Rolling back incentives on the way

By 13/09/2021News

Gold  1790,825

EURUSD   1,1792

DJIA  34625,50

OIL.WTI  69,875

DAX  15552

One of the main events at the end of last week was the ECB meeting where Christine Lagarde announced the start of a slow unwinding of the stimulus programme. It could be said that the ECB decided to prepare the markets a bit for the winter meeting, at which the central bank will already present a plan to wind down the programme.



We could say that the European Central Bank has now acted as a kind of shock absorber ahead of the key Fed meeting on 21-22 September. The fact is that all major banks in the world economy, be it the ECB or the Bank of Japan, are pursuing a coordinated monetary policy. This consists in redirecting liquidity in dollars, euros or yen from continent to continent by means of the institution of large commercial banks which are able to obtain funding. In this way they can keep the global economy afloat with liquidity.
Therefore, all current statements made by the banks are consistent with each other. With this in mind, we should assume that the Fed will not be making very loud statements at its meeting, but perhaps will make some initial statements. The unemployment report was disappointing. The Beige Book showed that the economy has started to slow down and the pace of recovery has fallen sharply. We can assume that the Fed will very cautiously announce a programme cut in December not in September and will not start a programme until 2022 at the earliest.
There are still plenty of uncertainties in the market which make it impossible to predict what central banks will do in the near future. In any case, they will be very restrained as it is very easy to set the markets on fire right now.
What does the current situation say for the Euro exchange rate. Most likely, the movement in the range will continue, as there are no serious drivers for a breakthrough in this range. Then, closer to winter, the pair EUR/USD might target the level of 1.16-1.15. One of the factors will be the cheapening oil, which will put pressure on all the commodity prices.

20.00 US Monthly Fiscal Status Report

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