The main event of the day saw ECB president Draghi address the market after rates were kept on hold as expected by all surveyed analysts. The press conference originally saw a bid in EUR/USD after optimistic rhetoric from the central bank president and discussion of better than expected GDP, however this strength was short lived, with the release of CPI forecasts (2015 inflation at 0.0% from previous 0.7%, 2016 inflation at 1.5% from previous 1.3% and 2017 inflation at 1.8%) showing a less optimistic prediction as the key `near 2%` target appears out of reach until after the scheduled end of QE. This led to the impression that monetary policy could remain accommodating for longer than previously thought, with QE potentially continuing past September 2016, thereby seeing fresh 11 and half year lows in EUR/USD, with the pair testing the 1.10 handle but failing to break below, seeing the greenback print fresh 11 year highs of its own, while below expectation US Factory Orders (-0.2% vs. Exp. 0.2%, Prev. -3.4%, Rev. -3.5%) failed to impact the USD.
Antipodean currencies both weakened during the European session, with AUD/USD coming off its overnight highs, which came after RBA Deputy Governor Lowe deviated from the RBA’s usual jawboning by saying AUD was still high given state of the economy but closer to where it needs to be. NZD/USD also trended lower during the European session in line with moves from overnight, with the RBNZ said to be consulting on property investor loans, which led to speculation that it could open the door to RBNZ rate cuts.
Looking ahead, tomorrow sees tier 1 data out of the US in the form of the Nonfarm payrolls report, with Fed’s Williams (Voter, Dove) and Fisher (Non-Voter, Hawk). Prior to that, the European morning sees German factory orders and Eurozone GDP.
Recommended Content
Editors’ Picks
EUR/USD clings to daily gains above 1.0650
EUR/USD gained traction and turned positive on the day above 1.0650. The improvement seen in risk mood following the earlier flight to safety weighs on the US Dollar ahead of the weekend and helps the pair push higher.
GBP/USD recovers toward 1.2450 after UK Retail Sales data
GBP/USD reversed its direction and advanced to the 1.2450 area after touching a fresh multi-month low below 1.2400 in the Asian session. The positive shift seen in risk mood on easing fears over a deepening Iran-Israel conflict supports the pair.
Gold holds steady at around $2,380 following earlier spike
Gold stabilized near $2,380 after spiking above $2,400 with the immediate reaction to reports of Israel striking Iran. Meanwhile, the pullback seen in the US Treasury bond yields helps XAU/USD hold its ground.
Bitcoin Weekly Forecast: BTC post-halving rally could be partially priced in Premium
Bitcoin price shows no signs of directional bias while it holds above $60,000. The fourth BTC halving is partially priced in, according to Deutsche Bank’s research.
Week ahead – US GDP and BoJ decision on top of next week’s agenda
US GDP, core PCE and PMIs the next tests for the Dollar. Investors await BoJ for guidance about next rate hike. EU and UK PMIs, as well as Australian CPIs also on tap.