Doves were unsatisfied and EUR/USD saw Draghi's conference out around pre-anounced levels

EUR/USD

The pair traded in a relatively tight range in the first half of the session following yet another disappointing German data release, with Y/Y German IP coming in at -0.5% vs. Exp. 0.3%. This follows on from yesterday’s weak German factory orders and subsequently led JP Morgan to say the German economy shrank in Q2 and slashed their Q2 GDP forecast to -0.5% from +0.5%. Thereafter, all eyes were on the ECB rate decision and accompanying press conference. As expected the ECB stood pat and kept their three key rates on hold. During the press conference the stand out comment from Draghi was that the ECB are "intensifying ABS prep", this comment saw an immediate fast-money move lower for the pair of around 25 pips. However, other than this comment, the opening statement was largely a reiteration of last month and as such the EUR fully reversed the initial dovish move. Draghi also reiterated that ABS and QE remain on the table but in reality regulatory reform would need to happen before such a program could come into effect. As such, despite the initial fast money move on the 'intensification' comment the doves were left unsatisfied and EUR saw the conference out around pre-announced levels with offers into the 1.3400 level helping to contain the upside price action where the 10DMA resided above at 1.3406. Looking ahead, tomorrow sees a lack of tier 1 data or notable speakers due to comment from the Eurozone.

GBP/USD

Today saw an absence of tier 1 data releases or notable economic commentary for the pair as participants headed into the BoE rate decision, with the pair buoyed in early trade by movements in the USD index. The MPC decided to keep their bank rate and APF at their current levels as expected, nonetheless the pair saw a modest tick lower following an unwind of outside hawkish bets, with some participants hoping for a rate hike by the BoE today. Thereafter, the pair moved marginally lower alongside the move higher in the USD index. Looking ahead, tomorrow sees the release of the UK trade balance. However, attention is more likely to be placed in the coming days and weeks on the BoE’s QIR (Aug 13th) and minutes (Aug 20th), whereby the minutes may potentially reveal a vote split on the MPC, with Weale and McCafferty potential members calling for a rate hike.

AUD/USD

AUD came under heavy selling pressure against its counterparts following a disappointing Australian jobs report which saw the unemployment rate hit a 12-year high (6.4% vs. Exp. 6.0%). The Australian labour market has now contracted in two of the past three months which consequently saw AUD/USD fall by the most in a month to break below the 0.9300 handle, while AUD/NZD and AUD/JPY also broke key levels at 1.1000 and 95.00 respectively. Looking ahead, attention now turns to the RBA’s monetary policy statement tomorrow after the central bank kept rates on hold on Tuesday and the RBA reiterated their view that AUD remains highly valued on a historical basis and which saw the pair move higher following the statement.