Daily summary: Dovish ECB supports European indices

  • Dovish comments from European Central Bank
  • US jobless claims rise unexpectedly
  • Crude oil prices continue to move higher

Investors' attention was focused today mainly on the decision of the European Central Bank, which, after all, did not cause much surprise. The bank indicated that interest rates would remain low until a visible improvement was achieved. Moreover, the dependence of the interest rate hike on the current inflation target suggests that the ECB will keep rates at an extremely low level for a long time to come. In theory, this type of dovish tone should be positive for European stock markets.

Other important data came from the US and concerned applications for unemployment benefits - the reading was weaker than expected as the number of new applications unexpectedly rose above 400k (worst since May). Meanwhile, other reports suggested that Fed members may start planning a reduction in the QE program at the next meeting - this is certainly interesting news, showing that the upcoming FOMC meeting may be groundbreaking in a sense.

The European stock exchanges ended the day mostly higher. The German DAX rose by 0.60% and closed the day above 15,500 points. On the other hand, the FTSE 100 was the weakest among major European benchmarks and fell by 0.43%. The tech Nasdaq is currently the best performer across the ocean, gaining around 0.50%. However, the small company index is losing more than 1%, showing the weakness of cyclical companies today and the strong position of the technology sector.

The rebound continues on the crude oil market, and the situation on the copper market is similar. The upward movement on the coffee market is also noteworthy - prices are rising strongly due to the weather turmoil that negatively affects the supply. The euro initially appreciated against the dollar after the ECB decision, but in the evening the EURUSD pair lost 0.25%.

USDIDX has been trading in an upward trend recently and reached its highest level since the beginning of April this week. Yesterday the index pulled back slightly, however buyers managed to halt declines. Today USDIDX bounced off the lower limit of wedge formation which coincides with the lower limit of the 1:1 structure and 50 SMA (green line). As long as the price sits above it, continuation of an upward move is possible. However if the price breaks below the support zone around 92.48, larger downward move may follow. Source: xStataion5

BREAKING: USD sees little reaction to personal spending and inflation data
Chart of the day - USDCHF (30.07.2021)
BREAKING: Markets unmoved by weak German GDP reading
Economic calendar: German GDP report, US PCE inflation
Morning wrap (30.07.2021)
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