Markets Prepare For Upcoming ECB Rate Decision
Talking Forex | Mar 05, 2014 10:51AM ET
EUR/USD
Following on from yesterday’s risk-on session, today saw a continuation of the theme with a lack of geopolitical commentary to alter participants risk appetite. Today saw the release of a host of broadly better than expected services PMI readings from the Eurozone with the German, Eurozone and Italian releases printing their highest levels since 2011. However, participants managed to shrug off this positive reports as focus very much remains upon tomorrow’s ECB rate decision with analysts split over whether the central bank will cut rates tomorrow given the mounting concerns of disinflationary pressures in the area. Although analysts at Goldman Sachs believe it is too early for the ECB rate to cut rates and are instead seeing April as a more likely opportunity for the central bank to act. Nonetheless, as concerns over the Eurozone continue to mount EUR could be placed under further pressure.
GBP/USD
GBP was one of the notable outperforming currencies across today’s session following an amalgamation of a receding of geopolitical concerns and stronger data from the UK. As discussed above, following on from yesterday’s comments from Russian President Putin regarding the use of military force will only be a last resort, there was little else in the way of the rhetoric that acted as a catalyst for political concern and thus failed to see USD benefit from a flight to quality. Today saw the release of a marginally better than expected services PMI from the UK, which in combination with Monday’s better than expected Manufacturing PMI saw an increased appetite by participants for the UK’s currency. Looking ahead, attention now turns to tomorrow’s BoE decision which is expected to show no change to the bank’s monetary policy, however the release is believed to be accompanied by a statement detailing gilt purchase operations for the maturing 2.25% 2014 bond.
USD/JPY
As has been a common theme across FX markets and as discussed above, price action across FX pairs was largely controlled by the risk-on sentiment relative to the past few sessions and thus saw JPY trim some of its recent strength and lead the pair higher. With little in the way of macroeconomic data out of Japan today and markets shrugging off the lower than expected US ADP Employment figure, the de-escalation of political tensions surrounding the Ukraine situation was a key influence for the pair. In terms of economic commentary, today did see some comments from sources saying the BoJ is expected to maintain overall economic assessment and may mull cutting view on exports next week. Looking ahead attention will now be turning to the host of upcoming risk events with Friday seeing the release of the US Nonfarm Payrolls data (Exp. 150K) and Unemployment Rate (6.6%).
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.