19th June 2019
European stocks rose and the euro has tumbled after ECB president Mario Draghi laid the groundwork for more stimulus to revive the eurozone economy. Mr Draghi admitted that “additional stimulus will be required” if the economic outlook for the stuttering region does not improve. He revealed in a speech at the ECB forum in Sintra, Portugal, that further cuts to interest rates and measures to mitigate the impact of negative rates remain tools in the central bank’s arsenal. Mr Draghi said the ECB’s Governing Council will discuss its options “in the coming weeks”, adding that its quantitative easing programme “still has considerable headroom”.
Donald Trump hit out at the ECB president after the euro sank versus the dollar amid expectations of more stimulus. The US president said the decline would make “it unfairly easier for them to compete against the USA”. “They have been getting away with this for years, along with China and other,” he added in a Tweet.
The Euro Stoxx 50, which tracks the region’s blue-chip stocks, reversed early losses to jump 1pc while the DAX in Frankfurt gained 0.9pc and the CAC 40 in Paris leapt 1.2pc.
Donald Trump has given markets an added boost after revealing he will hold “an extended meeting” with Chinese president Xi Jinping at next week’s crucial G20 summit in Japan. The US president revealed on Twitter that US and Chinese negotiators will begin talks prior to the meeting.
Signs of cooling trade tensions have propelled US stocks higher. The S&P 500 has jumped 1.1pc after being lifted another notch by Mr Trump’s tweet.
The U.S. and China said their presidents will meet next week in Japan. Donald Trump said he had a “very good” phone conversation with Chinese counterpart Xi Jinping, and that the two leaders will hold an “extended meeting” at the G-20 summit on June 28-29 in Osaka. “Our respective teams will begin talks prior to our meeting,” Trump said on Twitter. The U.S. president had threatened more tariffs if Xi declined a one-on-one at the event in Japan.
Asian equity markets rose after U.S. stocks climbed on hopes for a de-escalation of the trade fracas, adding to a European rally sparked by pledges of more ECB accommodation. Gains were capped by reports of more Trump-Fed friction, adding to caution ahead of the FOMC decision. Treasuries rose, with 10-year yields briefly approaching 2%. The euro declined while the kiwi and Aussie advanced. The yen briefly dipped after a 6.8 earthquake struck near northwest Japan. Gold climbed.
Today we have the FOMC rate and press conference. 7pm for the rate decision. Trump also wants to demote Fed Chair Powell. Trump replied “let’s see what he does” when asked whether he wants to demote Fed Chair Powell though its understood he asked his team into the legalities of getting rid of him.
Todays news highlights include UK and Canadian CPI, US DoEs, FOMC rate decision and Fed Chair Powell press conference, NZ GDP, BoJ’s Kuroda, ECB’s Lautenschlager, Coeure, Draghi, Germany 2046 Bund
FTSE 100 Trading Signals, Forecast and Prediction
We have the Fed later on today at 7pm as the main event, and also the UK CPI data at 09:30 this morning. A such I am thinking that we may well see some further bullishness today as we get a bit of buy the rumour and build on yesterday’s rise. That said I have decent looking resistance at the 7492 level if the bulls manage to break above the 7471 resistance level. That was the level we had above 7420 for yesterday, and the bears did indeed try a little assault as we got to 7470 yesterday. Should we see 7492 today then I am thinking that a short here is worth a go, though we do have 7529 above that as one to watch. A short there might be worth a go but with a wide stop as its off the longer timeframe.
Support today is initially at the 7450 level where we have a moving average on the 30min and also the coral line. Below this I am looking at the daily pivot at 7421 which I think may well hold any early test, as the bulls will be keen to build on this bullish momentum and get the price near 7500. The fear/greed gauge is still on “fear” at 44/100 here so we could well have further upside to come.
If the bears can break below the 7390 (200ema 30min) level today then the momentum may well start to shift back in their favour and probably a lot will depend on the tone set by the FOMC. The ECB mentioned more stimulus yesterday, much to Trump’s disgust, so a similar vibe from the Fed might well see a flurry of angry Tweets!
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