Global markets early Thursday received a boost after the United States and Europe reached a deal Wednesday to work towards “zero tariffs, barriers and subsidies on non-auto industrial goods” in a bid to defuse escalating trade tensions.
Investors took comfort in the encouraging meeting outcome, with Asian stocks edging higher early Thursday following overnight gains on Wall Street.
“While the positivity from Asia could carry over into European markets, caution ahead of the looming European Central Bank (ECB) policy meeting may restrict the upside momentum,” says Lukman Otunuga, research analyst at FXTM while commenting on the upcoming ECB meeting.
He noted that main event risk for the Euro would be the ECB monetary policy decision, which is widely expected to conclude with interest rates left unchanged at 0.00%.
- Lagos targets 60% retail trading to boost market penetration
- Nigeria, Japan sign $2.78m boat deal to enhance maritime security
- AbegApp secures AIP to boost mobile money operation
- SA-based Nomanini launches StockNow to boost Africa’s informal retail markets
- Embrace private sector to create jobs, boost economy, OCCIMA tells Imo govt
“Although July’s meeting will not include fresh economic projections, investors should not be quick to expect the meeting to be a snoozer. Much of the attention will be directed towards Mario Draghi’s press conference for further insight into rate hike timings and thoughts on global trade developments,” he stated.
With the ECB already unveiling its tapering blueprint and stating that interest rates would remain at ultra-low levels, “at least through the summer of 2019”, Draghi is expected to simply reiterate the message of June’s policy meeting.
While economic data from Europe remains positive with inflation hitting the golden 2 percent level, global trade tensions continue to weigh on sentiment.
Otunuga noted that the euro could take a hit if he decides to strike a cautious tone by focusing purely on global trade tensions and reiterate how interest rates will remain unchanged until Summer 2019,
“Regarding the technical picture, the EURUSD continues to find comfort within a wide range on the daily charts. However, the breakout above 1.1700 could encourage an incline towards 1.1768 and 1.1790, respectively.”