All Eyes On Ecb, G20 Summit

[RTFX-Trading]

What’s new:

United States: Sentiment improves further
United States: ADP employment data worse than expected, ISM improved
European Union: Focus on ECB


Today:

10h30 UK: Bank of England Credit Conditions Survey
13h45 Euro-zone: European Central Bank interest rate decision announcement
14h30 Euro-zone: European Central Bank Governing Council meeting press conference
14h30 US: Weekly Jobless Claims, exp 650.0 k, previous 652.0 k
16h00 US: Factory Orders, exp 1.5 %, previous -1.9 pct
The London Summit 2009 - G20 summit in London.


Overnight Ranges and Indices:

EURUSD: 1.3222 – 1.3312
USDCHF: 1.1410 – 1.1475
GBPUSD: 1.4448 – 1.4597
EURCHF: 1.5166 – 1.5198
USDJPY: 98.40 – 98.88
DowJones: 7761 +2.0%
NASDAQ: 1551 +1.5%
Nikkei: 8719 +4.4%
Gold: $927
Crude Oil: $49.00


Comments:

Yesterday EURUSD traded in the range of 1.3167 to a high of 1.3287. The EURGBP reached a high of 0.9258 followed by low of 0.9144. These relatively tight ranges lead us to believe that market sentiment is waiting day 2 of the G20 summit and the ECB meeting to be held later today. It is widely expected that the ECB will lower the base rate by 50 bp to 1%. Given the general idea that the ECB will cut rates, it is the subsequent decisions that are of much interest, in particular the potential move to join the other major central banks in adopting quantitative easing and credit easing measures.

The G20 summit is currently discussing the global economic crisis with major decisions to be held in the coming hours. As Gordon Brown stated, “Day one was for discussions day two is for decisions. So let's wait and see those decisions".

The markets are expected to rally once the ECB makes clear their decision. Should the ECB stick to its current policies and not adopt quantitative easing measures, we expect that the EURUSD to rally. Further, this shall be affected by decisions taken by the G20 summits, were an aggressive stance taken by Germany and France over heftier regulation is being discussed. The prediction of having a volatile end of week is much expected.

Good Day

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