{"id":155263,"date":"2019-09-12T07:30:03","date_gmt":"2019-09-12T11:30:03","guid":{"rendered":"https:\/\/www.countingpips.com\/?p=155263"},"modified":"2019-09-12T07:16:20","modified_gmt":"2019-09-12T11:16:20","slug":"risk-on-returns-as-investors-await-ecb-rate-decision","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2019\/09\/risk-on-returns-as-investors-await-ecb-rate-decision\/","title":{"rendered":"Risk-on returns as investors await ECB rate decision"},"content":{"rendered":"<div id=\"inves-1995275888\" class=\"inves-below-title-posts inves-entity-placement\"><div id =\"posts_date_custom\"><div align=\"left\">September 12, 2019<\/div><hr style=\"border: none; border-bottom: 3px solid black;\">\r\n<\/div><\/div><p><strong>By Hussein Sayed, Chief Market Strategist (Gulf &amp; MENA), <\/strong><a href=\"http:\/\/countingpips.com\/contributors\/contributor-profile-forextime\/\"><strong>ForexTime<\/strong><\/a><\/p>\n<div class=\"article-body\">\n<div class=\"field-body\">\n<div class=\"field-items\">\n<div class=\"field-item even\">\n<ul>\n<li><em>Stocks higher as US and China provide concessions<\/em><\/li>\n<li><em>ECB to ease policy but may not meet dovish expectations<\/em><\/li>\n<li><em>US inflation to determine the Fed\u2019s interest rate trajectory<\/em><\/li>\n<\/ul>\n<p>Stocks monitors were flashing green lights with China\u2019s Renminbi strengthening on Thursday morning after US President Donald Trump announced a delay in tariffs on Chinese goods by two weeks. Trump\u2019s postponement of the 5% extra tariffs came after China exempted some US goods from the 25% tariffs it imposed last year.<\/p>\n<p>These small concessions, while symbolic, have been welcomed by investors and seen as a positive sign ahead of next month\u2019s talks. However, it\u2019s still too early to go all-in as the end result remains unpredictable given the complexity of the trade war. The rally in risk assets may begin to fade in the coming days as investors require concrete solutions, which are unlikely to come anytime soon given the structural differences between the two sides.<\/p>\n<p>Toady\u2019s European Central Bank interest rate decision is the key risk event of the week. The anticipation of an interest rate cut and new stimulus package has been very high in recent weeks given the deterioration of economic data in the Eurozone. Almost all economic data have weakened since the central bank\u2019s last meeting on July 25, and the risk of a recession hitting Germany, the Eurozone\u2019s largest economy, has been on the rise after GDP contracted in the second quarter.<\/p>\n<p>While the ECB has proved to have no limits by how much it can lower rates, it faces many technical challenges. Negative interest rates have been hurting the banking sector for many years, as flat and inverted yield curves hit the profits of these banks. However, the ongoing trade war has hurt manufacturers across the Eurozone and the only tool to offset it is by weakening the Euro. Of course, President Trump won\u2019t like to see the Dollar appreciating further from current levels, and he may push the Treasury Department to intervene in the currency. There\u2019s also strong opposition from hawks in Germany and other Eurozone countries about restarting a new QE program. Given all these factors there\u2019s a high chance for the ECB to disappoint today and send the Euro higher.<\/p>\n<p>On the data front, investors will be watching the US CPI closely. Core inflation is anticipated to accelerate to 2.3% y-o-y in August from 2.2% in the previous month. Any upside surprise in prices may make the Fed\u2019s job more complicated. While a 25-basis point rate cut looks like a done deal at next week\u2019s FOMC, the trajectory of further cuts will be impacted if inflation continues to top forecasts.<\/p>\n<\/div>\n<\/div>\n<\/div>\n<p><em><strong>Disclaimer: <\/strong>The content in this article comprises personal opinions and should not be construed as containing personal and\/or other investment advice and\/or an offer of and\/or solicitation for any transactions in financial instruments and\/or a guarantee and\/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.<\/em><\/p>\n<\/div>\n<hr \/>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-54242 alignleft\" src=\"https:\/\/www.countingpips.com\/articles-analysis\/wp-content\/uploads\/2014\/07\/Forex-Time-Logo.png\" alt=\"Forex-Time-Logo\" width=\"262\" height=\"90\" \/><strong>Article by <span style=\"text-decoration: underline;\"><a href=\"https:\/\/www.countingpips.com\/contributors\/contributor-profile-forextime\/\">ForexTime<\/a><\/span><\/strong><\/p>\n<p><strong>ForexTime Ltd (FXTM)<\/strong> is an award winning international online forex broker regulated by CySEC 185\/12 <a href=\"http:\/\/www.forextime.com\" target=\"_blank\" rel=\"noopener noreferrer\">www.forextime.com<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>By Hussein Sayed, Chief Market Strategist (Gulf &amp; MENA), ForexTime Stocks higher as US and China provide concessions ECB to ease policy but may not meet dovish expectations US inflation to determine the Fed\u2019s interest rate trajectory Stocks monitors were flashing green lights with China\u2019s Renminbi strengthening on Thursday morning after US President Donald Trump [&hellip;]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-155263","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/155263","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/comments?post=155263"}],"version-history":[{"count":2,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/155263\/revisions"}],"predecessor-version":[{"id":155274,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/155263\/revisions\/155274"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=155263"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=155263"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=155263"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}