Thursday, February 6, 2014
Today's US trading session was fueled primarily by Euro strength, after the ECB had announced no change to their monetary policy and no cut in their 0.25% refi rate. The EUR/USD rallied 137 pips from the session low at 1.3482 to today's current high of 1.3619, where it found resistance.
Many investors were disappointed in the ECB's lack of response to the current weakness seen in some of the Eurozone Core data, as well as January's low inflation of 0.7%, which is far below the ECB's 2% target. While ECB president, Mario Draghi, admits that inflation is low in the region, he doesn't see any future signs of deflation for the Eurozone economy as a whole, anytime soon.
Mario Draghi's Statement at Press Conference:
- Underlying Eurozone Price Pressures to Remain Weak.
- Monetary Policy Stance to Be Accomodative as Long as Needed.
- Expect key ECB interest Rates to remain at present or lower levels for extended period.
- Monitoring Money Markets Closely, Ready to consider all tools.
- Will take decisive action if required.
- Risks to economic outlook remain on the downside.
- Unemployment stabilizing, but remains high.
- Underlying Price Pressures Should Remain Subdued Over Mid-Term.
- Inflation Expectations in Euro Area Remain Firmly Anchored.
The AUD/USD was the biggest winner for the 2nd time this week. The Australian Trade Balance reported their first surplus since July at $0.47 billion. Their Retail Sales also posted gains at 0.5% m/m. For this week alone, the Aussie has jumped over 200 points against the US dollar.
Tuesday, February 4, 2014
During today's trading session, the EUR/USD held to a tight range as investors chose to sit on the sidelines ahead of important risk events this week. We have two central bank meetings on Thursday, with the BOE & ECB releasing their policy statements, as well as the US Non-Farm Payroll report scheduled to be released on Friday.
The single currency remained confined to a narrow range of 46 pips with resistance at 1.3539 and support at 1.3493, as an indication of market uncertainty on both sides of the pond. Although markets are still concerned about the weakness in Emerging Markets, there are deflationary fears in the Eurozone, and concerns that some of the soft US data could encourage the FED to scale back on the amount they're tapering each month.
UK PMI construction rose to 64.6 in January versus an expectation of 61.6, which was a six year high and provided some support for the Sterling (GBP/USD).
The Aussie was the biggest winner today, as the RBA ruled out a rate cut in today's statement, which surprised the market and sent the AUD/USD to a 2 month high.
In today's V.I.P. webinar, we briefly discussed the current price behavior in the EUR/USD pair and the fundamental news & events pushing market prices. We also searched for opportunities to place a few live trades using the Slumdog Forex trading system.