All to Play for with Euro (EUR) Exchange Rate Tomorrow on ECB Decisions

May 31, 2016 - Written by John Cameron

STORY LINK All to Play for with Euro (EUR) Exchange Rate Tomorrow on ECB Decisions

The single currency is set to be shifted in a major way in the near-term, due to a raft of high-impact European Central Bank (ECB) policy decisions being made tomorrow afternoon.

The Euro has been able to make a notable gain against the Pound today, owing to the latter currency being heavily devalued by 'Brexit' polls.

Higher Crude Oil Prices see CAD, NOK Exchange Rates Improve

Significant developments in the global currency markets cast a shadow over this week’s session. Federal Reserve Chair Janet Yellen’s assertion that US interest rate hikes were likely in the ‘coming months’ sent FX traders home for the weekend with significant food for thought.

Meanwhile, the move back above the $50 threshold for the price of a barrel of oil has provided a fillip for the Petro Currencies. Crude had not been above $50 this year until the middle part of last week and if it convincingly break and hold above this psychologically significant level, then analysts forecast continuing gains for the Norwegian Krone (currency : NOK) and the Canadian Dollar (currency : CAD).

European Central Bank (ECB) Interest Rate Decision to Provoke Euro (EUR) Volatility This Week

The foreshortened trading week this week does not lack tier one data releases. The eruoland provides several highlights, with the centrepiece coming in the form of Thursday’s European Central Bank (ECB) monetary policy announcement. By his own admission, the ultra-loose stance adopted by ECB President Mario Draghi during the past two years means that he now has little leeway for cutting interest rates or deepening the euro area’s €80 bn per month Quantitative Easing programme.

However, investors holding the euro (currency : EUR) will be closely monitoring the tone of the rhetoric employed by the ECB Supremo in his post-announcement press conference for clues on what might be in store for the medium to long term.

Today’s estimated version of the whole of eurozone Consumer Price Index data for May will set the tone for Draghi’s commentary. Analysts are anticipating a slight decrease in the pace of deflation in the euroland from last month’s -0.2% to -0.1%. Such a meek result is unlikely to buoy Draghi enough to enable any positive analysis of the euroland economy, so a continuation of last week’s sharp move higher for the Pound Sterling euro exchange rate appears highly possible.

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TAGS: Canadian Dollar Forecasts Euro Forecasts Norwegian Krone Forecasts Pound Euro Forecasts