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    Baxia Markets
    By
    June 10, 2021

    Euro In The Spotlight

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    Three big events are coming your way very soon. Stay alert and set your alarms. 

     

    11:45 AM (GMT) - Monetary Policy Statement 

    11:45 AM (GMT) - Main Refinancing Rate
    12:30 PM (GMT) - ECB Press Conference

     

    What are they? 

     

    The ECB (European Central Bank) has been taking care of the Euro monetary policy since 1999. The Main Refinancing Rate, also called the minimum bid rate, is the interest rate for banks when they borrow money from ECB; thus, the rate provides the bulk of liquidity to the banking system. 

     

    Also, we have a Monetary Policy Statement coming soon. As it is in the name, it is a speech given by the ECB about the coming policy changes. Therefore, the ECB Press Conference is not a thing that we can miss. The ECB President and Vice President will give speeches about the monetary policy changes, which will affect the EUR price directly. 



    Professional Insight

     

    The ECB policymaker Yannis Stournaras said that the "economy is still fragile" while adding that "there is no risk of a high inflation era." "See no reason to change pace of PEPP purchase program." "Too early to shift from PEPP to APP."

     

    Also, the president of the ECB said that "The recovery is uncertain." "The inflation rise this year is temporary." 

     

     

    What happens if…

     

    We see the Main Financing rate higher than expected with some hawkish statements coming? That's good news for EURUSD. A high Main Financing Rate means the ECB is looking forward to seeing bullish action in the currency. Hawkish means the ECB wants to focus on keeping inflation in check. If the inflation rate gets controlled, the currency value will rise versus other currencies. 

     

    What happens if...

     

    We see the Main Financing rate as equal to expected, 0, with some dovish statements coming together? The interest rate stays the same, which means the ECB will not change too much on market liquidity. The dovish policy supports low-interest rates and an expansionary monetary policy because the ECB thinks low unemployment will keep inflation low. Therefore, the currency value will go down versus other currencies.

     

     

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