Attention is likely to focus on the movement of European currencies ahead of the policy rate announcement

Attention is likely to focus on the movements of European currencies ahead of the policy rate announcement

02.02.2022

Yesterday, the three major U.S. stock indices all rose for the third consecutive day, resulting in a market environment characterized by rising stock prices, rising interest rates, and a flat gold market. Amid concerns over the situation in Ukraine and monetary tightening (QT), strong earnings reports from major U.S. companies were well-received, driving stock prices higher toward the close. The Russell 2000, which comprises small- and mid-cap stocks, also closed at 2,050, up 1.10% from the previous day.

Ahead of tomorrow’s policy rate announcement, trading in the foreign exchange market has slowed, with GBP/JPY trading within a range of 154.09 to 155.22. From a technical perspective, GBP/JPY appears to be finding support at the 200-day SMA on the 4-hour chart; however, since the price is currently just above the 20-day MA on the daily chart, the key focus will be on whether the price can break decisively above the 20-day MA with a solid candlestick body.

Today’s economic indicators include France’s budget balance at 16:45, the Eurozone’s consumer price index (flash estimate) at 19:00, the U.S. MBA mortgage applications index at 21:00, the U.S. ADP National Employment Report at 22:15, Canada’s housing starts at 22:30,at 12:00 AM, remarks by BOC Deputy Governor Gravel; at 12:30 AM, U.S. weekly crude oil inventories; and at 5:00 AM, remarks by BOC Governor Maclean. With the ECB and BOE policy rate announcements scheduled for tomorrow, we will carefully monitor how European currencies react.