Global indices moved lower once again on Wednesday as investors took risk back off the table. Global growth fears continue to linger hitting risk appetite. As the US 10-Year treasury yield inversion with the 3 month yield intensifies, investors are finding recession fears difficult to ignore.
One by one we are seeing central banks across the globe acknowledge the worsening economic outlook and move towards a more accommodative stance for monetary policy. This was highlighted today after the Reserve Bank of New Zealand stated that a rate cut was more likely than a rate rise and after Draghi doubled down on dovish rhetoric.
The ECB President added to growing concerns over the health of the eurozone economy, by reminding the markets that the risks were tilting to the downside. Draghi confirmed that the ECB were willing to delay any planned interest rate hikes if necessary, a move that mirrors that of the Fed a week earlier.
Following Draghi’s comments and better than forecast trade data from the US, the euro dipped to a 2-week low of $1.1242. Euro traders will now look ahead to German inflation data tomorrow. Inflation is expected to remain steady at 1.5% yoy in March and increase by 0.6% mom. Should this be the case it could help the euro pare some of today’s losses.
Brexit update
The pound has advanced across the early par of the day, closing in on the high from the previous session as support grew for Theresa May’s Brexit deal.
After pro-Brexit ERG leader Jacob- Rees Mogg made an abrupt U- turn, deciding to support the PM’s Brexit deal or risk no Brexit at all, other Eurosceptic ministers have followed suit. Theresa May is expected to give a date for stepping down as the price for getting her twice defeated deal through Parliament. The pound was unable to maintain its strength and is moving lower as we head towards tonight’s action in Parliament.
Prior to that Parliament will be voting on other alternatives to Brexit in an attempt to end the current impasse in Westminster. Ministers will vote on options such as keeping close ties with the EU or a second referendum. Minister have been instructed to vote for every option they support, in the hope of finding one that could hold a majority. Whilst the votes are not legally binding, Parliament could try to make it so in subsequent moves.
Disclaimer: The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient.
Any references to historical price movements or levels is informational based on our analysis and we do not represent or warrant that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, the author does not guarantee its accuracy or completeness, nor does the author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.