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    北京pk105码一期计划:Will The ECB Crush The Euro?

    By Kathy LienForexMar 06, 2019 03:53PM ET
    www.investing.com/analysis/will-the-ecb-crush-the-euro-200395228
    Will The ECB Crush The Euro?
    By Kathy Lien   |  Mar 06, 2019 03:53PM ET
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    Daily FX Market Roundup March 7, 2019

    Kathy Lien, Managing Director of FX Strategy for BK Asset Management.

    北京赛车pk10助赢软件 www.ztid.net Thursday’s European Central Bank monetary policy announcement is the biggest event of the week and it could be even more market-moving than Friday’s nonfarm payrolls report. Over the past year, ECB rate decisions have not been kind to the euro. In the last 15 months, EUR/USD fell after every policy meeting except for September 2018. History could be repeated as the central bank is seriously considering a new targeted long-term refinancing operation (TLTRO). This announcement could be made as quickly as Thursday because it is not a question of if, but a matter of when the loan facility will be renewed. In January, the ECB took the unusual step of lowering its risk assessment at a meeting without updated staff forecasts. Those economic projections will be released on Thursday and should be lowered to support the central bank’s grim outlook. While there have been some improvements in the Eurozone’s economy since then (see table below), growth slowed sharply at the end of last year and prices continue to fall. At 1.5%, Eurozone CPI is running far below the central bank’s target.

    Based on the growth and inflation outlook alone, the ECB needs to be dovish. However the current TLTROs are due next June and when the maturity falls below a year, they are considered short term and subject to new regulations that will incentivize banks to pay back the loans sooner, therefore reducing the amount of cheap loans in the market. The ECB has already discussed a new TLTRO so the question is 4 fold:

    1. When will they commit to new TLTRO?
    2. What will be the maturity?
    3. Will it have a fixed or floating interest rate?
    4. Will there be limits?

    The more clarity the ECB provides, the greater impact on the euro. If the ECB fails to commit to new loans this week – even if it does not include details – we could see EUR/USD squeeze to 1.14 fairly quickly. If it says a new TLTRO is coming and details will be provided in April, the euro should fall and then stabilize quickly because it is not exceeding bearish expectations. If it has the whole program hashed out and announces new loans with 3-to-4 year maturities, EUR/USD could test its November low of 1.1215.

    EUR Data Points
    EUR Data Points

    The Canadian dollar dropped to its weakest level in 2 months after the Bank of Canada said there is increased uncertainty on the timing of future rate hikes. Business investment is lower, consumer spending and housing is soft and for all of these reasons, not only was the fourth quarter slowdown deeper than forecasted but Q1 growth should fall short of expectations as well. With inflation expected to remain below 2% throughout 2019, the Bank of Canada is basically telling us that no rate hikes are on the horizon. While this may not be a surprise to our readers, it was just the excuse that loonie traders needed to send the currency lower. Data released alongside the rate decision supported the slide. The fall in oil prices drove Canada’s trade deficit to its highest level ever at the end of last year and conditions do not appear to have improved with the IVEY PMI index falling to its lowest level since May 2016. Canadian labor data is scheduled for release on Friday and a weaker reading is expected after last month’s sharp rise. Having broke above all major moving averages, the next stop for USD/CAD should be 1.35.

    The Australian and New Zealand dollars also fell sharply on the back of weaker-than-expected Australian Q4 GDP numbers. The economy expanded by only 0.2% in the last 3 months of the year and this slowdown pushed the annualized pace of growth down to 2.3% from 2.7%. We don’t expect a relief rally from Wednesday night’s Australian retail sales and trade balance. Between the 2 reports, retail sales will be the most important and the sales component of PMI services fell sharply in January and December, signaling a slowdown in spending.

    Meanwhile, the biggest trade deficit since 2008 and a smaller increase in ADP prevented USD/JPY from recapturing 112. The pair has been hovering below this level for the past few days and a sustainable breakout in one direction or another will have to wait for NFP. The Beige book report had very little impact on the dollar – 10 out of 12 districts reported slight-to-moderate growth and half of the regions said the government shutdown slowed activity. Some districts saw upward price pressure from tariffs and a tight labor market with notable worker shortages. These are mostly positive reports but the dollar shrugged off the news.

    Will The ECB Crush The Euro?
     
    Will The ECB Crush The Euro?

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    Comments
    Muhammad Shahbaz
    Muhammad Shahbaz Mar 08, 2019 8:17PM ET
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    Kathy I love u u r so nice and elegant advisor
    Shoby Khaan
    Shoby Khaan Mar 08, 2019 4:54AM ET
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    plz tell me how much chances of market to go down side
    Tudorel Ciugulea
    Tudorel Ciugulea Mar 07, 2019 1:19PM ET
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    thanks
    Anthony Koh
    Anthony Koh Mar 07, 2019 5:57AM ET
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    thank you
    Ellon Lon
    Ellon Lon Mar 07, 2019 1:31AM ET
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    thank you...
    Michael Wash
    Michael Wash Mar 06, 2019 6:10PM ET
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    I hardly call a euro at 1.1215 crushed. Unless it trades south of 1.12 might look for a better headline
    partson justine
    partson justine Mar 06, 2019 5:37PM ET
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    Very precisely and infirmative
    Andy Mulyawan Andy Mulyawan
    Andy Mulyawan Andy Mulyawan Mar 06, 2019 5:35PM ET
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    So...Will ECB Bearish tonight ?
    zhintaro nidorima
    zhintaro nidorima Mar 06, 2019 5:35PM ET
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    That my friend .. is we dont know. We have to wait ECB decides.
    Agiel Duhaney
    Gilles94 Mar 06, 2019 5:25PM ET
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    Very? informative Kathy. No? mention? of ? the? delay? in agreement? in? China-US? trade? conflict and? impact? on? global economy. Thanks.
    muhammad fiaz
    muhammad fiaz Mar 06, 2019 4:40PM ET
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    Good
     
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