Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 54.76% of retail investor accounts lose money when trading CFDs / Spread betting with this provider. You should consider whether you understand how CFDs / Spread betting work and whether you can afford to take the high risk of losing your money.
Important Notice - Fraud awareness
Important Notice - Scam alert
54.76% of retail investor accounts lose money when trading CFDs / Spread betting with this provider.
Important Notice - Fraud awareness
Important Notice - Scam alert
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 54.76% of retail investor accounts lose money when trading CFDs / Spread betting with this provider. You should consider whether you understand how CFDs / Spread betting work and whether you can afford to take the high risk of losing your money.
Important Notice - Fraud awareness
Important Notice - Scam alert
The vast majority of retail investor accounts lose money when trading CFDs / Spread betting with this provider.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. The vast majority of retail investor accounts lose money when trading CFDs / Spread betting with this provider. You should consider whether you understand how CFDs / Spread betting work and whether you can afford to take the high risk of losing your money.
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Euro Market affected by European Central Bank Interest Rate Decision

The market is watching Germany, and the United States, which announce their respective consumer price index (CPI) reports for March on Tuesday. Many believe that local inflation will remain high due to the high international energy prices in March. In addition, the war in Russia and Ukraine has triggered problems such as the rising prices of agricultural products and industrial metal raw materials; hence, inflation may hit a new record high. Therefore, it is worth noting that the latest views from ECB officials on inflation may trigger volatility in the bonds, stocks, and foreign exchange markets.

 

Furthermore, the European Central Bank's interest rate meeting will be held on Thursday, and the results will be announced later that day. The latest German CPI data may directly affect the ECB's view on future monetary policies. Therefore, there may also be an opportunity for the central bank to push forward with the original plan to raise interest rates before the end of the year or before the third quarter.

 

According to the European Central Bank’s current monetary policy outlook, the bank will review its asset purchase program (APP) at the end of March's anti-pandemic aid bond purchase program (PEPP). Whether the ECB will start shrinking the program will be one of the priorities at this week’s ECB interest rate meeting. Faced with the slow growth of the European economy combined with high inflation, investors are highly concerned about how central bank policymakers will respond and make future deployments.

 

If the European Central Bank implements tighter monetary policies and curtails bond purchases, the Euro, which has been sluggish recently, may rebound in the short term. Although technically, the 1.08 mark in the EUR/USD can be regarded as a significant short-term support level, we can shift attention to the 1.11 or 1.12 range if there is a rebound. Furthermore, the UK will announce its March CPI on Wednesday. The market will be paying attention to whether the inflation level will break through its recent historical high, which will stimulate the pound and indirectly benefit the Euro’s exchange rate.

 

In the face of high global inflation, the central banks of New Zealand and Canada will announce the results of their interest rate meetings on Wednesday. The market expects the two countries' discussions to result in interest rate hikes. The Reserve Bank of New Zealand is expected to raise rates by 25 basis points to 1.25%, while the Bank of Canada is expected to raise rates by 50 basis points to 1.0%. If the two central banks raise interest rates more than expected, it may trigger a rise in the exchange rate.

 

On the contrary, if the rate hike is in line with expectations or lower than expected, it will trigger a decline in the exchange rate. After the interest rate discussion, investors should pay attention to the future policy outlook of the central bank policymakers. We believe it will indirectly affect the future direction of the exchange rate.

Last Updated: 11/04/2022

This market commentary and analysis has been prepared for ATFX by a third party for general information purposes only. Any view expressed does not constitute a personal recommendation or solicitation to buy or sell as it does not take into account your personal circumstances or objectives, and should therefore not be interpreted as financial, investment or other advice, or relied upon as such. You should therefore seek independent advice before making any investment decisions. This information has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. We aim to establish and maintain and operate effective organisational and administrative arrangements with a view to taking all reasonable steps to prevent conflicts of interest from constituting or giving rise to a material risk of damage to the interests of our clients. The market data is derived from independent sources believed to be reliable, however we make no representation or warranty of its accuracy or completeness, and accept no responsibility for any consequence of its use by recipients. Reproduction of this information, in whole or in part, is not permitted.


 

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