europe union building

ECB’s hawkish tone sends euro higher

12th January 2018 Market Update

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?? GBP – The pound had a mixed day across the board yesterday, the dollar broke a key resistance level against GBP although re-traced in the afternoon of yesterday’s session. Cable should now trade between these levels until its next direction is confirmed. GBP also slipped to one-week lows against the euro on what was a data light day for the UK.

?? EUR – Buoyant figures continue apace as the EU shows signs of good health. Yesterday’s hawkish ECB statement is the latest event in a long line that adds to an ever-growing army of euro bulls.

?? USD – Fed officials continue to harden calls for further rises this year, Robert Kalpen, of the Dallas Fed yesterday highlighted inherent risks of overheating if Trump’s tax reforms have the impact expected. Inflation readings and Retail sales are due from the US today, a solid inflation reading will do nothing to dampen Fed calls for further rate rises.


Key Announcements

?? USD
13:30pm: Inflation readings, Retail Sales


Summary: ECB minutes from last month’s meeting revealed a surprisingly hawkish tone, this sent the euro 1% higher against much of its trading partners. The improving economic picture led Draghi to conclude that faster than expected tapering of the historic QE programme may become appropriate. Elsewhere Nigel Farage caused some controversy by declaring his ‘tongue in cheek’ support for a second Brexit vote.


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Darren Kilner

Darren Kilner

Darren is Head of Dealing at FairFX. Darren lives and breaths FX, his Mastermind topics are G8 currencies and economic forecasts.

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