Currency Market Analysis

Sep 12, 2019 | Currency Market Analysis

Global Themes

Euro hits two-year lows ahead of ECB

The euro neared two-year lows overnight as markets look ahead to tonight’s key meeting of the European Central Bank.

The ECB is expected to join over 30 central banks and loosen policy in 2019.

So far this year, we’ve seen the US, India, Brazil, Australia, New Zealand, Hong Kong, Thailand, the Philippines, Russia and many others all cut interest rates to boost activity.

Tonight, the ECB is expected to cut their main deposit rate by between 10 to 15 basis points from the current level at -0.40%.

The benchmark refinancing rate is expected to stay steady at 0.00%.

AUD higher

In other markets, the ongoing rally in global sharemarkets boosted more risk sentiment currencies while safe havens fell.

The Australian dollar climbed to six-week highs boosted by a more positive risk environment.

On the other hand, safe havens like the US dollar and Japanese yen fell.

ECB in focus

Tonight’s focus will be on the ECB.

After a large move lower in the euro in expectation of looser policy, the major risk is for any market disappointment to see the EUR reverse these recent losses.

Such a move could drive the euro higher.

The ECB decision is at 7.45pm.

Apart from the ECB, the US releases its monthly inflation reading is due at 10.30pm, while Friday night sees the release of US retail sales.

Get the daily currency market analysis in your Inbox

Published five days a week, this newsletter provides day-to-day trends and activities affecting the market in easy-to-understand snapshots.