EURJPY is moving in an Ascending channel and the market has rebounded from the higher low area of the channel.
The ECB is all set to release the CPI data for the Euro zone and this data will directly impact the upcoming interest rate hikes in the region. Here are some factors to keep in mind:
Euro Zone Inflation
On Thursday, new statistics that came out of the euro zone revealed that it will take some time for inflation to considerably come down, which raised the possibility of more rate rises in the region in the coming months. Christine Lagarde, the president of the European Central Bank (ECB), stated on Thursday that lowering inflation will still require some time.
EURUSD is moving in an Ascending channel and the market has reached the higher high area of the channel.
The bank aims to achieve an overall interest rate of 2%. The organization with its headquarters in Frankfurt has signaled that there is a possibility of a further increase of 50 basis points in the interest rate at the conclusion of the central bank’s meeting later this month.
As of Thursday, Lagarde said that this course of action is still an option, despite the fact that inflation is substantially higher than the objective. An announcement was made earlier this week by analysts at Goldman Sachs that they were boosting their estimates for future rate hikes by the ECB and factoring in another increase of 50 basis points in May.
Germany Worker Ban
In the midst of Europe’s largest economy reeling from the effects of inflation, which hit 9.3 percent in February, employees in Germany’s transportation sector are organizing one of the greatest walkouts in decades. As a result of its hasty search for other energy supplies, Germany has been particularly severely impacted by rising costs. Before to the conflict in Ukraine, Germany relied significantly on Russia as a supply of gas.
EURCAD is moving in the Descending channel and the market has reached the lower high area of the channel.
In recent months, its rates of inflation have been higher than the average for the euro region. On Monday, a 24-hour strike that had been called for both the Verdi trade union and the EVG railway and transport union began, bringing Germany to a complete stop. This included airports, bus and train terminals across the country. As a result of airports canceling flights and train services, the terminals were mostly abandoned.
The cancellation of rail services was carried out by the railway operator Deutsche Bahn. The walkouts that took place on Monday are part of a larger trend of disruptive labor strikes that have been occurring in wealthier European nations in recent months, such as France and Britain. Violence on the streets of France has reached levels not seen for years as a result of demonstrations against pension reforms proposed by President Emmanuel Macron.
ECB Schnabel Speech
ECB Executive Board Member Isabel Schnabel recently gave a speech regarding interest rate control and how it is important for the economic stability of the region. She reveals, “The Bank of England currently offers reserves through short-term repo operations at the same rate that it pays to banks depositing reserves. Using the same rate for providing and remunerating reserves ensures that money market rates will trade closely to the policy rate at every level of excess reserves. While it is operationally simple and robust to large changes in reserves, it may in some market structures also be prone to a leaky floor when excess reserves expand measurably in response to asset purchases or long-term credit operations.”
EURAUD is moving in an Ascending channel and the market has rebounded from the higher low area of the channel.
“In the United Kingdom, this risk has been tackled in three ways: first, through non-penal pricing; second, by communicating clearly that this is a business-as-usual monetary policy operation; and third, through a clear statement from the Prudential Regulation Authority that it would judge usage of the facility to be routine participation in money markets. So, in the absence of an efficient interbank market, there must be alternative facilities for banks to source liquidity at short notice should they need it. The Bank of England offers a range of liquidity facilities which allow firms to access reliable supplies of liquidity at a predictable cost.”
“To conclude, my remarks today have highlighted that the decision which policy implementation framework the ECB should choose for the future involves many complex issues. Ultimately, our obligation to act in line with the principle of an open market economy implies that, in the steady state, the size of our balance sheet should only be as large as necessary to ensure sufficient liquidity provision and effectively steer short-term interest rates towards levels that are consistent with price stability over the medium term.”
Political Ads Ban
It has been claimed that Meta, the parent company of Facebook and Instagram, is contemplating instituting a blanket ban on political advertising throughout the corporation in Europe because to concerns that it may find it difficult to comply with new EU campaigning legislation. Policymakers in Brussels are proposing new regulations that, if implemented, would require online tech companies like Facebook and Google to disclose information about political advertisements.
This information would include the amount of money spent on the advertisements, who paid for the content, and the number of people who viewed the advertisements. Executives at Meta have expressed their unease over these suggestions, as they are concerned about the potential breadth of the definition of political advertisements as well as the difficulty of adhering to the laws if they are enacted.
EURCHF is moving in the Descending channel and the market has reached the lower high area of the channel.
As a result of the Cambridge Analytica controversy, Facebook in particular came under scrutiny after it was discovered that user data had been exploited by Russian agents that year to disrupt the election. These facts emerged as a result of the scandal surrounding Cambridge Analytica. The political firm that is no longer in business helped customers target political advertisements by using the data of tens of millions of Facebook users without first obtaining the users’ agreement.
Despite the fact that Meta’s leadership initially resisted pressure to factcheck political advertisements, the company has since decided to temporarily suspend campaign advertisements on its website in the lead-up to significant elections, including the election for the presidency of the United States in 2020. Since that political advertising is claimed to make up a very tiny fraction of the company’s income, the move to ban political advertisements in the EU would not necessarily have a substantial impact on the company’s finances in and of itself.
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