• Comey, ECB and UK General Election all due
  • GBPUSD opens at 2 week high and could pop higher still
  • Trump asked for loyalty but none came
  • ECB to focus on inflation, we think EUR could fall today

Euro fell yesterday on reports that the ECB would cut there inflation expectations over the coming three years and earlier today they did just that, bringing their forecasts on price rises lower through 2019. EURUSD has continued its recent weakness but the move feels more like consolidation than a determined drive lower for the pair.

During the press conference ECB President Draghi made it clear that growth was accelerating however this was not enough to adequately drive inflation onwards. Language around interest rates was modified with the central bank no longer cautioning that rates may decline from current levels. This does not mean they are heading higher of course; this was the economic equivalent of dipping a toe in the water. It will be many months before a whole foot is plunged into the territory wherein rate rises become practicable.

British voters are heading to polling places today with the election set up to confirm another win for the governing Conservative party. Whatever the result the focus will shift almost instantaneously to what now happens to Brexit and we would therefore suggest that any sterling strength from the vote may be short lived especially given the recent weakness in economic news.

Any result that hints that the Conservatives have blown a 20pt poll lead will send sterling sharply lower. We will get our first exit poll at 5pm Eastern.

As you are reading this Former FBI Director James Comey will be testifying to the Senate Intelligence Committee over his firing, President Trump and Russia. On the basis of his statement yesterday we feel there is little in here for the USD to be overly concerned about although these issues continue to limit the prospects for USD strength.

EURUSD: Euro is weaker overnight but looks unwilling to give up large gains.

GBPUSD: Sterling will remain quiet until the election results are clear late in the session.

AUDUSD: Aussie dollar has continued to pull higher following yesterday’s impress GDP announcement.

USDCAD: Canadian dollar looks vulnerable given another poor day for oil markets.

USDJPY: with all this risk around there is a decent bet we will see JPY keep itself on the front foot.