eur news

Interesting Price Action Follow Trichet's Comments "Strong Vigilance"

Thursday, 08 February 2007 21:37:25 GMT  |  Kathy Lien, Chief Strategist

Even though there was no US data to drive market activity today, there was quite a bit of interesting price action.  The main event was the press conference after the ECB meeting.  Interest rates were left unchanged, but as soon as the words “strong vigilance” came out of Trichet’s mouth, the ECB’s hawkish bias was set and bullishness was instilled in the Euro.  The behavior in the British pound however was very different.  The currency collapsed after the Bank of England left interest rates unchanged.  It appears that more than a small minority may have been expecting an interest rate hike. The Australian and Canadian dollars rallied thanks a rise in commodity prices while the New Zealand dollar collapsed after Finance Minister Cullen said that he was considering imposing a mortgage levy to curb the growth of the housing market.  The action has been in the crosses with typically range bound pairs like the EUR/GBP and EUR/CHF seeing unusually large moves.  The Tier 2 US data released today pretty much offset each other.  Wholesale inventories fell short of expectations while wholesale sales were stronger than expected.  Jobless claims were slightly higher, but remained at levels that were indicative of limited job losses.  Tomorrow’s market activity should continue to be driven by factors outside of the US since no economic data is due for release.  We expect the most interesting movements in the Japanese Yen as traders adjust their positioning ahead of the G7 meeting

Resources

• free demo account
• forex courses
• open an account
• real time news
• free webinars