After a weak run in the earlier trading session, the euro quickly got back on its feet when a report suggested that ECB members support a hike before December 2019.
Price action for the rest of the majors was subdued as U.S. traders stepped away from their desks to enjoy the Fourth of July festivities.
- U.S. markets closed for the Fourth of July holiday
- U.S. President ups the pressure on OPEC to push oil prices down
- Report: Some ECB members think Dec 2019 hike would be too late
- Sources suggest ECB hike might happen in Sept or Oct next year
ECB to hike before end of 2019?
So much for Draghi trying to keep markets guessing on when the ECB might tighten! Sources close to the ECB revealed that some policymakers are uneasy that markets aren’t pricing in a hike before December 2019, according to a report on Bloomberg.
Of course they also clarified that any tightening decision would still hinge on the central bank’s economic outlook then. Still, they suggested that a move in September or October next year is possible.
Recall that the latest ECB decision and presser saw head honcho Draghi downplaying these hawkish hopes in citing that rates could stay unchanged through the summer of 2019.
Oil up on U.S.-Iran conflict
While most Americans were busy celebrating life, liberty, and the pursuit of happiness, U.S. President Trump just couldn’t keep his hands away from Twitter as he posted:
The OPEC Monopoly must remember that gas prices are up & they are doing little to help. If anything, they are driving prices higher as the United States defends many of their members for very little $’s. This must be a two way street. REDUCE PRICING NOW!
— Donald J. Trump (@realDonaldTrump) July 4, 2018
Keep in mind that the Donald is also under pressure to keep the oil situation under control before the mid-congressional elections this November since surging energy prices could undo some of the effects of the administration’s tax reform by then.
Trump has also urged European allies to stop buying Iranian oil, but their own spat when it comes to auto imports turned their trade relationship status to “It’s complicated.”
Meanwhile, Iranian President Hassan Rouhani warned that it could reduce cooperation with the UN nuclear watchdog as a consequence of fresh U.S. sanctions on the country.
A commander from the Iranian Revolutionary Guards declared that they are ready to prevent regional crude exports if the U.S. bans sales of Iranian oil.
Major Market Mover(s):
The shared currency managed to make its way out of the bottom of the forex heap during the London session to end in the green this time.
Apart from increased speculations of an earlier ECB hike, signs that the U.S. is willing to compromise on EU auto imports also lifted the euro.
EUR/USD recovered from 1.1641 to a high of 1.1676, EUR/JPY bounced off 128.54 to a high of 128.96, EUR/GBP popped up to a high of .8827, EUR/AUD is up to the 1.5800 handle, and EUR/NZD rallied to 1.7270.
Watch Out For:
- No major reports due in today’s Asian session