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Forex Flash: Three scenarios on the ECB outlook in coming months - RBS

FXstreet.com (Barcelona) - According to RBS economics team, there are three scenarios for the ECB outlook for rates for the next few months: "A balanced cut in rates by September (A); a cut in the main refinancing rate with the deposit rate unchanged and a symmetrical corridor (B); and no change in rates based on an improving outlook (C)" the team notes.

"Of course, we could start finessing scenario A into different variants with smaller deposit rate cuts (5, 10 or 20 basis points) but at this stage that looks like over-egging the pudding. The upshot is that we think another cut in the main refinancing rate is likely by the end of September, but we are not yet sufficiently confident that the Council is ready to take the deposit rate sub-zero to make a deposit rate cut part of that most likely scenario" the team added.

Forex: EUR/USD holds above the 1.3050 and focuses on NFP to see the future

The EUR/USD collapsed on Thursday after ECB's movements on rate cuts and the 'open mind' about the negative deposit rates. Mario Draghi opened the door to further cuts and said the bank is 'technically ready' in case the eurozone conditions worsen. The EUR/USD recorded its first negative day in the last five sessions with 0.86% daily losses from opening price to the current 1.3065.
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Commodities Brief: Oil regains most of previous losses, closes day +3.37%

The choppy trading across commodities continued today, as “risk assets” were back in play after the ECB Monetary Policy meeting earlier in the day. Apparently market participants viewed the ECB rate cut and further dovish rhetoric from the ECB as bullish for risk assets, which sent both stocks and commodities higher. Oil led the way in commodities, finishing up 3.37% at 94.07. The commodity was able regain of its losses from the previous two days, but still needs to build value and close above 95 to really set the stage for a leg higher. The precious metals markets also managed to join in, with gold finishing up 0.61% at 1466, and silver ending up 0.97% at 23.79.
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