The Forex market will be highly focused on today’s European Central Bank policy release, which might result in a rate hike from 4.25% to 4.50% in the main refinancing rate.
- The European Central Bank will be holding a policy meeting today at which it is expected to hold rates, despite continuing fears over unacceptably hot inflationary pressures. Some analysts expect that there will be a 0.25% rate hike by the Bank today.
- Yesterday’s release of US CPI (inflation) data saw monthly CPI come in as expected, while Core CPI was just slightly above expectations, putting annualized inflation slightly higher than expected at 3.7% instead of 3.6%. The release, apart from triggering short-term volatility, seems to have had little impact on the market, although stock markets are mostly a bit higher.
- The Forex market is seeing a softer US Dollar. Since the Tokyo open, the US Dollar has been the weakest major currency, while the Swiss Franc has been the strongest. However, the US Dollar remains within a valid long-term bullish trend, keeping the USD/JPY currency pair in focus on the long side for trend traders.
- Crude Oil remains strong, WTI again reaching a new 10-month high price yesterday above $89. OPEC a, making it very attractive to trend traders on the long side.
- Cocoa futures rose strongly yesterday to reach another new multi-year high price.
- There will be releases today of crucial US economic data: PPI, retail sales, and unemployment claims.
- Bitcoin is threatening to break down to new 2-month lows as the crypto sector remains weak, with the price unable to get established above the key resistance level at $26,329.