Draghi sends the Euro lower. ECB to decide on monetary policy in March

Jan 21 2016, 1:46 pm

Today’s Economic Events

  • Australia consumer inflation expectations 3.60% vs. 4.0%
  • Australia HIA new home sales m/m -2.70% vs. -3.0% previously
  • Japan all industries activity m/m -1.0% vs. -0.70%
  • ECB Bid rate 0.05% vs. 0.05%
  • ECB Cash deposit rate -0.30% vs. -0.30%
  • ECB Press conference
  • US Philly Fed manufacturing index -3.5 vs. -5.8
  • US Weekly unemployment claims 293k vs. 279k

Coming Up

  • Eurozone consumer confidence
  • US Crude Oil inventories

The markets were trading mixed this morning in what seemed like a momentary pause to the risk aversion sentiment. The Asian equity markets closed lower however with the Japan Nikkei 225 closing -2.43% while the Shanghai composite was down -3.22%. The Japanese Yen made some early gains in today’s trading but soon eased back lower. USDJPY is currently trading at 117.3, up 0.37% for the day after posting an intraday low to 116.46. The commodity risk currencies are looking to recover the gains with AUDUSD up 0.25% for the day, trading at 0.69 after initially trading higher at 0.695 while the NZDUSD is up a modest 0.17% for the day at 0.644.

The European trading session opened on a quiet note with the markets looking forward to the ECB’s press conference and monetary policy meeting. The ECB decided to leave interest rates unchanged but in the press conference, Mario Draghi noted that the Central bank would make a decision on monetary policy at the meeting in March as we reported earlier.

The ECB noted that Eurozone growth remains to the downside on slowing emerging markets and that inflation outlook is also risked to the downside. EURUSD lost -0.83% for the day during the press conference, trading at 1.08 support. On the other hand, German DAX was stronger gaining 1.23% for the day while the London FTSE100 was also modestly higher at 0.99%.

The British Pound is seeing another day of losses, with GBPUSD down -0.57% for the day as the currency pair hit a low of 1.407.

In the NY trading session, data from the US today included the weekly jobless claims which rose more than expected to 293k above the estimates of 279k, marking a fourth straight week of increase in the weekly jobless claims. The US Philly Fed manufacturing index released today showed a decline of -3.5, less than the expected -5.8. The US Dollar Index was largely unchanged on the data as the Euro turned weaker on the ECB’s press conference, supporting the US Dollar. USDCAD remains weak, losing -0.55% for the day. The Canadian dollar gained yesterday after the Bank of Canada left interest rates unchanged against market expectations of a 25bps rate cut. USDCHF has gained 0.59% for the day on a weaker EURUSD, currently trading at 1.01

On the commodity front, Gold prices are currently retreating after hitting an intraday high to 1104. Gold is currently down -0.46% at the time of writing. Crude Oil prices are also weaker, down -2.0% for the day trading near $28.3 ahead of the US Crude Oil inventory report.

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John has over 8 years of experience specializing in the currency markets, tracking the macroeconomic and geopolitical developments shaping the financial markets. John applies a mix of fundamental and technical analysis and has a special interest in inter-market analysis and global politics.

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