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Mid Week Update - ECB Interest Rate Decision Looms - 10 Sep 2020

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What's To Come?

It’s been a very quiet start to the trading week with end of summer holidays in the northern
hemisphere but this can also herald the start of increased volatility in the market as trading desks
get back to full capacity and traders look to make budget.

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ECB Meetings Loom

With the NFP data coming out close to expectation, the currency market will now focus on upcoming central bank meetings for any changes in the underlying fundamentals as well as the continuing threat of Covid 19 escalations across the globe. Stock markets did take a bit of a hit last week and investors will continue to monitor them very closely to see if we have put a top in for a period of time of if we resume the grind higher.

Key Macro Factors this week:

ECB Meeting: It’s not until Thursday, but there will be a strong focus on what the ECB does and the message it gives to the market after this month’s meeting. Currency traders will be looking for any mention of an elevated currency and expect some sharp corrections to the downside.

US Politics and Election: The race for the white house will continue to heat up over the next few months and investors will be filtering through the inter party abuse for direction on what either side will do economically if they win – expect the focus to sharpen as we approach November and volatility in markets increase with comments from either side.

Fed Meeting: Independent from political influence (??!!) the Fed will continue to negotiate the unprecedented market conditions that we find ourselves in and despite the next meeting not taking place until next week, the potential for negative rates from the worlds most influential central bank will continue to drive sentiment.

Brexit: It seemed to have disappeared from our screens for a few months as Covid 19 headlines dominated sentiment and flow, however as ‘the’ end date approaches and both sides face off across the Channel expect further volatility in markets with the Cable and EurGbp favourites to trade in these circumstances.

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