European Session Wrap-up
- BOE keeps rates unchanged at 0.50%, asset purchases at 375B GBP
- ECB surprisingly cuts rates down to 0.25% to boost the economy
The major currencies traded mutely in the early London session as traders waited for today’s central bank decisions. The BOE decided to keep its interest rates unchanged at 0.50% and its asset purchases at 375 billion GBP. GBP/USD briefly touched 1.6056 area but quickly recovered to its intraday support around 1.6070. Since the BOE didn’t release any accompanying statement, market players will wait for next week’s inflation report for clues on the BOE’s hawkishness.
A few minutes earlier the ECB surprised the markets by cutting its interest rates down to 0.25%. Although it kept its deposit rates unchanged, it didn’t stop the bears from dragging EUR/USD below 1.3400, EUR/GBP below .8400, and EUR/AUD to the 132.00 area.
As explosive as the currencies have been, the day’s not over yet! We still have the ECB press conference and U.S. quarterly GDP on tap at 2:30 pm GMT. Both of these reports are potential market movers, so be extra cautious with your trades, aight?
Asian Session Wrap-up
- AU unemployment rate jumps to 5.7%, additional jobs disappoints
- Swiss SECO consumer climate at -5 in July to October 2013 (-9 prev)
The Aussie took the most hits during the Asian session since Australia surprisingly printed weak employment numbers. The comdoll has recovered a bit since then after part of the weakness was attributed to a decline in participation rate. The other high-yielding currencies also ended up stealing back pips against its low-yielding counterparts as traders close their positions ahead of today’s major reports.
The big hitters will start coming in at 12:00 pm GMT when the German industrial production is printed. The report is expected to show a 0.2% growth but an upside surprise could support the euro like yesterday’s German factory orders data did.
At 1:00 pm GMT we’ll see the BOE’s monetary policy decision. Analysts aren’t expecting changes to its interest rates but many are looking for the central bank to make changes to its forward guidance schedule after they admitted that the U.K.’s unemployment rate is falling faster than expected.
The ECB’s interest rate decision will follow at 1:45 pm GMT. Market geeks are expecting an interest rate cut in reaction to the euro zone’s falling inflation and tepid growth. Attention will likely be focused on the ECB’s press conference at 2:30 pm GMT though, when the ECB is likely to give details on its plans. It’s also important to note that the U.S. advance quarterly GDP (expected at 2.0%) and the initial jobless claims (expected at 336K) will be released at the same time.
U.S. Session Wrap-up
- CA building permits rise by 1.7% vs. 7.8% expected
- CA IVEY PMI at 62.8 in Oct. vs. 51.9 in Sept.
- U.K. NIESR GDP estimate falls from 0.8% to 0.7% in Oct.
- Announced U.S. job cuts up by 13.5% from Sept. to Oct. – Challenger
The euro followed the pound’s rally after an ECB source hinted that there won’t be a rate cut from the central bank today. However, traders failed to sustain the momentum from the early London trading as they’re unwilling to commit to strong moves ahead of the major reports today and tomorrow. EUR/USD hit an intraday ceiling at 1.3548, GBP/USD only went as far as 1.6111, and USD/JPY made a run for 98.74.
AUD and NZD were also affected by the overall profit-taking and USD strength. Both AUD/USD and NZD/USD were reluctant to make new intraday highs. Only USD/CAD survived the storm after Canada printed surprisingly positive reports.
Earlier today AUD took a big hit on weak employment numbers. Unemployment rate remained at 5.7% but only 1,100 workers found job in October, which is less than the expected 10,300 increase. Only Japan’s leading indicators data at 6:00 am GMT is scheduled before the London session starts.
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