Tomorrow we will have the ECB Meeting which will deliver its speech on their interest rate decision. has already peaked in Europe and to curb this rate, the ECB might have recourse to tapering on the European side.
• Reducing aggregate demand in the economy – people will spend less because they have to pay higher interest interest on loans.
• Increasing the cost of financing for companies.
• Strengthening domestic currency as a result of higher interest rates – this may mean that exporters are forced to cut their prices and imports will be cheaper. A hawkish ECB will boost the EURO and the USD might fall which in turn will be favourable to gold to attain its resistance levels at $ 1,823.6, $ 1,836.20 and $ 1,850.
On the american side, U.S. Treasury Secretary Janet Yellen on Wednesday again urged Congress to tackle the nation’s debt ceiling, saying it was unclear how long Treasury’s efforts to temporarily finance the U.S. government would last and citing ongoing economic worries over the pandemic.