You will short the EUR ... and you will be happy - WEF
Updated
The ECB is (once again) on the wrong track:
It is stubbornly sticking to its hawkish view and justifying this with the fact that inflation in the euro area will remain stubbornly "sticky" and will probably not reach the target range of 2% until 2025.
The ECB is wrong (once again), as inflation will hover around 3% as early as December 2023 and reach the 2% target mark in the first half of 2024 at the latest (bullseye!).
The hawks of the ECB are thus adorning themselves with borrowed plumes and will soon (have to) reveal their dovish face.
However, since the strong negative disinflation effects will only take full effect from September onwards and core inflation will definitely remain stable in July and August, the ECB will not abandon its planned interest rate hike in July and the European Central Bank could (unfortunately) also be expected to implement a final rate hike in September.
However, these would not be necessary; on the contrary, they will weigh heavily on the already struggling eurozone economy and force the ECB to revise its GDP growth forecasts downwards soon.
-> Germany is a cautionary, recessionary example here!
-> All these points (stronger than expected falling inflation + ailing economy) will hurt the euro, which makes me see a promising short opportunity in the EURCAD.
I have given a detailed insight into the strength of the Canadian economy in my CADCHF trade idea.
Translated with DeepL.com/Translator (free version)
It is stubbornly sticking to its hawkish view and justifying this with the fact that inflation in the euro area will remain stubbornly "sticky" and will probably not reach the target range of 2% until 2025.
The ECB is wrong (once again), as inflation will hover around 3% as early as December 2023 and reach the 2% target mark in the first half of 2024 at the latest (bullseye!).
The hawks of the ECB are thus adorning themselves with borrowed plumes and will soon (have to) reveal their dovish face.
However, since the strong negative disinflation effects will only take full effect from September onwards and core inflation will definitely remain stable in July and August, the ECB will not abandon its planned interest rate hike in July and the European Central Bank could (unfortunately) also be expected to implement a final rate hike in September.
However, these would not be necessary; on the contrary, they will weigh heavily on the already struggling eurozone economy and force the ECB to revise its GDP growth forecasts downwards soon.
-> Germany is a cautionary, recessionary example here!
-> All these points (stronger than expected falling inflation + ailing economy) will hurt the euro, which makes me see a promising short opportunity in the EURCAD.
I have given a detailed insight into the strength of the Canadian economy in my CADCHF trade idea.
Translated with DeepL.com/Translator (free version)
Note
The EUR PMIs were horrible today, especially the manufacturing sector from Germany-> thats wonderful for my EURCAD Short Trade!
-> As I said the ECB is blind with its GDP and inflation forecasts for the Eurozone, they both will need to be dramatically corrected downwards in their next projections
Note
As forecasted the core inflation in the eurozone today was still sticky (5,5%) and will also be sticky and high next month.BUT: The headline inflation (5.3%) will begin to fall fast from september onwards and reach around 3% at the end of 2023.
2% target reach will be in sight from there on for the ECB in Q1 24.
Meanwhile growth numbers send alarming signals.
Time to wake up ECB!
-> My EurCad Trade runs further to target.
Note
Update:The PPI of the eurozone will decline more than the consensus expects
-> should help my trade!
Note
As forecasted the PPI of the eurozone fell stronger than the consensus expected.Yesterday also the PPI numbers out of Germany fell stronger than expected, so the good news keep coming for the ECB inflation target.
On the other side the higher than expected inflation numbers in Canada have risen the cance for a further BOC hike in september.
As of now the chances for it are 50/50.
Note
Update about some bad news in a weak EUR economy:The EUR PMIs were horrible yesterday
-> after the Manufacturing sector the service sector is now also in contracting terroritory
The German Factory orders today were horrible x10 (as I forecasted) and much weaker than the consensus expected them.
The EUR GDP AND the German Industrial Production tomorrow will also disappoint and will be weaker than consensus expects them.
(EUR GDP will come at 0.1 or 0.2 vs consensus expected 0.3)
If someone knows some good news from the eurozone I`m all ears but so far theres no sunshine when she (the economy) is gone.
Note
As announced, the EUR GDP data (0.1) and the industrial production from Germany were worse than expected by the consensus. -> And the euro continues its downward slide. Easy Peasy.
Note
The eurozone industrial production today was weak (as I forecasted) but tomorrow will be the big day: will the ECB hike the OCR and put the eurozone economy a step further to the abyss?The chances are 50/50 and it will be one interesting rate decision thats for sure!
Note
The German Inflation today will come lower (3.7 or 3.8) than the consensus forecasts (4.0)-> Great for my EUR Short
Note
Business as usual:The German Inflation data comes as I forecasted it at 3.8 -> lower than the consensus expected!
Note
The Eurozone inflation data today should be weaker than consensus (3.1) expects it.Note
The Eurozone inflation data comes as I forecasted weaker (2.9) than consensus expected it.Note
The scenario I predicted in July is playing out:-> Quote: "Inflation in the eurozone will already be around 3% towards the end of 2023."
And here we are, in November 23 with 2.9% inflation in the eurozone.
Where do we go from here?
Well, inflation will rise again slightly in December due to base effects.
Moreover, it will fall again from February onwards and will already be below the 3% mark again in Q1 24.
A scenario that even the most optimistic ECB members do not expect until August 24.
-> The ECB will cut interest rates far earlier than it currently realises.
