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Forex Today: ECB plans to cut interest rate to 3.75%

Forex Today: ECB plans to cut interest rate to 3.75%

➡️ The European Central Bank will hold a policy meeting today. It is almost universally expected that the ECB will cut the interest rate by 0.25% on the basis that inflation has been sufficiently tamed. If the ECB were to approve the rate cut, it would be a very accommodative surprise and would likely trigger a sharp decline in the relative value of the euro.

➡️ The main global stock indexes continue their recent bullish run as risk appetite takes hold, especially in the United States where  the NASDAQ 100 Index and the broader S&P 500 Index  they rose strongly yesterday to close at new record highs. This is a bullish sign and traders will likely do well by continuing to look for long trades here. When the S&P 500 started hitting new record highs a few months ago, I noticed that this usually precedes a gain in the 12% over the next year, based on historical data. We have certainly seen strong gains since then. I am strongly bullish on these indices.

➡️ Like many risky assets, yesterday Bitcoin  rallied but ran into the key resistance level at $71,600 which it was unable to overcome. This level has held the price several times in recent months and may do so again. If the price manages to settle above that level, it can then continue to test the record high.

➡️ The Bank of Canada yesterday cut the overnight rate from 5.00% to 4.75% as widely expected, becoming the first G7 nation to cut rates this cycle. Governor Macklem justified the cut by saying that “our confidence that inflation will continue to approach the 2% target has increased in recent months.”

➡️ In the Forex market, the strongest major currency since the Tokyo opening is the Swiss franc, while the US dollar is the weakest major currencyand, focusing the USD/CHF currency pair  . However, the relative values are low, so they may not be very significant.

➡️ Yesterday's release of US ISM services data was higher than expected.

➡️ Data on unemployment claims in the United States will be released later today.

 

Credit by DailyForex.com

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