Market participants expected the European Central Bank (ECB) to add further stimulus measures this week. The ECB did. But market participants were disappointed because they hoped for more stimulus measures by the ECB. The euro jumped, while stock markets dropped.
The ECB lowered its deposit rate to -0.3% from -0.2% and extended its asset-buying programme until the end of March 2017. But the volume of the monthly purchases remained unchanged.
Market participants had expected that the ECB will expand the volume of the monthly purchases.
The ECB's action seems to be a little strange as it always said that quantitative easing was working. If quantitative easing works, why to extend the programme?
The U.S. labour market data in November was better than expected. The U.S. economy added more than 200,000 jobs last month. But this data failed to support the U.S. dollar. Market participants speculate that the Fed will start raising its interest rate this month, but they are cautious that the normalisation process by the Fed will be slow as the slowdown in the global economy will likely weigh on the U.S. economy.
Monetary policies of the ECB and the Fed will remain in focus next week. It is likely that the euro will be under pressure next week as the ECB will continue its quantitative easing, while the Fed will likely hike its interest rate.
It is likely that the currency pair EURUSD will rise toward the resistance level at $1.1000 or at $1.1100, if the U.S. economic data will be negative and there will be no negative news from the Eurozone.
If the U.S. economic data is positive and in case of the negative news from the Eurozone, the currency pair EURUSD may test the level at 1.0800 or the level at $1.0763.
© 2000-2020. All rights reserved.
This site is managed by Teletrade D.J. Limited 20599 IBC 2012 (First Floor, First St. Vincent Bank Ltd Building, James Street, Kingstown, St. Vincent and the Grenadines).
The information on this website is for informational purposes only and does not constitute any investment advice.
Making transactions on financial markets with marginal financial instruments opens up wide possibilities and allows investors who are willing to take risks to earn high profits, carrying a potentially high risk of losses at the same time. Therefore you should responsibly approach the issue of choosing the appropriate investment strategy, taking the available resources into account, before starting trading.
Use of the information: full or partial use of materials from this website must always be referenced to TeleTrade as the source of information. Use of the materials on the Internet must be accompanied by a hyperlink to teletrade.org. Automatic import of materials and information from this website is prohibited.
Please contact our PR department if you have any questions or need assistance at firstname.lastname@example.org.