European major indices mostly higher. German Dax the exception

German DAX -0.4%

The major European indices are ending mostly higher. The exception is the German Dax which fell -0.4%.

The provisional closes are showing
  • German DAX, -0.4%
  • France’s CAC, +0.1%
  • UK’s FTSE 100, unchanged
  • Spain’s Ibex +0.7%
  • Italy’s FTSE MIB, +0.5%
Looking at the forex market as London/European traders head toward the close for the day shows, the GBP remains the strongest of the majors, while the USD is the weakest. The USD has moved lower in the early North American session.

Dollar holds more mixed so far on the session

Dollar a touch softer on the balance of things but in a mixed spot

The greenback is keeping a mild advance against commodity currencies, though gains have been chipped away with the dollar losing some slight ground against the likes of the euro, pound, and yen so far on the day.
Treasury yields are staying pressured on the session, with 10-year yields down a little over 4 bps to 1.243% currently. Of note, 10-year real yields in the US did touch a record low just below -1.127% so perhaps that is weighing slightly.
GBP/USD is up close to 0.3% to 1.3780, challenging last week’s highs and the 61.8 retracement level of the recent downswing @ 1.3781.
Meanwhile, EUR/USD is taking a look at 1.1800 but is still largely trapped within a narrow range for the time being just below the figure level:
EUR/USD H1 26-07


There is minor support closer to 1.1755 that is keeping downside in tact while the 200-hour moving average (blue line) and 1.1800 level are limiting gains for now.

ECB: Not ‘lower for longer’, apparently.

Reading between the lines

Going into the ECB meeting there were expectations that, after the ECB’s strategic review, the ECB would be revealing a more dovish hand. At the heart of those dovish expectations was the theory that the ECB would somehow morph the emergency PEPP purchase program (due to expire in 2022) into the standard €20 billion a month AP program. This was hinted at in the run up to the meeting by Christine Lagarde who said that the PEPP could ‘change’ into something else. However., the statement was not explicit. It was a case of trying to read between the lines.

Balancing act

Within the GC are fiscal conservatives like Germany and the more liberally minded Italians, so getting agreement was always going to be tough. This meeting really showed that there is still work to be done and ultimately the doves were disappointed. Rates were unchanged and so too were both the PEPP and the AP programs. So, here is what could be gleaned from the meeting.


Christine Lagarde said that they were at the ‘effective lower bound’. However, the statement explicitly says that,’the Governing Council expects key interest rates to remain at their present or lower levels…’

Dovish message?

Not so according to Christine Lagarde. The New ECB message is not that the ECB are ‘lower for longer’. Apparently PEPP was not discussed and neither was the link between APP and interest rates


Christine Lagarde noted some ‘marginal’ disagreement in this months meeting concerning the calibration of some aspects of the forward guidance. Germany’s Weidmann & Belgium’s Wunsch opposed the ECB’s new guidance according to Bloomberg as it signalled a commitment to lower rates for longer. In addition to these two members sources note that several more voiced objections due to the length of commitment and a lack of clarity.


The ECB will accept an overshoot of inflation which they expect to be temporarily higher. Remember, the know have a symmetric 2% target.

The bottom line

It was a dovish meeting. The EUR chopped around at the meeting and in the press conference, but in the end the EURUSD pair dropped lower as the message was, in its lack of hawkish tones, not a denial of the dovish expectations. Is the ECB really lower for longer? Probably, but incoming data will be important here.

Reading between the lines


ICYMI – the report last week that suggests Amazon is preparing to accept crypto

  • Amazon’s payments team is looking to hire a digital currency and blockchain expert
CNBC add that:
  • The posting signals that Amazon may be taking a more serious look at cryptocurrencies, such as bitcoin.
  • Amazon doesn’t accept any cryptocurrencies as payment for its products.
Amazon’s payments acceptance and experience team is seeking to hire an “experienced product leader to develop Amazon’s Digital Currency and Blockchain strategy and product roadmap.”
Amazon confirmed the job posting.
Here is the report.  Its attracting a renewed round of interest given the crypto surge earlier (i.e. narratives often follow price):
From Friday, CNBC had the report on an advertised job vacancy at Amazon:
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