European Open: BOE expected to hike, Euro holds 1.1300 ahead of ECB

Asian Indices:

Australia's ASX 200 index fell by -15.3 points (-0.22%) and currently trades at 7,072.40
Japan's Nikkei 225 index has fallen by -270.13 points (-0.98%) and currently trades at 27,263.47

UK and Europe:

UK's FTSE 100 futures are currently down -4.5 points (-0.06%), the cash market is currently estimated to open at 7,578.50
Euro STOXX 50 futures are currently down -10.5 points (-0.25%), the cash market is currently estimated to open at 4,211.55
Germany's DAX futures are currently down -54 points (-0.35%), the cash market is currently estimated to open at 15,559.77

US Futures:

DJI futures are currently down -13 points (-0.04%)
S&P 500 futures are currently down -324.5 points (-2.15%)
Nasdaq 100 futures are currently down -41.5 points (-0.91%)

The disappointing earnings report from Meta Labs (formerly Facebook) weighed on sentiment overnight with tech stocks in Japan leading the declines. The ASX 200 was the least effected and down just -0.2%. European futures have opened around-0.2 to -0.3% lower, whilst Nasdaq futures have fallen over -2% last night.

BOE expected to hike rates at 12:00 today

The Bank of England are expected to raise interest rates from 0.25% to 0.5% today, which would make it their first back-to-back hike since 2014. Inflation has been the key driver behind the expectations, although be warned that if BOE do not hike it wouldn’t be the first time they have surprised markets in recent months. Still, it also begs the question as to whether this hike has been priced in, so perhaps traders will need a ‘hawkish hike’ to justify bidding the pound further if the 25-bps hike arrives today. GBP/USD has pulled back from its 8-day high and is holding above its 20-hour eMA. EUR/GBP is holding steady and up just 9 pips from yesterday’s close as it braces itself for today’s ECB meeting.

ECB rate decision at 12:45 GMT

The euro had risen 1.9% from Friday’s low to yesterday’s high. It has more than erased its post-FOMC losses and its rally has been supported by yield rising yield differentials. A record CPI print for the eurozone places extra pressure on the ECB to bow down to market expectations and start talking about hikes. And that makes today’s meeting pivotal for the euro’s near-term direction as there is clearly some expectation the ECB will cave today. Failure to do see could send EUR/USD (and yield differentials) move sharply lower.

Technically, EUR/USD finds itself at an interesting set of levels. The hourly chart is within a strong uptrend but prices are coiling within a triangle formation. The 20-hour eMA has provided dynamic support but, should we see prices move lower then the monthly pivot and weekly R1 sits around 1.1280 for potential support. As long as prices hold above that support zone then we retain a bullish bias and see potential for a return to 1.1330. A break below 1.1280 warns of a countertrend move.

ECB guide

Gold extends its corrective bounce

Should euro moves higher it could also assume a weaker dollar, and that could further support gold prices. We outlined a scenario yesterday where gold could fall much further but, until we see the dollar move lower with gold higher against other currencies, XAU/USD is likely to remain in a countertrend bounce. A break above yesterday’s highs (1810.82) assumes bullish continuation over the near-term.

FTSE 100 reaches 7600 target

The FTSE 100 reached our 7600 target yesterday after rallying directly from the open. Yet this level has proved to be a tough level to crack this year so far and it lands right near the weekly R1 and monthly R1 pivot. A pullback form this level would not be unexpected, and a break above 7620 is required to clear the YTD highs.

FTSE 350: 4283.88 (0.63%) 02 February 2022

217 (62.00%) stocks advanced and 114 (32.57%) declined
8 stocks rose to a new 52-week high, 1 fell to new lows
38.57% of stocks closed above their 200-day average
66.86% of stocks closed above their 50-day average
13.43% of stocks closed above their 20-day average

Outperformers:

+ 5.70% - Ocado Group PLC (OCDO.L)
+ 4.85% - Discoverie Group PLC (DSCV.L)
+ 4.81% - Bytes Technology Group PLC (BYIT.L)

Underperformers:

-5.69% - Antofagasta PLC (ANTO.L)
-5.53% - Harbour Energy PLC (HBR.L)
-3.99% - Energean PLC (ENOG.L)

Up Next (Times in GMT)

How to trade with City Index

You can easily trade with City Index by using these four easy steps:

Open an account, or log in if you’re already a customer

• Open an account in the UK
• Open an account in Australia
• Open an account in Singapore
Search for the company you want to trade in our award-winning platform
Choose your position and size, and your stop and limit levels
Place the trade

This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

StoneX Financial Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit www.cityindex.com/en-sg/terms-and-policies for the complete Risk Disclosure Statement.

ALL TRADING INVOLVES RISKS. LOSSES CAN EXCEED DEPOSITS.

City Index is a trading name of StoneX Financial Pte. Ltd. (“SFP”) for the offering of dealing services in Contracts for Differences (“CFD”). SFP holds a Capital Markets Services Licence issued by the Monetary Authority of Singapore for Dealing in Exchange-Traded Derivatives Contracts, Over-the-Counter Derivatives Contracts, and Spot Foreign Exchange Contracts for the Purposes of Leveraged Foreign Exchange Trading. SFP is also both Derivatives Trading and Clearing member of the Singapore Exchange (“SGX”). SFP is a wholly-owned subsidiary of StoneX Group Inc.

The information provided herein is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to invest, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk.

The information does not represent an offer of, or solicitation for, a transaction in any investment product. Any views and opinions expressed may be changed without an update. To understand the risks and costs involved, please visit the section captioned “Important Information” and the “Risk Disclosure Statement”.

The information herein is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation.

StoneX Financial Pte. Ltd. 1 Raffles Place, #18-61, One Raffles Place Tower 2, Singapore 048616. Tel: 6309 1000. Co. Reg. No.: 201130598R.

This advertisement has not been reviewed by the Monetary Authority of Singapore.