Daily Financial Markets Update: ECB Easing Spurs Risk-Taking – Mar 11, 2016

Daily Financial Markets Update: ECB Easing Spurs Risk-Taking - Mar 11, 2016

The euro was the biggest mover of the day as it tossed and turned during the European Central Bank’s monetary policy statement and press conference. Initially the shared currency tumbled upon hearing of several rate cuts and an expansion of the quantitative easing program from 60 billion EUR to 80 billion EUR, but it staged a strong rally when ECB Governor Draghi mentioned that they have no plans to lower rates further in the near future.

EURUSD fell to a low of 1.0823 then spiked up to a high of 1.1218, EURJPY bounced of 123.66 to a high of 126.81, EURAUD reached a low of 1.4467 then rallied to the 1.5000 area, and EURGBP found support at .7650 then popped up to .7850.

The Swiss franc also chalked up big moves during the event, as it trailed the euro and eventually ended higher against its forex counterparts. USDCHF is down to .9855, EURCHF is up to 1.1006, AUDCHF is at .7380 and NZDCHF is at .6600.

CAD slightly weaker on OPEC meeting speculations

Crude oil gave up some ground when sources close to OPEC officials said that a number of oil-producing nations are reluctant to attend the upcoming meeting on March 20. In particular, Iran hasn’t confirmed its participation, which would be crucial to coming up with a deal to cap output.

WTI crude oil dipped below the $38/barrel level while Brent crude oil tested support at $40/barrel after seeing these headlines. USDCAD is back above the 1.3300 handle, CADJPY retreated to the 85.00 area, and GBPCAD is trading close to 1.9000.

The Canadian dollar still has a catalyst lined up before the end of the week in the form of the Canadian jobs report. A rebound of 10.2K in hiring is eyed, enough to keep the unemployment rate steady at 7.2%.

Risk-on environment supports AUD and NZD, yen and dollar weaken

At the end of the day, the ECB’s announcement still managed to bring some risk-taking activity in the financial markets, allowing equity indices to rally. However, stocks returned their intraday gains when Draghi suggested that they might not add to their stimulus efforts again anytime soon.

Still, the higher-yielding currencies managed to rake in gains against the lower-yielding US dollar and Japanese yen. AUDUSD is up to .7500, NZDUSD advanced to the .6700 area, AUDJPY is up nearly a hundred pips to 85.00, and NZDJPY is closing in on 76.00.


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Samuel Rae is an active retail trader across a variety of assets, including currencies, stocks and commodities and the author of Diary of a Currency Trader (Harriman House). His personal strategy focuses primarily on classical technical charting patterns with a fundamentally supportive bias, combined with a strict, risk management-driven approach to entries and exits. He is an Economics graduate from Manchester University, UK.