This morning has been fairly scarce in terms of news as markets will prepare for Draghi’s press conference on Monetary Policy late in the afternoon. Yesterday saw EUR/USD approach fresh 11 year lows as the currency broke below the 1.11 mark, as expectation of a QE programme due to start on March 9th nears. GBP/USD also experienced big losses plummeting to just above the 1.52 mark.
In the early afternoon we can expect news from the BOE on interest rate and asset purchase decisions, both looking to be unchanged as made clear by recent inflation reports from Carney.
In the late afternoon focus will turn to Draghi’s press conference, where firstly the technicalities of the QE program will be announced including a more accurate timing of the start of the program as well as the measures expected to be used. Markets have already priced in the start of a QE program and therefore more emphasis on the divergence of policy from expectation will likely cause bigger moves in the market. Especially the use of increased measures such as the use of OMT after it became legal in European Court, will likely have a more dovish tone. More focus then will not necessarily lie on the technicalities of the QE program, as the negotiations with Greece and European creditors is still a focus. More significantly whether the ECB will reinstate the waiver on Greek collateral, if so it could be seen as more hawkish for the Euro currency.
USD/JPY has begun its ascent, with yesterday being fairly disappointing as the currency stayed within a range, despite the USD index printing fresh 11 year highs. It has now broken above the 120 mark where it is meeting some resistance at 120.2. It is also important to note that there is a large option expiry of 3 billion at the 120 mark, due to be met at 15:00 GMT cut.
Around the time of the press conference U.S news is expected related to Jobless Claims, which will be important in expectation of tomorrow’s NFP figures. However the focus will remain on Draghi today and his comments on both QE and Greece.
That’s the wrap for today, Good Luck with your trading endeavours.