ECB Cuts deposit rates to -0.30%. Expands QE timeline from September’16 to March’17
- Australia AIG services index 48.2 vs. 48.9 previously
- Australia HIA new home sales m/m -3.0% vs. -4.0% previously
- Australia Trade balance -3.31bn vs. -2.61bn
- China services PMI 51.2 vs. 53.1
- Spain services PMI 56.7 vs. 56.2
- Italy services PMI 53.4 53.9
- France services PMI 51.0 vs. 51.3
- German services PMI 55.6 vs. 55.6
- Eurozone services PMI 54.2 vs. 54.6
- UK services PMI 55.9 vs. 55.1
- Eurozone retail sales m/m -0.1% vs. 0.2%
- US Challenger job cuts y/y -13.9% vs. -1.3% previously
- ECB minimum bid rate 0.05% vs. 0.05%
- US weekly unemployment claims 269k vs. 269k
Later
- US Services PMI
- Fed Chair Yellen Speech
- ISM non-manufacturing PMI
- US factory orders
The Asian trading session opened today with most of the currencies trading weaker against the Greenback after Janet Yellen’s comments yesterday on the Fed’s rate hike plans. AUDUSD fell to a session low at 0.7288 before reversing the losses and posting a new high above 0.734. Data from Australia this morning included the services index which was soft at 48.2 while new home sales fell -3.0%. The Kiwi was also trading weaker, but remains up 0.17%. NZDUSD remains range bound within yesterday’s high and low.
The Yen remains flat today at the time of writing with the USDJPY testing intraday highs above 123.5 coming off yesterday’s high above 123.6. The Yen firmed up closer to the ECB’s meeting trading below the day’s open.
The European session was marked with various services PMI numbers, which were mixed. However, the Euro was more focused on the ECB’s rate decision with most of the data being overshadowed. The Euro initially posted steady declines touching down below 1.0529 before spiking nearly 1.0% into the ECB’s rate statement. While keeping the minimum bid rate unchanged at 0.05%, the ECB cut the deposit rate steeper into negative territory to -0.30% while noting that further policy measures would be announced at the press conference. EURUSD’s spike tested intraday highs to 1.0738 before easing back lower.
On QE plans, ECB’s Draghi announced that the QE will be extended into March 2017, from the current September 2016. He did not announce any further expansion to the QE. EURUSD continued to spike higher trading near 1.079
The British Pound is up 0.20% for the day posting an intraday high above 1.499. The spike came about on the ECB’s decision. The cable remains subdued despite today’s services PMI posting strong gains, rising to 55.9 beating estimates of 55.1. GBPUSD tested the intraday lows below 1.4921 but prices were rejected at this level, similar to yesterday’s low.
In the US trading session, the weekly initial claims came in as expected at 269k without any surprises. The US Dollar remained weak on a stronger Euro, but further volatility is expected as Fed Chair, Janet Yellen is expected to testify in Washington. Besides Ms. Yellen’s speech other US data for today includes the non-manufacturing PMI and factory orders.
