All eyes on the ECB today – 7th September 2017

All eyes on the ECB today – 7th September 2017

The big news today is the upcoming announcement by Mario Draghi on the outcome of the ECB policy meeting and any comments about the possibility of a tapering of the quantitative easing programme. Expectations are that the press conference later today will lay the groundwork for a rate rise across the Eurozone in October, but as Canada showed yesterday, surprise rate rises are not out of the question.

The US isn’t short of news today, either. Congressional leaders received sign off from President Trump late on Wednesday to raise the government’s debt ceiling, lifting the maximum amount the government can borrow and extending funding until 15th December. Despite this move taking away some of the domestic tension, the US Dollar failed to rally as the threat of North Korea continues to loom on the horizon.

 

Despite these changes in the US, Sterling held steady against the US Dollar yesterday, although this can largely be attributed to the US Dollar’s weakness. Parliament begins debating on the main principles of the Great Repeal Bill today, with a vote due on Monday next week on whether to move to the next stage of the process, when many amendments are expected to be proposed.

Against the Euro, the Sterling remains vulnerable but with changes brewing in Europe and a possible rate hike on the way, it has so far been able to withstand the current pressure. The upcoming announcement from the ECB may shatter this if it holds any surprises, which means the market will need to multitask at lunchtime, watching both the initiation of the Great Repeal Bill in the House of Commons and Draghi’s press conference across the Channel.

 

The unexpected interest rate rise in Canada indicated an upcoming trend of policy tightening. As a result of the surprise move yesterday, the Canadian Dollar gained at least 2% at one point in the day, reaching its highest levels in almost two years.