ECB Increased Its PEPP, US And Canada Jobs In Spotlight

ECB Increased Its PEPP

Yesterday, the ECB delivered its monetary policy decision, which included more stimulus. As it was expected prior to the announcement, the Bank increased its pandemic emergency purchase programme (PEPP) by another 600 billion euros, which will be extended at least till June 2021. The initial expectation was for at least another 500 billion euros. The ECB hopes this could help support businesses and households, and ease the effects of the coronavirus, which had battered the eurozone’s economy. The central bank is also hoping to try and bring inflation higher, which is already very low. Currently, the annual YoY CPI sits at +0.1%. However, the Bank’s target is to have that number below, but close to +2.0%, which for now looks like a very difficult task to do.

EUR/GBP — Technical Analysis

In the beginning of this week, EUR/GBP managed to rebound from its short-term upside support line taken from the low of May 5 th. The pair drifted higher, but yesterday it found strong resistance near the 0.9006 hurdle. Today, the rate is still struggling to move above that barrier, which might cause EUR/GBP to correct slightly lower, before trying to move up again. For now, we will take a somewhat positive approach.

US Labour Market

The US released its initial jobless claims yesterday, where the figure had once again beaten the forecast in the negative way. The number had come out at 1877k, but the initial expectation was for a 1800k. In our yesterday’s daily report, we’ve mentioned that the US initial jobless claims have been following a tendency of beating the forecast in the negative way. Yesterday’s reading is so far proving that, unfortunately, that is the case. However, on the positive side, the numbers are declining slowly.

USD/CHF — Technical Outlook

Yesterday, USD/CHF finally broke below the lower side of its range, between the 0.9590 and 0.9800 levels, where it has been trading in from around the end of March. The pair drifted lower and found support near the 0.9544 hurdle, from which the rate rebounded this morning. However, at the time of writing, USD/CHF is moving lower again. For now, we will take a bearish approach, especially if the rate falls below yesterday’s low.

Canada Jobs Are In Focus As Well

The neighbouring Canada will show how it has managed to battle the pandemic and how many jobs it had lost during May. Although we currently do not have any forecasts for the employment change and the labour participation rate, the country’s unemployment number is believed to have risen from the previous 13.0% to 15.0%. If the jobless percentage rises above the current expectation, we could see CAD coming under some selling interest against some of its major counterparts.

As for the rest of today’s events

Canada will also release its Ivey PMI numbers, which have no forecast available at the time of writing. One thing we know for sure, is that for two months in a row, the readings are sat heavily below 50, in contraction territory. Even if the May numbers show up better than the previous ones, we doubt they will be able to climb back above 50. If so, that may continue to apply pressure on the Canadian economy and the BoC.

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