The European Stocks And Euro Hold Gains Ahead of the European Refinancing Rate

The Main Refinancing Rate is the interest rate banks pay when they borrow money from the European Central Bank (ECB) for one week. This operation provides a bulk of liquidity to the banking system.

Short-term interest rates are paramount factor in currency valuation. This is highly correlated with the economic outlook because its changes can affect both inflation and recession.

since March 2016, the European Central Bank (ECB) interest rate was kept relatively low at 0.00% in response to the great recession hit that affected the European Union, the developed and emerging economies. Presently, the interest rate is still maintained low and it is expected to be sustained at that level till full recovery and the core ECB monetary policy goals are met. This monetary policy is enacted with the expectation of stimulating growth and other strong economic drivers. In response to that and other policy fundamental factors playing out, the EUR/USD monthly price pattern is seen swinging between the 1.03249 and 1.25552 multi-month price range.

According to a senior macro strategist at Rabobank, Bas Van Geffen, “the baseline forecast is for the ECB interest rate to remain on hold through 2021, and based on his assessment inflation is transitory and the expectations that they will continue to see it as such.

On the contrary, inflationary headwinds continue to build up to the upside at 3.4%, encouraging the hitting tapering debate within the ECB. Inflation rise is speculated to further grow 3.5% this quarter and then possibly drop low in mid-2022.

In a report filed by the Euro stat, the statistical office of the European Union, its unemployment rate has maintained an order of decline heading low to the 6.0% percentage point.

Currently, there is a gradual reduction in the quantitative easing program and a decline in the monthly emergency bond-buying as a first step towards ending the emergency aid that has integrated the economy during the Covid-19 pandemic hit.

Economic forecast revealed that the European economy will grow 1.1% in this fourth quarter(Q1) after the 2.0% growth in the third quarter(Q3).

The Public sentiment holds firm as the European stocks such as Adidas, Allianz, BMW etc. are holding firm in gains and they can be traded on the ACT brokers trading platform with the best spread trade execution and speed.

Regardless, traders should brace themselves up for a period of high volatility as the Main Refinancing Rate report often have a great impact on the FOREX market. An increase in the Main Refinancing Rate will usually strengthen the EUR (Euro), while its decrease will usually weaken the EUR (Euro).

Traders should always be aware that volatile markets provide great opportunities for making profits, as the increase in volatility can cause market swings for traders to capitalize on.

The currency pairs that include the EUR (Euro), the European stocks, and indexes are mostly affected by the data release. The pairs on the best forex brokers (ACT brokers) platform include: EURUSD, XAUEUR, XAGEUR, EURAUD, EURCAD, EURCHF, EURCZK, EURGBP, EURHUF, EURJPY, EURNOK, EURNZD, EURSEK, EURTRY, EURZAR, BMW, ADIDAS, Allianz, etc.

Time Schedule for the next Main Refinancing Rate Report:

Date: Thursday. October 28th, 2021.

Time: 12:45pm (GMT + 1).

Amogo Solomon is a Broker-Dealer/Market Research analyst and writer in ACT Brokers with a background in Computer Science, Data Analytics, and Forex Broker Dealing. He specializes in Forex Dealing, markets Analysis, Currency research, forex fundamental and technical analysis, and Monitoring of Forex trends, Stocks, Equities, Cryptos, and Commodities. He possesses strong technical and analytical skills and is well known for his entertaining and informative analysis of the global economy, fiat currency, commodities, Stocks, Indexes, Futures, and Options markets. He held a Bachelor's degree in Computer Science and Nanodegree in Programming for Data Science Enterprise.