Global macro overview for 18/08/2017:
The release of European Central Bank Meeting Minutes has raised some concerns. According to the statement, the were concerns over possible market overshooting, especially in the currency markets. Moreover, there were other concerns regarding favorable financing conditions, which could not be taken for granted and relied to a great extent on policy.
The tone of the minutes suggests that the ECB will indeed be cautious about the way it will communicate any future policy moves, with the dovish form of QE tapering being the most likely option. Buying assets remain the main tool for controlling monetary policy as the ECB needs more space to adjust its monetary policy. The probability of an end of the quantitative easing that might be announced at the Economic Symposium in Jackson Hole next week is really very limited. Basically, the ECB's policy makers are very cautious regarding a possible future policy tightening, although we may expect the QE to be relatively short-lived (unless central bankers try to make some changes to the structure of the program, theoretically, Mario Draghi still does not rule out its extension). The debate at the last meeting, however, raised the point that the Eurozone economy is going to get better and better all the time. Of course, as is usually the case in such debates, it has been emphasized that it is impossible to fully conclude the present conditions because they may be temporary, but they were acknowledged to be good and becoming more self-sustaining.
Let's now take a look at the EUR/CHF technical picture at the H4 time frame. The market had bounced four times from the 38%Fibo support at the level of 1.1268 already, but no new high or low was made, so it looks like the market is consolidating gains in a somewhat wide range between the levels of 1.1260 - 1.1537. Further gains are anticipated as the market conditions are starting to look oversold and the momentum indicator starts to point to the upside.
