Key Forex Afternoon Notes:
- Australia CPI expectation 3.2% vs. 3.4%
- UK Public Sector Net Borrowing 12.5 Bn vs. 9Bn
- Italy retail sales m/m 0.1% vs. 0.1%
- ECB keeps interest rates unchanged, announces €60 billion bond purchase program from March 15 – Sep – 16
- US Weekly jobless claims 307k vs. 300k
- US HPI m/m
Later:
- Crude Oil inventories
Markets opened on a cautious note ahead of the main ECB event in Europe today. The effects of yesterday’s surprise rate cut from BoC saw pressure on commodity risk currencies such as the Kiwi and the Aussie dollar, as well as the Canadian dollar, which managed to stabilize.
There was not much of major news from Asia, which saw the markets open on a quiet note, without any major moves. The European session was also relatively quiet with most of the currencies trading within a tight range. The Euro managed to gain early into the trading against the Greenback and so was Crude Oil futures which managed to rally in expectations of the ECB’s QE announcement but gave up its gains after making an intraday high towards $49 a barrel, ahead of the US Crude oil inventories report.
The much awaited ECB monetary policy held by Mario Draghi today saw the announced of the much anticipated QE or Quantitative easing to the tune of purchasing €60 billion per month starting March 2015 until September 2016. While leaving interest rates and term deposit rates unchanged, Draghi also changed the terms of the TLTRO’s. In regards to the QE purchases, the National Central Banks would be primarily tasked with purchasing their sovereign bonds. The Eurozone periphery bond yields dropped immediately after the news was released, especially from Italy, France, Greece and Spain.
The Euro gave up its gains on the news, easing from intraday highs of 1.1653 to settle near 1.1525 post the ECB press conference. The British Pound was also a bit weaker into the US trading session easing from its intraday highs but remains supported above 1.515.
The Japanese Yen remained stable into the run up to the QE announcement as well as during the press conference. The USDJPY was trading tight within the 118 – 117 levels, without much volatility.
The Greenback was largely mixed after the ECB’s announcement, which clearly overshadowed the weekly jobless claims which continued to rise higher than expectations for the third straight week. The housing price index m/m managed to beat estimates rising 0.8%, above 0.3% expectations.
With no more economic news releases scheduled for the day, the markets are likely to play off the ECB’s QE themes, but head into a weekend of uncertainty as Greece holds its elections.
