With the FOMC Minutes out yesterday, the Forex market now turns its attention on the ECB. Yesterday, the FOMC Minutes showed little hints that the Fed was in any hurry to apply new monetary stimulus. The minutes contrasted with Fed Chairman Ben Bernanke’s comments last week, and were closer to the opinion from Dallas Fed President Fisher. On the news, the US dollar spiked higher across the board as the lack of imminent stimulus triggered a broad based risk selloff.
Looking ahead, today’s ECB Interest Rate Meeting comes as Forex traders are reacting to this morning’s Spanish debt action which was met with unenthusiastic demand. As a result, the EURUSD is traading lower again today to 1.3175, after dropping over 100 pips yesterday. As we reach the ECB Meeting, Forex traders will be awaiting any comments in regards to the central bank’s increasing balance sheet, and whether its low interest 3-5 year lending to troubled banks is helping.
For more on the ECB Meeting from TheStreet.com
Although market participants see the European Central Bank keeping the benchmark interest rate at 1.00%, the press conference with President Mario Draghi could drag on the EURUSD should the central bank head cast a weakened outlook for the region. Indeed, we’re going to keep a close eye on the ECB’s fundamental assessment as the region faces a risk for a prolonged recession, and dovish comments from Mr. Draghi could reinforce our bearish outlook for the euro as the sovereign debt crisis continues to drag on the real economy. Read More