Morning View: Euro Jawboning and a Dollar Surge

May 20, 2015

Morning View:
EUR/USD came off it’s highs overnight, dropping sharply as the European Central Bank’s Benoit Coeure said that they could step up their purchases of Eurozone government bonds. The idea here is that the bank can front load it’s purchases now to avoid the seasonal issues that arise in the following months.

Coeure went on to suggest that the ECB may push interest rates further below zero when setting stimulatory monetary policy. But with Mario Draghi constantly standing by his view that ECB interest rates could not go much beyond the zero level, this all sounds like a bit of good old fashioned jawboning to me.

EUR/USD 4 Hourly:
Click on chart to see a larger view.

With EUR/USD rallying nearly 1000 pips off it’s lows, this isn’t ideal for the ECB who would like to see the pair lower in order to stimulate inflation and help export demand growth.

Last night also saw the German ZEW survey show that business confidence has fallen to its lowest level since December 2014, while the US saw housing data surprise to the upside, with Housing Starts in April surging to a 7 year high.


On the Calendar Today:
Quiet one on the data front during Asia but it all leads us into the FOMC Minutes early tomorrow morning.

JPY Prelim GDP
AUD Westpac Consumer Sentiment

GBP MPC Official Bank Rate Votes
CAD Wholesale Sales
USD FOMC Meeting Minutes


Chart of the Day:
The Nikkei hit a 3 week high this morning and looks set to surge through it’s recent swing high.

Click on chart to see a larger view.

Look at that long wicked candle on trend line support and then the way that price rallied hard off the level straight up to it’s swing high. This is the key level, but it looks pretty damn strong to me!

Let us know what you’re watching or trading? Compare Forex trading accounts here and leave a comment below or mention @VantageFX on Twitter.

Dane Williams – @VantageFX

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