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Euro Drops Below 1.10 vs. US Dollar Amid ECB Pre-Positioning

Euro Drops Below 1.10 vs. US Dollar Amid ECB Pre-Positioning

2016-03-09 03:38:00
Ilya Spivak, Head Strategist, APAC
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Talking Points:

  • Euro declines amid pre-positioning for ECB monetary policy announcement
  • Australian, Canadian Dollars fall as Yen gains amid risk aversion overnight
  • Quiet docket of scheduled event risk puts financial markets in digestion mode

The Euro underperformed in overnight trade. A singular catalyst was not readily apparent, suggesting the move may have reflected pre-positioning ahead of this week’s much-anticipated ECB policy announcement. The central bank is expected to cut the deposit rate by 10bps to -0.4 percent and may increase the size of monthly QE asset purchases.

The single currency corrected higher as traders unwound bets on depreciation over the past week. Indeed, the latest COT positioning report showed speculative net-short exposure fell for the first in eight weeks in the five days through March 1. Within that context, a downswing representing a move toward “neutral” does not seem unreasonable.

The sentiment-linked Australian and Canadian Dollars tracked stocks lower. The MSCI Asia Pacific regional benchmark equity index fell 1 percent in a move that appeared to reflect follow-on momentum from a selloff on Wall Street. The anti-risk Japanese Yen traded higher against most of its major counterparts, although the benchmark USD/JPY cross traded little-changed on the session.

Looking ahead, a quiet economic calendar in European trading hours offers little by way of scheduled event risk to shape price action. That seems likely to make for a digestive tone, with markets in retracement mode until the next round of high-profile news-flow by way of the BOC and RBNZ rate decisions crosses the wires.

Losing money trading the FX market? This might be why.

Asia Session

GMT

CCY

EVENT

ACT

EXP

PREV

21:45

NZD

Card Spending Retail (MoM) (FEB)

0.7%

0.3%

0.4%

21:45

NZD

Card Spending Total (MoM) (FEB)

-0.1%

-

0.6%

23:30

AUD

Westpac Consumer Conf Index (MAR)

99.1

-

101.3

23:30

AUD

Westpac Consumer Conf SA (MoM) (MAR)

-2.2%

-

4.2%

23:50

JPY

Money Stock M2 (YoY) (FEB)

3.1%

3.2%

3.2%

23:50

JPY

Money Stock M3 (YoY) (FEB)

2.5%

2.6%

2.6%

00:30

AUD

Home Loans (MoM) (JAN)

-3.9%

-3.0%

2.7%

00:30

AUD

Investment Lending (JAN)

-1.6%

-

-0.1%

00:30

AUD

Owner-Occupier Loan Value (MoM) (JAN)

-4.3%

-

-0.2%

06:00

JPY

Machine Tool Orders (YoY) (FEB P)

-

-17.2%

European Session

GMT

CCY

EVENT

EXP

PREV

IMPACT

09:00

GBP

BOE's Bailey Speaks in London

-

-

Low

09:30

GBP

Industrial Production (MoM) (JAN)

0.4%

-1.1%

Medium

09:30

GBP

Industrial Production (YoY) (JAN)

0.0%

-0.4%

Medium

09:30

GBP

Manufacturing Production (MoM) (JAN)

0.2%

-0.2%

Medium

09:30

GBP

Manufacturing Production (YoY) (JAN)

-0.7%

-1.7%

Medium

Critical Levels

CCY

Supp 3

Supp 2

Supp 1

Pivot Point

Res 1

Res 2

Res 3

EUR/USD

1.0893

1.0957

1.0984

1.1021

1.1048

1.1085

1.1149

GBP/USD

1.4018

1.4120

1.4167

1.4222

1.4269

1.4324

1.4426

--- Written by Ilya Spivak, Currency Strategist for DailyFX.com

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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