Daily Analysis | 14 December 2017
ECB interest rate decision
ECB is widely expected to remain on hold today and keep interest rates at 0.00%. As the rate as such is expected to remain the same focus may shift towards the press conference which will be held by ECB President Mario Draghi.
Media reports suggest that, as key policy decisions were met in October, ECB could present the macroeconomic projections of those policies, until 2020. Another topic which is expected to be mentioned during the press conference is the QE extension that was “broadly” agreed in October, and any net purchases after September 2018. The forecast updates, especially for inflation and growth, are also expected to attract wide attention.
EUR/USD started to trade in a consolidative manner yesterday, Wednesday, and after the FOMC’s decision about the interest rate hike rose to break the 1.1820 resistance barrier (now turned to support level). The price continued to hover above but close to the aforementioned support level during today’s Asian morning. Should the bulls take the driver’s seat we expect the pair to break the 1.1880 (R1) level and aim for the 1.1910 (R2) resistance hurdle. Should the bears take the reins we expect the pair to break 1.1820 (S1) support barrier and head towards the 1.1725 (S2) support level.
- Support: 1.1820 (S1), 1.1725 (S2), 1.1680 (S3)
- Resistance: 1.1880 (R1), 1.1910 (R2), 1.1960 (R3)
BoE interest rate decision
BoE is widely expected to remain on hold today and retain the interest rate at 0.50%. The scenario was priced in by the market with a 99.3% probability, according to GBPOIS yesterday evening. As the decision is already widely anticipated, the focus may turn to the minutes accompanying the decision. Investors may try to clear the fog regarding future interest rate hikes. We see the case for a slightly more hawkish tone, a case which is supported by recent inflation data as well as keeping the way open for a future interest rate hike. On the other hand, BoE may want to maintain flexibility as Brexit negotiations are still a concern.
Cable rose yesterday and broke the 1.3400 resistance level (now turned to support). The direction continues to remain sideways, however, should the bulls take the driver’s seat we expect the pair to break the resistance level of 1.3455 (R1) and aim for the 1.3520 (R2) resistance barrier. Should the bears take the reins, the pair could break the 1.3400 (S1) support level and aim for the 1.3365 (S2) support hurdle.
- Support: 1.3400 (S1), 1.3365 (S2), 1.3300 (S3)
- Resistance: 1.3455 (R1), 1.3520 (R2), 1.3550 (R3)
As for today’s other economic data
From Germany and Eurozone, we get the preliminary Markit PMI figures for December
From the UK we get the Retail sales for November which will be released before BoE’s interest rate decision and are expected to uptick
From the US we also get retail sales for November which are also expected to have up-ticked