EUR hike is temporary, all await for ECB meeting

Daily Update

Yesterday’s Market                                                                                              

• AUD RBA Interest rate decision and Rate statement
• EUR Gross Domestic Product
• USD Trade Balance
• USD Factory orders

Yesterday Explained

The resounding “no” that resulted from Italy’s referendum on constitutional reform over the weekend placed the future of the euro firmly in the spotlight, yet failed to weigh on the common currency in the immediate aftermath. The euro rebounded powerfully from its new lows against the dollar just two days after the vote, defying any concerns over the referendum’s potential financial and economic implications. 

Markets did not see much movement in the currencies as there were no major data released. RBA decided to keep the interest rate unchanged as expected by the market experts hence there was no movement for Australian Dollar. Gross Domestic Product report from Euro zone came out positive which was better than expected but it didn’t manage to give any positive boost to EUR/AED pair which was already at 3.95 when the day began.

Day ended with two reports from USA. Trade balance report came negative which did not meet the market expectation. Even though factory orders report from USA came positive it did influence majorly on the currencies. As per market experts the current hike in EUR is just temporary and we should be able to have a realistic view on it after the European Central Bank’s (ECB) policy decision on Thursday.

Today’s Markets

• AUD Gross Domestic Product
• GBP NIESR GDP Estimate
• CAD BOC Interest rate decision and Rate statement

Today’s Focus

The day is light in terms of economic data. Australia will release its Gross Domestic Product report for its 3rd quarter. This report is expected to show that economic growth slowed down a little bit during the third quarter.  Australia is expected to have growth by 0.3% in the 3rd quarter, while it had expanded by 0.5% during the second quarter.  Its annual growth rate should come in around 2.5%, which is relatively high for a developed economy.

By evening UK will release NIESR GDP Estimate, which is an estimate of growth over the last 3 months up to the report which comes out a month before the official announcement. The report is highly reliable and would influence the UK monetary policy. The day will end with Interest rate decision and rate statement from Bank of Canada, where it is expected that the Interest rate will be kept unchanged at 0.5%.