Forex: Ecb Rate Cut Guessing Games Begin Anew

INFLATION The euro gained 0.1 percent against the dollar at $1.3750 , after the closely watched German Ifo survey beat expectations on Monday. However, in a week lacking major economic data, all eyes will be on Friday's first estimate of euro zone February inflation. Recent months' numbers have seen price growth sliding below 1 percent, strengthening the case for more action by the European Central Bank to provoke growth. Many players who began the year believing more ECB easing and the U.S. Federal Reserve's reining in of its own stimulus would gave the dollar a lift are reconsidering. But few seem prepared to bet on a stronger euro ahead of the inflation number, forecast to inch down to 0.7 percent. Source:

The European Commission revised up its growth forecast for the euro zone to 1.2% this year, up from 1.1% in November. However, the EC also cut its inflation forecast for 2014 to 1% from 1.5% in November and warned that debt levels in several countries will continue to climb. Earlier Tuesday, official data confirmed that Germany's economy grew 0.4% in gold advice newsletters the fourth quarter and expanded 1.3% on a year-over-year basis as strong overseas demand bolstered exports. The common currency was also lower against the yen. Source:

For foreign exchange (forex) market watchers and investors, the fact that Draghi mentioned it certainly emphasizes the significance of the March 6 ECB meeting. Uttering what appear to be preparatory remarks on a subject of such importance will likely boost market speculation that euro policymakers will soon cut interest rates. With inflation growth remaining well below the ECBs target its inciting fears of deflation an issue that threatens consumer spending, wages, business profits and investment. In the March meeting, Draghi and company will release the ECBs 2016 inflation forecast which includes an unusual extended timeline for euro policymakers. Source:

By Ilya Spivak 8 hours ago 0 shares To receive Ilya's analysis directly via email, please SIGN UP HERE Talking Points: Support: 1.6593 (23.6% Fib ret.), 1.6452 (38.2% Fib ret.) Resistance: 1.6667-80 (Jan 24 high, 14.6% Fib ret.), 1.6822 (Feb 17 high) The British Pound is attempting to launch a recovery against the US Dollar. Prices are testing above support-turned-resistance in the 1.6667-80 area, defined by the January 24 high and the 14.6% Fibonacci retracement, with a close above this barrier targeting the February 17 highat 1.6822. Alternatively, a push through the 23.6% level at 1.6593 aims for the 38.2% Fib at 1.6452. Clear-cut confirmation of an upside reversal is incomplete at this point. On the other hand, a short position with prices trading above near-term resistance seems like a dangerous proposition. We will wait on the sidelines for greater clarity to emerge. Source:

Forex: GBP/USD Technical Analysis Ready to Turn Higher Anew?

The Australian dollar, meanwhile, was down after a fall in China's yuan currency, which reflected concern over growth and moves by the People's Bank of China (PBOC) to prod the currency lower. The Aussie is the nearest developed world currency to a proxy for growth in China, which takes much of Australia's commodities output. The Australian dollar was down 0.08 percent at US$0.9029 , although it was still some way above January's three-and-a-half-year low of $0.8660. Meanwhile, the Norwegian crown hit a fresh three-month high of 8.2665 crowns per euro, in largely subdued trading in major currencies. That extended Monday's gains after German drug firm Bayer's $2.9 billion deal to buy Norwegian cancer drug maker Algeta. Source: