EUR/USD trades in a range post Draghi's QE comments

EUR/USD and Antipodean currencies

EUR/USD started the session on the backfoot after consolidating its break below 1.2500 which subsequently led EUR/GBP to test 0.7900 to the downside after the pair broke out of its overnight range. This move to the downside was largely exacerbated by this morning’s Spanish and German inflation releases which continued to highlight a dreary picture of the area’s inflation prospects. More specifically, the prospect of falling inflation in the Euro-zone will likely re-ignite the premise of a potential QE programme from the ECB in order to stimulate prices and safe guard the Euro-zone. In terms of the session’s central bank rhetoric, it was largely a reiteration of what we’ve already seen with ECB's Draghi saying the governing council remains unanimous in commitment to using additional unconventional measures if necessary and as such EUR/USD was largely unscathed. Thereafter, the pair traded in a relatively rangebound manner with little macro newsflow on offer to dictate the price action.

Elsewhere, Antipodean currencies initially outperformed with NZD higher following RBNZ data which showed the central bank did not intervene in Oct selling just NZD 1mln vs. Prev. NZD 30mln. AUD/USD rose, supported by upbeat Q3 AU Private CapEx data (0.2% vs. Exp. -1.9%), with the equipment/plant/machinery investment component, which feeds into next week’s GDP business investment component, rising 4.4%. However, this move failed to sustain throughout the session with AUD pulling away from its highs alongside the slide in oil prices as participants began to adjust to the likely outcome of the OPEC meeting, with the oil cartel seemingly unwilling to cut their production levels.