Euro Drops On Draghi Comments, All Eyes On Friday's NFP
Littlefish FX | Dec 06, 2012 05:09PM ET
Well we did say we expected some risk off and shorts in December, and Draghi seriously helped us out with that one.
So lets recap on what's been a pretty weird day for the markets.
Morning started with better-than-expected Aussie unemployment over night, which provided a nice base for risk currencies and, obviously, the Aussie.
Then we start to stagnate before the BoE and ECB decision.
However as we stagnated, rumours of Mario Monti stepping down hit the wires.
As always, the BoE was a rather nonevent. I like the BoE, decisions seem logical and don't tend to come out with many surprises.
Onto Draghi, rates kept as is but a rather down beat press conference; very little new but nothing that positive. Questions although interesting provided little additional cover.
I said last night that it looked like people were looking for an excuse to short, as the press conference ended and participants reflected on Draghi's comments the markets started to fall.
December volumes can often lead to some big moves and this was no exception breaking support in the Euro and falling to the 1.2950 level. This played well for our EURCAD and EURSEK shorts.
I mentioned Monti earlier, well as the day progressed this moved from a rumour to more substantiated...he now goes to see the Italian president tomorrow to discuss the future...more event risk.
Markets then died during US lunch as news of the US senate voting on whether Obama has the power to raise the debt ceiling.
Eventful day, but played well for our positions.
We are now set up for another big day tomorrow with UK industrial production and NFP scheduled releases but also watch for further US fiscal cliff, Italian Prime Minister and Debt ceiling comments.
So how am I looking to position myself into tomorrow. Well firstly, locking in some of the profit on the various positions however the strategy remains the same, we could see a bounce after such an aggressive move lower but I still like the idea of December shorts.
As For Tomorrow, Here's My Position
Markets really don't like Political uncertainty. With Italy such a key factor in Europe, the Monti situation could be a major driver for the Euro. Markets will want to see this resolved.
Analyst views on NFP are extremely wide ranging from a high of 145k to a low of 15k with the average around 86k, this could easily provide some serious chop.
EUR/USD
Euro dropped like a stone today thanks to Draghi's comments. Potential for a small bounce tomorrow but I like this for a move lower. Be careful with the NFP tomorrow.
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