Euro Awaits the ECB Monetary Policy Minutes

On Wednesday, the Greenback recovered after falling for five days in a row vs. a basket of major currencies as the U.S. consumer price index (CPI) increased by 0.3% last month. The CPI rose as much as 2.1%, the biggest year-on-year increase for more than a two-and-a-half-years. Such data could carry the Federal Reserve to hike interest rates at a faster pace than expected.

The U.S. dollar index rose as much as 1% and settled above 101.20, one day after Trump’s statement that the dollar is “too strong”.

Gold slid yesterday from an eight-week high on strong USD figures and settled at the psychological level of $1,200. The precious metal could sustain such levels in anticipation of Trump's plans for the first 100 days of his presidency.

Sterling pound fell as much as 1% and settled below $1.23, as HSBC announced yesterday that it would move staff to Paris following Britain's exit from the EU. Cable could trade under pressure during the next period as other major banks are expected to do the same.

GBP is unlikely to maintain its gains for an extended period and could decline to $1.20 due to the variation of British government’s statements.

Euro dropped to $1.07 vs. USD, negatively affected by a strong USD. Markets await the ECB monetary policy minutes, which will be released later on today; traders should watch this carefully.

Oil prices fell more than 2% yesterday on expectations that U.S. shale oil could increase as energy firms boost drilling activity with crude prices soaring near 18-month highs. U.S. crude settled below 51.50, down more than $1. Technically, it could re-test $51 during the day.

The most important economic events:

• EUR European Central Bank Rate Decision (JAN 19): (GMT 14:45) – Important – Forecast (0.00%) – previous (0.00%).
• EUR ECB Marginal Lending Facility (JAN 19): (GMT 14:45) – Important – Forecast (0.25%) – previous (0.3%).
• EUR ECB Deposit Facility Rate (JAN 19): (GMT 14:45) – Important – Forecast (-0.40%) – previous (-0.40%).
• EUR ECB Asset Purchase Target (JAN): (GMT 14:45) – Important – Forecast (EU80b) – previous (EU80b).

Disclaimer
The prices and news mentioned in this outlook are absolutely no guarantee of future market performance and do not represent the view of ICM Capital Limited. Financial markets can move in either direction causing profits to be made or complete losses to be incurred by the trader. Each trader must decide for themselves what their risk appetite is and ensure that correct risk management procedures are in place before placing any trades.