Article Highlights

  • Swiss Trade Balance weaker-than-expected: 0.5B CHF vs. 2.11B CHF
  • U.K. Halifax House Price Index m/m slightly better at 1.1% vs. 1.0% forecast
  • German Factory Orders m/m weaker-than-expected: -0.5% vs. 0.2% forecast
  • BOE Monetary Policy Committee keeps rates steady at 0.5%, asset purchases at 375B GBP per month
  • European Central Bank (ECB) holds rates at 0.25%
  • U.S. Initial Claims better-than-expected at 331K vs. 335K forecast
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A big day for the London session thanks to monetary policy decisions from both the Bank of England and the European central bank.  Currency price action was muted ahead of both events as we only saw minor tier 2 economic reports from Europe, the most notable being the weak Germany factory orders data; no major reactions from the euro.

The big events of the day were from the ECB and MPC, both of whom held their interest rate policies as-is (0.25% and 0.50% respectively).  The MPC kept their asset purchasing program at 375B GBP per month, with no additional comments from the MPC at this time.  Sterling price action remained relatively stable during and after the event, GBP/USD currently up only 3 pips on the session to trade around 1.6310.

As with past ECB events, the major market mover was the accompanying statement from Mario Draghi, in which he repeated the rhetoric of keeping interest rates at their current levels or lower for an extended period of time. And of more interest to traders was the statement on inflation, in which he thinks inflation would remain low, but stable as well.  With no indication of acting anytime soon, the euro is rallying against all of the majors on Draghi’s comments: EUR/USD rallied 100 pips on the event to break above 1.3600, EUR/JPY jumped 120 pips to now trade just above 138.00, and EUR/GBP broke out to the upside but found resistance at the .8350 area.

From North America, we got a better-than-expected read from the U.S. initial claims data, showing that less people signed up for unemployment benefits last week and coming in below the previous week read of 351K as well. The U.S. trade balance data was also released, coming in weaker than expected at -38.7B vs. -36B forecast.  The dollar reaction was muted as the ECB event continues to dominate broad forex price action.

In less than a half an hour, we’ll get Canada’s Ivey PMI data which expected to come in at 51.0 (above 50 signals expansionary conditions). This can be a short-term market mover for the Loonie, so stay on your toes for this event, as well as how traders continue to price in this morning monetary policy events.  Stay frosty!

See also:

Asia Session Recap

U.S. Session Recap

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