The ECB's decision did not translate into increased volatility on the financial markets and the EUR/USD exchange rate remained relatively stable despite the Eurozone raising its economic growth forecast.
The European Central Bank left interest rates at record lows, but announced that it would begin a moderately lower pace of net asset purchases under the PEPP for the rest of the year due to improving economic and financial conditions. The central bank reiterated that the PEPP pool will be maintained at 1.85 trillion euros until at least the end of March 2022, and in any case until it considers the coronavirus phase of the crisis to be over. Policymakers gave no details on the timing or pace of the tapering, saying the bank would buy flexibly depending on market conditions and to avoid tightening policy too quickly. The ECB also raised its growth and inflation forecasts for the year. Inflation is expected to be 2.2 percent in 2021. (vs. 1.9% estimated in June), 1.7% in 2022. (vs. 1.5%) and 1.5% in 2023. (vs. 1.4%). In terms of GDP growth, the eurozone economy is expected to expand at a rate of 5% in 2021. (vs. 4.6%), 4.6% in 2022. (vs. 4.7%) and 2.1% in 2023. (vs. 2.1%).
Thus, as can be seen from the above data and the ECB's projections, the best for the economy will come in 2021 and then a phase of slowing GDP growth will begin as inflation is expected to move away from the central bank's target again. This in turn may mean that the ECB will still need to stimulate the economy and that interest rates in the Eurozone will not need to be raised. Hence, it could be assumed that the process of the so-called flip-flopping of the Eurozone is progressing.
Meanwhile, in the U.S., stock indexes are trying to make up some of the losses of the past few days, and futures seemed to rise slightly on Friday as fears of a slowing economic recovery eased after the weekly number of unemployment claims fell to a near 18-month low. Meanwhile, data released earlier in the week showed that U.S. job vacancies rose to a new high of 10.934 million in July. As for the pandemic, President Joe Biden outlined a broad plan Thursday to increase COVID-19 vaccinations in the U.S., pushing private employers to immunize their workers as well as mandating vaccinations for federal employees, contractors and health care workers. The appetite for risk was also expected to be boosted by successful talks that were held between the presidents of the U.S. and China.
Daniel Kostecki, chief analyst at Conotoxia Ltd. (Forex service of Cinkciarz.pl)
The above trading publication does not constitute an investment recommendation or information recommending or suggesting an investment strategy within the meaning of Regulation (EU) No 596/2014 of 16 April 2014. It has been prepared for information purposes and should not form the basis for investment decisions. Neither the author of the study nor Conotoxia Ltd. shall be held liable for investment decisions made on the basis of the information contained in this publication. Copying or reproduction of this publication without written consent of Conotoxia Ltd. is prohibited.
CFDs are complex instruments and carry a high risk of rapid cash loss due to leverage. 77.31% of retail investors' accounts record cash losses as a result of trading CFDs with this CFD provider. Consider whether you understand how CFDs work and whether you can afford the high risk of losing money.
Trade this news from Conotoxia Ltd. platforms
Go to your account
