Euro smacked lower after ECB announce surprise series of policy measures

United States Dollar:

GBP/USD has broken down through resistance at 1.64 over the last 24 hours. The Scottish Independence vote is weighing on the pound, but there are other factors at play. It was dragged lower by the big sell-off in EUR/USD yesterday, as the European Central Bank announced a host of measures to boost growth and stave off the threat of deflation in the eurozone. US economic data, released yesterday, was also strong and further fuelled demand for the USD; trade balance, Final Services PMI and ISM Non-Manufacturing PMI all printed better than expected. US ADP Non-farm Employment data was a little weaker than market forecasts but overall the reading was still strong, which in turn bodes well for today’s US Non-Farm Payrolls data. This will cap off a busy week. In other news yesterday, the Bank of England announced they would be leaving monetary policy unchanged, although this was a foregone conclusion and barely caused a ripple in exchange rates. With all things considered, GBP/USD fell to a low of 1.6287 yesterday. It remains on the back foot this morning, and opens at 1.6320.

Euro:

The European Central Bank took markets by surprise yesterday, announcing a cut in the main refinancing rate, the marginal lending rate and the deposit rate facility. ECB President Mario Draghi also announced that the bank would be buying asset-backed securities (ABS), as well as other plans to buy repackaged debt, designed to revive lending and support some struggling banks. The bank stopped shy of announcing “full blown” quantitative easing; as for how much the ABS program will be, we’re unsure at this stage, but will find out in October. This package of measures isn’t quite what markets were expecting. In fact, a lot of commentators out there had suspected that the central bank would do nothing, and take a wait-and-see approach. With this, the euro snapped lower across the board – EUR/USD fell from 1.3149 to a low of 1.2920, and EUR/GBP gapped from .7990 to .7900. The respective pairs open close to this level this morning. Throw in today’s US Non-Farm Payrolls and volatility in EUR/USD could well continue in to the end of the week. The pair has benefitted and recovered a little this morning, following the release of stronger-than-expected German Industrial Production, but it still only opens at 1.2945.

Aussie and Kiwi Dollars:

After the big swings in Europe yesterday, things settled down slightly overnight in Australia and New Zealand. Both AUD/USD and NZD/USD have fallen, though. The kiwi has dropped a little further than its cousin, after finance minister Bill English said that the NZD should fall once the US economy starts to recover. GBP/AUD and GBP/NZD both remain close to the bottom of their recent ranges, at 1.7450 and 1.9700 respectively.

Date Releases for the next 24 hours:

AUD: No data

EUR: Revised GDP q/q

GBP: Consumer Inflation Expectations

NZD: No data

USD: Non-Farm Employment Change, Unemployment Rate, Average Hourly Earnings m/m