6 Feb 2014
EUR/USD: calm before the ECB
FXStreet (Córdoba) - The EUR/USD has entered in a consolidation phase as investors remain sidelined ahead of the European Central Bank policy decision, with disappointing German factory orders figures having no impact on the euro.
Germany factory orders fell 0.5% in December missing expectations of a 0.4% increase, but rose 6.0% over the year. The EUR/USD has barely moved during the last sessions, with the upside capped by the 1.3540 area and the downside contained by 1.3515. At time of writing, the EUR/USD is trading at the 1.3530 zone, virtually unchanged on the day.
ECB decision
"Today's ECB decision is looking a little more interesting than it was a week ago, after another downside surprise to inflation and the press reports about ending sterilization of SMP", said the TD Securities team. "We look for the refi and deposit rates to remain unchanged today, but concede that given the lack of denials from the Bundesbank or other ECB members, we have to believe that ending SMP sterilization is on the cards for today's meeting".
Meanwhile the Lee Hardman, FX Analyst at the Bank of Tokyo Mitsubishi UFJ commented: "It is a close call as to whether the ECB feels there is compelling evidence to ease policy again as soon as today. On the positive side the latest PMI surveys highlighted that economic recovery in the euro-zone has likely continued to strengthen posing upside risks to the ECB staff's GDP forecast for 2014. Should the ECB disappoint investor expectations for further ECB easing today, the euro is likely to stage only a modest rebound as further easing still appears likely soon."
Germany factory orders fell 0.5% in December missing expectations of a 0.4% increase, but rose 6.0% over the year. The EUR/USD has barely moved during the last sessions, with the upside capped by the 1.3540 area and the downside contained by 1.3515. At time of writing, the EUR/USD is trading at the 1.3530 zone, virtually unchanged on the day.
ECB decision
"Today's ECB decision is looking a little more interesting than it was a week ago, after another downside surprise to inflation and the press reports about ending sterilization of SMP", said the TD Securities team. "We look for the refi and deposit rates to remain unchanged today, but concede that given the lack of denials from the Bundesbank or other ECB members, we have to believe that ending SMP sterilization is on the cards for today's meeting".
Meanwhile the Lee Hardman, FX Analyst at the Bank of Tokyo Mitsubishi UFJ commented: "It is a close call as to whether the ECB feels there is compelling evidence to ease policy again as soon as today. On the positive side the latest PMI surveys highlighted that economic recovery in the euro-zone has likely continued to strengthen posing upside risks to the ECB staff's GDP forecast for 2014. Should the ECB disappoint investor expectations for further ECB easing today, the euro is likely to stage only a modest rebound as further easing still appears likely soon."