No surprises from ECB or Draghi
FX Trader, Loonieviews.net
FX traders were hoping for more clarity from the European Central Bank or its president, Mario Draghi, on the pace of interest rate hikes in the Eurozone. They didn’t get it. The ECB did not deviate from the previous meeting’s message. Non-standard monetary policy measures will terminate at the end of December, and Eurozone interest rates aren’t going anywhere until the summer of 2019.
Eurozone equity indices climbed on the news. Wall Street wasn’t quite as lucky. Facebook’s (FB: NASDAQ) face-plant (its share dropped 18.19% from yesterday’s close after the company forecast slowing revenue growth in the coming quarters. The plunge helped drag the Nasdaq down 1.14% in early trading. The S&P 500 is down just 0.28%. The success of the Trump/Juncker meeting has underpinned the DJIA which has gained 0.58% this morning.
EURUSD traders who had bought the single currency on misguided hopes that Mario Draghi would be more specific as to the timing of a rate increase bailed out of their positions. EURUSD dropped from 1.1728 at the New York open to 1.1681 at 14:00 GMT.
The dip in EURUSD has dragged down the rest of the G-10 currency majors, led by a plunge in AUDUSD. This morning’s US data supported the greenback. June durable goods orders rose 1.0%, well above the -0.3% drop in May, but below the forecast for a 3.0% gain. Initial jobless claims were 217,000.
Traders are looking ahead to Friday’s US Q2 GDP report. Earlier this week, President Trump was rumoured to have leaked a result in the 5.0% area. The forecast is for a gain of 4.1%, and many market participants are expecting a forecast-beating result.
EURUSD is trading erratically inside a 1.1650-1.1750 range. A break either side will yield 0.0060 points in either direction.