Category: Daily Look

Euro spiked following Draghi’s lack of action



The dollar took a beating yesterday as investors rushed into the euro following the ECB meeting that saw President Mario Draghi defy market expectations. An increase in growth forecasts and lack of further monetary easing saw the single currency spike with EURUSD hitting a fresh 2 year closing high. Not even sterling was immune to the euro’s advances as EURGBP hit a three week high and this morning it’s knocking on the door of 0.8300. As mentioned in yesterday’s outlook, sentiment towards the single currency has been slowly but surely improving over the past few months and Draghi’s comments yesterday were interpreted to be far more hawkish than had been anticipated, further improving that sentiment. As I write EURUSD is adding to yesterday’s gains printing 1.3870 on the screen with the next near-term resistance level seen at 1.3920.

Looking ahead to today the dollar has a chance to try and regain lost ground with nonfarm data due at 13.30 GMT. Wednesday’s ADP figure disappointed but the two have been polarised in recent months and so yesterday’s initial jobless claims would be a better gauge to try and predict what we’ll see today. The dip will be seen as encouraging for the dollar bulls who’ll be wanting to see a better than expected 149k for USD to even attempt to regain the lost ground from yesterday. Regardless, the bigger picture of course is what this will mean for the taper, continuously on the mind of investors and it’s hard to see much will blow the Federal Reserve off their current course.

Further reading:

Draghi does not announce new measures – EUR/USD screams higher

USDJPY: Bull Pressure Builds Up

Recent data may prevent ECB from dropping refi rate today

Recent data may prevent ECB from dropping refi rate today

The dollar has been steadily recouping some ground overnight in particular against the Yen as USDJPY gets itself back to the 102.75 level and could have the impetus behind it to test 103.00 again, not seen since January. The normalisation of markets since the beginning of the week has been stark so today investors can

Markets back to normal

Markets back to normal

Things have truly settled down since the week end and Monday’s frantic panic. The safe haven play has been unwound and so it’s back to normal for now with the dollar seeing little traction and yet to truly gain the backing of investors, despite the expectation of further tapering from the Federal Reserve throughout the

Financial markets shake off the Ukraine crisis

Financial markets shake off the Ukraine crisis

The Ukraine situation dominates the headlines and pundits have been detailing the worst case scenario. Financial markets on the other hand seem to have overcome the initial risk-off reaction we saw yesterday and some of the moves into safe havens and out of risk assets have been reversed overnight. The Yen has given back much

Ukraine problems should not get in way of big week for data

Ukraine problems should not get in way of big week for data

The first week of a new month brings with it a large amount of data to absorb with manufacturing PMIs, unemployment figures and central bank interest rate decisions from Europe. The ECB meeting is being built up s one of the major risk events of the week as no action could see the euro build

Market Volatility continues

Market Volatility continues

We are entering the last trading day of the month after what has already been a fairly choppy week for FX. Markets have been coping with the dual risks of China and also events in the Ukraine. The effects have been felt across a range of currencies, with EURCHF near 10 month lows, the yen

Prepare for the ride

Prepare for the ride

The focus is back on the dollar today as Fed Chair Yellen testifies to the Senate on monetary policy, an event delayed from earlier in the month owing to the weather. This does mean that it’s going to catch more attention that would have otherwise have been the case, given that we have seen a

Difficult markets

Difficult markets

There’s no denying that the price action on FX this week has been erratic. The volatility seen on the dollar in the wake of the weaker than expected consumer confidence data illustrated this yesterday. The dollar initially strengthened, especially vs. sterling and the euro, but quickly turned around within the hour. The undercurrents from China

The troubles in China

The troubles in China

The focus has shifted firmly to China over recent trading sessions. Stocks were lower overnight, now down for 4 consecutive sessions and down nearly 7% from the highs of last week. More significantly, the Yuan has depreciated significantly, by 1% over the past week. This takes the currency to levels last seen in July/August last

Asian equities lay low after Chinese property shares plunge

Asian equities lay low after Chinese property shares plunge

Currency markets are starting the week on a more cautious footing, with nervousness emerging from China over the weekend regarding lending, especially in the property sector. This put Asian equities on the defensive, with the yen gaining through the Asia session and the Aussie also weaker. The risk of a credit related car crash is