ECB Leaves Rates Unchanged After September Cut
The European Central Bank on Thursday left its key interest rates
unchanged at a record low, in line with economists' expectations, after
reducing them in a surprise move last month.
Council, led by President Mario Draghi, held the refinancing rate at a
record low 0.05 percent, following its policy meeting in Naples, Italy.
The bank today kept the deposit rate at -0.20 percent and the marginal lending rate was maintained at 0.30 percent.
three main interest rates were lowered by 10 basis points in September
as euro area inflation is set to slow in the coming months.
EUR/USD Technical Analysis: Euro May Be Ready to Recover (based on dailyfx article)
The Euro may be preparing to launch a recovery against the US Dollar
after prices put in a bullish Morning Star candlestick pattern. A daily
close above the 1.2659-73 area marked by the November 2012 low and the
38.2% Fibonacci expansion exposes the 1.2754-60 zone bracketed by the
July 2013 bottom and the 23.6% level. Alternatively, a reversal below
the 50% Fib at 1.2602 clears the way for a challenge of the 61.8%
expansion at 1.2532.
Trading the News: U.S. Non-Farm Payrolls (based on dailyfx article)
A pickup in U.S. Non-Farm Payrolls (NFP) may spur a further decline in
the EUR/USD as the Federal Reserve is widely expected to halt its
quantitative easing (QE) program at the October 29 policy meeting.
What’s Expected:Why Is This Event Important:
The deviation in the policy outlook certainly casts a long-term bearish
outlook for the EUR/USD, but a further slowdown in job growth may
generate a larger pullback in the dollar as it would allow the Federal
Open Market Committee (FOMC) to further delay the normalization cycle.
The ongoing decline in planned job-cuts along with the pickup in private
sector activity may spur a meaningful uptick in job growth, and a
positive print may spur another round of dollar strength as it boosts
interest rate expectations.However, the slowdown in building activity paired with the persistent
weakness in the housing market may drag on hiring, and another
disappointing employment report may trigger a near-term decline in the
greenback as it dampens bets of seeing the Fed normalize policy sooner
rather than later.
How To Trade This Event Risk
Bullish USD Trade: Job & Wage Growth Picks Up
MetaTrader Trading Platform Screenshots
EURUSD, M5, 2014.10.03
MetaQuotes Software Corp., MetaTrader 5, Demo
EURUSD M5 : 68 pips price movement by USD - Non-Farm Employment Change news event
USDJPY Fundamentals (based on dailyfx article)
The Japanese Yen fell to fresh post-financial crisis lows versus the
surging US Dollar, but a clear slowdown the USDJPY rally warns that it’s
near an end. When might we buy?
The difficulty in trading the USDJPY is clear: recent data shows that
the trade is extremely crowded, and a sharp correction is possible if
not likely. Yet the US Dollar continues to defy our expectations and is
plowing higher across the board. We’ll need to wait for signs of
concrete turnaround before getting short USDJPY.
An upcoming Bank of Japan Monetary Policy Meeting and Decision dominate
event risk for the Japanese Yen in the week ahead, while clear USD
outperformance keeps focus on a number of important US data releases.
See the full video for our take on what to expect, but in sum: we are
likely biding our time and keeping a very close eye on whether the
USDJPY breaks above ¥110.
NZDUSD Fundamentals (based on dailyfx article)
The medium-term outlook for the NZD/USD remains bearish as the Reserve
Bank of New Zealand (RBNZ) sticks to a neutral policy stance and
retains the verbal intervention on the New Zealand dollar, but the pair
may face a larger correction in the days ahead should the fresh back
of central bank rhetoric coming out of the Federal Reserve drag on
interest rate expectations.
The purchasing manager indices coming out of China during the first
full week of October may have a greater impact on the kiwi amid the
minor data prints in New Zealand, and a further slowdown in the world’s
second-largest economy may dampen the appeal of the higher-yielding
currency as it curbs the prospects for global growth. As a result,
market participants may continue to look towards the safety of the U.S.
dollar as the Federal Open Market Committee (FOMC) is widely expected
to halt its quantitative easing (QE) program later this month, but it
seems as though the central bank remains in no rush to move away from
the zero-interest rate policy (ZIRP) as price growth continues to lag.
Despite the bullish U.S. dollar reaction to the upbeat Non-Farm Payrolls (NFP) report,
we may see the group of Fed doves (Narayana Kocherlakota, William
Dudley, Charles Evans and Daniel Tarullo) talk down interest rate
expectations as weak wage growth continues to cast a subdued outlook for
inflation. The prepared remarks may undermine the bullish sentiment
surrounding the greenback should the central bank officials highlight
the ongoing slack in the real economy, while comments from central bank
hawks Richard Fisher and Charles Plosser may largely be ignored as it
seems as though the two will continue to be the lone dissenters in 2014.
The EUR/USD pair fell hard during the course of the week, slamming into
the 1.25 level. That level of course is a large, round, psychologically
significant number and therefore we would not be surprise at all to see a
little bit of a bounce from here. However, we believe that the 1.28
level above is massively resistive, and as a result we would be willing
to sell on some type of pullback at this point in time. We have no
interest in buying, as we believe that although this market is oversold,
it is far too risky to go long of the Euro right now.