Awaiting the ECB

With the Lunar New Year holidays upon us and many players awaiting the upcoming ECB rate decision, it was a rater steady session here in Asia today. The action was early and limited to New Zealand where employment data was disappointing across the board. New Zealand’s unemployment rate rose from 6.4% to 6.8%, well over the expected 6.5% while employment change data came in at -0.5% versus +0.2%. The reaction in the NZD/USD was swift as the pair dropped from 0.7775 to lows of 0.7720 over a matter of minutes, and to eventual lows near 0.7710 as the day wore on.

A bit later in the morning, Australian data impressed with building approvals coming in at 8.7% versus the forecast of 1.6% and trade balance showing 1.98B as opposed to the projected 1.63B. The data sent the AUD/USD from 1.0100 to eventual highs near 1.0120 on the day.



More dramatically, the AUD/NZD blasted from 1.2950 to just over 1.3100 as of this writing. Of note, Australia seems to have dogged the bullet of cyclone Yasi which was downgraded from a category 5 storm to a category 2 storm.

Markets traded lightly with China out for the Lunar New Year holiday, but the sideways movement of risk was broken by increased violence in Egypt. News reports that violence has escalated in Cairo and had claimed seven casualties and almost 200 wounded helped to put currencies in risk adverse mode. EUR/USD broke from its 1.3815 to 1.3800 range to lower levels near 1.3785. The same story was seen in the GBP/USD which dropped from 1.6200 to 1.6175 and the AUD/USD which shed its employment data elation to drop almost 20 pips to 1.0090. The yen remained steady over the course of the day.

As noted all eyes will be on the ECB rate decision due out at 12:45GMT and followed by President Trichet’s press conference. While no one expects a change in rates from 1.00%, if Trichet remains on his hawkish path we could see a boost to the Euro. Conversely, investors will be monitoring the events in Egypt for signs of escalation that would weigh on the European currency.

Источник: FOREX.com

03.02.2011