Daily Analysis - 27/07/2018
The euro was sent back down below $1.17 after the ECB press conference on Thursday. The central bank’s President Mario Draghi offered nothing new for the markets during his press conference. The focus turns to US GDP data later today for the second quarter. The forecast is for a strong number of around 4.2 percent.
EURUSD fell over 70 pips and is trading in the lower $1.16 handle as the ECB offered no positive surprises on policy and also failed to respond on the Trump – Juncker meeting. The ECB signaled no change in its timetable to move away from ultra low rates or end its bond purchase program and so the interest rate differentials between the ECB and the Federal Reserve is weighing on the euro/dollar pair.
Sterling weakened on news that EU chief negotiator Michel Barnier is rejecting the UK’s latest White Paper proposal on customs, saying "The EU cannot and the EU will not delegate the application of its customs policy, of its rules, VAT and excise duty collections to a non-member who would not be subject to the EU’s governance structures.”
There are expressions of optimism from the Trump Administration regarding today’s Q2 GDP release. A strong number will be positive for the dollar. However, trade war fears could dampen sentiment. Focus will be on the exports component of GDP. USDJPY is currently testing the key 111 yen level. The Dow Jones closed up over 100 points on Thursday at 25,527.
