this week’s topic is the European Central Bank – so let’s talk about what Happened.
- On Thursday, the ECB decided not to proceed along with changes to the bloc’s monetary policy and additionally left interest rates unchanged.
- The EUR/USD immediately jumped 50 pips peaking at 1.1058.
- While on Friday the U.S. dollar rallied to a four-month high versus a basket of major currencies, boosted by the monetary policy outlook.
So what led to this situation?
- In the conference that followed, ECB President Mario Draghi commented on Brexit and the geopolitical instability resulting from the decision.
- He additionally highlighted the declining state of the Eurozone’s banking industry
- The decision taken on Thursday means that the main refinancing rate remains at 0%, the marginal lending facility rate at 0.25%, and the deposit facility at -0.40%.
So What’s going on This week?
- Investors will be looking atWednesday’s highly-anticipated FOMC statement for guidance on the pace of future US interest rate hikes which is at 6PM GMT
- While on Friday, the markets await amonetary policy announcement from the Bank of Japan amid growing expectations for further stimulus.
- Lastly, be sure to keep your eye on the GBP – Since the U.K. shocked the markets along with their decision to leave the EU on June 24, the pound has actually already declined nearly 12% versus the dollar and analysts are expecting further declines
That’s it for this week once again I’m Nima and you’ve been watching the Hot Topic.