FWIW - ECB will announce her policy on interest rates tomorrow. (6 am ET, presse release 6.45 am).
Participants are widely expecting a rate cut of 50bpts at least (current rate is 3.25).
I am a complete dummy when talking about interest rates.
Lowering interest rates theoretically should be bearish a currency. And tho, EUR rises.
Many US Dollars are deposited in European banks (aka Eurodollars) to profit from the interest yield.
A cut from the ECB would reduce that yield, sending some Dollars looking for another safe haven = more supply.
So, IMHO, against the thinking of other commentators, my take is that a huge cut in ECB rates would be bearish the US Dollar, hence bearish the equities market, hence bullish gold.
And vice versa. No cut, or a mere 25bpts would be bullish the Dollar and equities, bearish gold.
In Europe, only Germany (1/3rd of the commercial weight of the Union) is demanding a cut. Most of the other countries still need high interest rates. So, there is no certitude of a rate cut, as the ECB is very onservative. Altho some see a hint in yesterday's comment of the ECB president.
forbes.com
So, much will depend on the ECB meeting of tomorrow.
And we also can expect traders to go neutral at the close today.
I see some must hold levels on the equities indices:
SPX 915-920 to hold in order to resume a rally.
SPX 910-912 break opening a through towards 870.
NDX 1080-1100 for a rally 1200
NDX 1060 for a through.
With gold (metal) in the opposite direction.
Answer today, or the latest tomorrow before open.
JMVHO
BWHDIK |
