D-Day for the Euro, Great Expectations Over Mario Draghi
22 January 2015, 12:05
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Today is the day for the Euro. Mario Draghi’s monetary announcement is highly anticipated with most market participants expecting a 550 billion Euro bond buying program to be announced. Although, today there has been some speculation for an up to 1 trillion Euros QE program establishment. If the ECB decides to go that high then the EURUSD could go much lower than its current level at 1.1582. The EURUSD has been in sideways between top barrier at 1.1639 and floor at 1.1541 in the recent term as we can see at the chart. We expect ECB interest rate announcement at 12:45 GMT and then most importantly is the ECB Press conference at 13:30 GMT.
The US dollar against the Canadian jumped higher than its previous major cap at 1.2115 and went as high as 1.2390. The Bank of Canada unexpectedly lowered its key rate to 0.75% from 1% and that weighed on an already weak Canadian dollar, pushing it to more than 5 ½ year lows. Main reason for its rate cut was the falling Oil prices.
Elsewhere, the British pound following the better than expected employment data did not react at all. The GBPUSD remained in the consolidation trading style around 1.5136. Perhaps that was due to the two members who voted previously for a rate increase are now voting for steady rate policy. Nevertheless, the employment improvement passed like nothing happened and that suggests the GBPUSD is more US dollar dependent. We expect the US Jobless Claims would have an impact on the currency pair today at 13:30 GMT.
The Aussie and the Kiwi responded negatively yesterday to the decision of the Bank of Canada to reduce key rates because these three currencies are the commodity currencies. Investors would expect that the same policy could follow the RBA and RBNZ. The AUDUSD dropped from 0.8229 to 0.8058 and the NZDUSD declined from 0.7682 to 0.7516. The NZDUSD breached a previous key support at 0.7623 and confirmed its previous long term down trend and taking into account lower than expected inflation for December, should we see falling US Jobless Claims today this currency pair could go continue lower.
The US dollar against the Canadian jumped higher than its previous major cap at 1.2115 and went as high as 1.2390. The Bank of Canada unexpectedly lowered its key rate to 0.75% from 1% and that weighed on an already weak Canadian dollar, pushing it to more than 5 ½ year lows. Main reason for its rate cut was the falling Oil prices.
Elsewhere, the British pound following the better than expected employment data did not react at all. The GBPUSD remained in the consolidation trading style around 1.5136. Perhaps that was due to the two members who voted previously for a rate increase are now voting for steady rate policy. Nevertheless, the employment improvement passed like nothing happened and that suggests the GBPUSD is more US dollar dependent. We expect the US Jobless Claims would have an impact on the currency pair today at 13:30 GMT.
The Aussie and the Kiwi responded negatively yesterday to the decision of the Bank of Canada to reduce key rates because these three currencies are the commodity currencies. Investors would expect that the same policy could follow the RBA and RBNZ. The AUDUSD dropped from 0.8229 to 0.8058 and the NZDUSD declined from 0.7682 to 0.7516. The NZDUSD breached a previous key support at 0.7623 and confirmed its previous long term down trend and taking into account lower than expected inflation for December, should we see falling US Jobless Claims today this currency pair could go continue lower.
