CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
☰
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
✖

ECB to go negative

Article By: ,  Financial Analyst
June 5, 2014 10:49 AM

The Beige Book released last night showed that all 12 regions in the US are seeing a moderate expansion in the economy with the highlights from Asia being the HSBC service PMI data from China that came in weaker at 50.7 from the April reading of 49.5. This along with the Australian trade balance falling into deficit of 122 million, which had been forecast to show a surplus of 510 million, saw AUD reverse gains back towards the 0.9250 level.

Today is all about the ECB and what action they will take to fend off the imminent threat of deflation with market expectations raised to the maximum, leaving plenty of room for a huge disappointment. We have seen this time and time again from the ECB and market positioning is showing extreme shorts in the single currency. Below are the potential scenarios:

1. No rate cut

2. Re-financing rate plus deposit rate cuts of 10-15 basis points

3. Re-financing plus deposit rate cuts of a larger 20-25 basis points

4. Option 2 or 3 plus liquidity measures – MRO extension to 2016 and/or SMP sterilisation suspension

5. The above plus FLS/LTRO for SMEs with the press conference to hint at all out QE being imminent

6. The above plus an outline of framework for the implementation of QE programme

Number 4 is what I believe the market has priced in which I think will see us move gradually down to 1.33 with number 1 outcome taking us back to 1.40.

 

EUR/USD

Supports 1.3520-1.3480-1.3420 | Resistance 1.3650-1.3790-1.3840

 

 

USD/JPY

Supports 102.40-102.10-101.80 | Resistance 102.80-103.10-104.00

 

 



GBP/USD

Supports 1.6705-1.6670-1.6600 | Resistance 1.6780-1.6820-1.6880

 

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.

City Index is a trading name of StoneX Financial Ltd. Head and Registered Office: 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is a company registered in England and Wales, number: 05616586. Authorised and regulated by the Financial Conduct Authority. FCA Register Number: 446717.

City Index is a trademark of StoneX Financial Ltd.

The information on this website is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement.

© City Index 2024