- The European Central Bank will be holding a policy meeting today. It is almost universally expected that the ECB will cut its interest rate by 0.25% on the basis that inflation has been sufficiently tamed. If the ECB passes on the rate cut, that will be a major dovish surprise, and would likely trigger a sharp fall in the relative value of the Euro.
- Major global equity indices are continuing their recent bullish run as risk-on sentiment takes hold, especially in the USA where the NASDAQ 100 Index and the broader S&P 500 Index rose strongly yesterday to close at new record highs. This is a bullish sign, and traders will probably do well by continuing to look for long trades here. When the S&P 500 first started hitting new record highs a few months ago, I noted that this usually precedes a 12% gain over the next year, based on historical data. We have certainly seen strong gains since then. I am strongly bullish on these indices.
- Like many risky assets, Bitcoin rose bullishly yesterday, but ran into the key resistance level at $71,600 which it has not been able to overcome. This level has held the price several times in recent months and may do so again. If the price can get established above that level, it can then go on to test the record high.
- The Bank of Canada yesterday cut its Overnight Rate from 5.00% to 4.75% as was widely expected, becoming the first G7 nation to cut rates in this cycle. Governor Macklem justified the cut by stating that “our confidence that inflation will continue to move closer to the 2 per cent target has increased over recent months.”
- In the Forex market, the strongest major currency since the Tokyo open is the Swiss Franc, while the US Dollar is the weakest major currency, putting the USD/CHF currency pair in focus. However, the relative values are on the low side so may not be very meaningful.
- Yesterday’s release of US ISM Services data came in higher than expected.
- There will be a release of US Unemployment Claims data later today.
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