Last week, the ECB surprised the market by raising 0.25% interest to 4.50% but at the same time signaled this was likely to be its last. This week, it is the US FOMC Interest Rate Decision. Will they surprise the market too?
Last week, the ECB surprised the market by raising a 0.25% interest rate. EURUSD at first was spiking up but then as they signaled that likely to be the last one, EURUSD quickly dropped after that.
15 minutes later, the US announced quite a number of economic data. EURUSD dropped a lot further after that announcement. There are quite a number of surprises but we believe Producer Price Index(PPI) MoM and Retail Sales MoM should be the culprit. As stated previously, PPI is the leading indicator of inflation. The consensus was 0.4% but it came out as 0.7%. This signals that inflation might rebound. Retail sales’s consensus is 0.2% and it came out as 0.6%, which signals the US economy is still very hot.
You can see there are almost 1000 points swings during the ECB interest rate and US data announcement.
This week, we have a few key announcements from the US and Europe as follows.
- 19 Sep (Tue) – Europe CPI
- 21 Sep (Thu) – US FOMC Interest Rate Decision
As the ECB surprised the market last week, they should have early access to the CPI data before the interest rate decision. Hence, this week Europe CPI has a high chance of surprising the market too. The consensus for YoY is 5.3% and the last actual is 5.3% too.
For the FOMC Interest rate, the consensus is no change on the interest rate and to keep it at 5.5%. We will see whether there is a surprise this week.
Recommendation
With this outlook, to be on the safe side, we strongly recommend all Ophiuchus and Limitless EA users to schedule to stop trading for this period starting from 18 Sep till 22 Sep. You can use the stop trading period feature in the EA to do that. You can also decide to start the stop trading for a longer period to wait for the dust to settle. (e.g., stop trading from 18 Sep and only start trading after the weekend) if you would like.
Disclaimer – Please note that Limitless Trading is not liable for our recommendation and is not responsible for any loss or profit caused by this recommendation. You should assess your personal circumstances and perform your own research to make decisions for your trading.