(My base scenario for the first ECB rate cut is March / April 2024)
Note
📊🇪🇺Industrial Production Data out of the Eurozone will come weaker than the consensus expects it.-> Good for my EUR Shorts
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As forecasted the 📊🇪🇺Industrial Production Data out of the Eurozone comes weaker than the consensus expected it.-> easy :)
Note
Take profit reached +540 Pips✅️I think one can't complain ;)
Let's continue here, basically this is the same trade again, with the only change that this time +1000 pips is the profit target :)
Note
📊🇩🇪The German Inflation data will come weaker today than the consensus expects it.-> wonderful for my EUR Short!:)
Note
📊🇩🇪As forecasted the German Inflation data was much weaker (3.2) yesterday than the consensus (3.5) expected it.Easy game✅️
And my EUR Shorts just keep printing, I love it!😉
Note
📊🇪🇺The Eurozone CPI today will of course also come in weaker than the consensus expects it.-> Watch the magic! 😉
🔮As I already forecasted in July (!)
("In december we will have a CPI in the eurozone at around 3%")🔮
✅️And here we are, at the start of december, with a sub 3% reading today✅️
Note
📊🇪🇺As forecasted Inflation data from the EU came in lower than consensus expectations✅️🔮We are now as predicted in July
(Quote: "and reach the 2% target in the first half of 2020 at the latest.")
closer to the 2% target than the market and the ECB in particular dared to dream a few months ago 🤫
🏛🇪🇺The ECB meeting in December will be an extremely exciting circus event when all of the ECB's inflation and growth forecasts have to be revised downwards (as predicted🔮)
📉 My 🇪🇺 EURCAD 🇨🇦 trade is developing nicely and is currently in profit with +180 pips ✅️
Note
🟢The Trade is developing nicely🟢Up over 260 Pips so far✅️
More to come!
🏛🇪🇺The ECB decision next week will decide about the nearterm future of the EUR.
One thing is for sure:
They will have to cut their growth & inflation forecasts a lot
-> thats a negative for the EUR longterm📉
Note
The trade is up +400 Pips✅️ and I'm taking a partial profit here✅️
🟢further 400 Pips till the target🟢
🏛🇪🇺This week we have the ECB decision and a lot of other important data points, so
-> better safe than sorry!
Note
🟢My second EURCAD trade is also developing satisfactorily: the support at 1,456 seems to be holding (for now).As soon as this breaks, the next target would be the 1.44 mark.
From there it is not far to the take profit.
🏛🇪🇺 An analysis of last week's ECB interest rate decision will follow here in the coming days ✅
Note
📊🔮 The next focus will be on the EUR inflation data this week. It will show a rise in inflation and lift it back towards the 3% mark.-> This could put the ECB in the wrong boat, as this boost will only be temporary due to base effects and a one-off effect from the German energy price brake.
The February and March inflation data at the latest will clearly show the misconception of the ECB about higher inflation in the long term ✅️
Note
📊🇪🇺Also PPI Data out of the Eurozone will come weaker today than the consensus expects it.-> Great for my EUR Shorts!✅️
Note
📊🇪🇺As forecasted the PPI Data out of the Eurozone was weaker than the consensus expected it.-> easy✅️
📊🇪🇺The February CPI out of the Eurozone will be the most exciting EUR data since a long time, since it will determine when we will get the first ECB rate cut
-> My base case is still April✅️
Note
📊🇨🇦 CPI out of Canada was a tad more on the hotter side and therefore keeps the BOC from cutting rates (for now)🏛🇨🇦The market prices a first cut for the march meeting, which I see as too aggressive.
Every strong data point (Employment data early february for example) could price out more cuts out of the march meeting and so push the EURCAD further down🟢
Note
📊🇨🇦 CPI from Canada came in (slightly) higher than expected: as expected, the market immediately started pricing out the BOC's March rate cut again📊🇨🇦 With the labour market data from Canada this Friday, we get another glimpse of when the BOC's first rate cut will follow.
-> Meanwhile, the EURCAD is at the edge of support at 1.45 and is very likely to break it soon, which will be followed by another fall into the abyss (1.42 region)🟢.
Note
This week we have the📊🇪🇺PMI (Purchasing Managers' Index) from the eurozone and the
📊🇨🇦 CPI out of Canada -> two extremely important data points for the EURCAD.
Meanwhile, the pair is getting closer and closer to an extremely attractive short zone.
-> I will wait for this week's events to pass before possibly building another short in EURCAD🟢
Note
🔮My crystal ball tells me:📊🇪🇺The EUR Inflation data (CPI) will come weaker today than the consensus expects it.
-> wonderful for my EUR Short!🟢
Note
🔮 As predicted, the 📊🇪🇺EUR inflation data was lower than expected by consensus.-> The EUR subsequently saw weakness
-> EURCAD is (slowly) heading south again🟢
-> All conditions (for the ECB) to cut interest rates are met ✅️
🏛🇪🇺 Nevertheless, I expect the ECB (out of sheer stubbornness) to wait until June for the first rate cut.
-> If Lagarde hints at interest rate cuts for June AND July today, the beatings for the EUR will continue until morale improves💥💥💥
Note
📊🔮My crystal ball tells me:
EUR CPI (inflation data) today will be lower than consensus expected.
-> This is excellent for my EUR shorts🟢
🔮 As predicted a year ago, 📊🇪🇺EUR inflation will already hit the ECB's inflation target of 2% today (contrary to the ECB's completely abstruse forecasts)
🔮My forecast:🔮
The ECB will cut interest rates again in September✅️
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