Trading Plan – Monday 18th July 2022: ECB to show how hawkish they really are

Mark NugentJuly 2022, Trading Plan

Trading Plan – Monday 18th July 2022: ECB to show how hawkish they really are

Good afternoon.

Last week saw four-decade high inflation in the US. The European Commission gave us new projections saying that the rebound from the pandemic will be weaker than anticipated while inflation will be faster because of Russia’s war in Ukraine.

Risk sentiment was largely risk-off, with a bit of relief on Friday. Equities were slightly down on the week as was the US 10-year yield. Currencies played in line with my biases: the USD was up, and both the EUR and GBP fell. That does not mean trading was easy. I took GBPUSD short on Monday. It went nowhere and I managed to get out at breakeven.

This week is all about central banks. We have rates and statements from the European Central Bank (ECB), the Bank of Japan and the People’s Bank of China. The ECB on Thursday will be the highlight. Their Damascene conversion to hawkishness will be tested. Markets expect a 25 basis-point rise. There’s a significant chance the bank will raise the rate by more.

We also have UK and Canadian CPI on Wednesday.

As always, I go through my trading themes for the week in the video.

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