- U.K. Construction PMI improves: 64.2 vs. 63.5 forecast, 64.0 previous
- European PPI m/m: -0.1% vs. -0.1% forecast, -0.2% previous
- U.S. Challenger Job Cuts lower at 30.4K vs. 40K previous
- ECB holds Refinancing Rate at 0.05% as expected; Deposit Rate holds at -0.2% as expected
Probably the biggest mover on the session was the British pound after we heard comments from the BOE’s Broadbent saying that the U.K. is still not ready for a rate hike. All Sterling pairs took big hits on the session, with strong momentum still to the downside for many of them going into the U.S. trading session:
GBP/USD is down 51 pips (-0.35%) to 1.6131, GBP/JPY is down 62 pips (-0.36%) to 175.59, and EUR/GBP is up 30 pips (+0.39%) to .7827
The Japanese yen rally also saw one final burst of strength, trading on risk aversion sentiment which started in the U.S. session and stemming for the first report diagnosis of Ebola in the United States. From the London open, USD/JPY dropped another 55 pips from 108.90 to 108.35 before the move became over sold. The bounce back has been pretty strong, bring most yen pairs back to near breakeven or above on the session.
EUR/JPY is up 5 pips (+0.05%) to 137.48 after dropping to 137.00, AUD/JPY is up 36 pips (+0.40%) to 95.49 after better-than-expected Australian Trade Balance and Building Approvals data.
Finally, the ECB made no changes to their interest rate policies as expected. The reaction to the announcement was muted as expected since we all know that the real fireworks don’t begin until ECB press conference. What Draghi will say on quantitative easing will determine whether or not volatility picks up for the euro and which direction it’ll go next. The press conference begins at 1:30 pm GMT, so be sure to be ready for anything then!
As far as the rest of the economic calendar for the Thursday afternoon London/morning U.S. session, it’s very light with only U.S. initial claims at 1:30 pm GMT and U.S. factory orders at 3:0o pm GMT. Both are mid-tier events and expected to come in below expectations, but with the ECB press conference going on and Ebola/geopolitical fears driving risk sentiment, those U.S. data points may not have much influence on the market unless we see a huge surprise. Stay frosty!
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