The European Central Bank’s monetary policy statement was most definitely the catalyst of the day for FX, sparking a euro sell off. Is there still a chance to catch the move?
Intermarket Snapshot
| Equity Markets | Bond Yields | Commodities & Crypto |
| DAX: 11476.33 -0.96% FTSE: 7129.80 -0.92% S&P500: 2747.65 -0.86% DJIA: 25421.15 -0.98% |
US 10-yr 2.708% -0.014 Bund 10-YR 0.131% -0.036 UK 10-YR: 1.174% -0.054 JPN 10-YR: 0.002% +0.002 |
Oil: 56.36 +0.25% Gold: 1285.10 -0.19% Bitcoin: 3879.00 +0.67% Etherium: 137.28 +0.50% |
Fresh Market Headlines & Economic data:
- ECB pushes back rate hike plans, announces fresh funding for banks
- 2019 February Job Cuts: U.S. Employers Announced 76,835 in February
- BoE most likely to cut rates in a no-deal Brexit: Tenreyro
- EU gives UK 48 hours to come up with new plan for backstop to break deadlock
- Eurozone GDP growth falls below expectations confirming sluggish 2018
- Japan’s coincident index suggests economy at ‘turning point’
- Australian retail sales soft in January
- Australia’s trade balance sharply widens in January, highest monthly surplus since end-2016
- Value of Canada building permits down 5.5 percent in January
Upcoming Potential Catalysts on the Forex Calendar:
- Bank of Canada’s Lynn Patterson speaks in Hamilton at 5:15 pm GMT
- Fed’s Brainard speaks at Princeton University at 5:15 pm GMT
- ECB’s Praet speaks in Paris at 5:30 pm GMT
- U.S. Consumer Credit at 8:00 pm GMT
- Japan GDP q/q at 11:50 pm GMT
- China Trade Balance; tentative release Mar. 8
- U.S. Non-Farm Employment change at 1:30 pm GMT (Mar. 8)
- Canada Employment Change at 1:30 pm GMT (Mar. 8)
What to Watch: EUR/NZD
The European Central Bank surprised traders today as it slashed its growth forecast for 2019 to 1.1% from an earlier forecast of 1.7% back in December, prompting a broad sell off in euro pairs on the session. With a calendar looking uneventful until tomorrow’s U.S. employment situation update, we think the euro is the currency to stick to for potential short-term setup.
We think pairing it with the Kiwi makes sense as it lacks any NZ catalysts ahead for the rest of the week, increasing the odds will only focus on the euro for this pair. Also, if this does flip into a longer term position, there’s that sweet interest rate difference of 1.75% in the Kiwi’s favor that likely brings in some level of pressure on EUR/NZD.
We also see a super simple support break on EUR/NZD off of today’s catalyst that could draw in more sellers, but with the pair already down one full daily ATR of around 120 pips from the Friday open, there’s an argument for support in this area around the major psychological level of 1.6600.
Odds are in the bears favor at the moment, but it’s probably a good idea to either wait for a bounce back to 1.6600 or possibly scale into a short position in case the move is overdone and profit takers step in.
For the bulls, it’s really tough t o make argument here for ya today since the ECB event seems to be a short-to-medium term game changer for the euro. As mentioned before, 1.6600 is a psychological level and was previous minor support in March, so a bounce from here could happen. But it’s likely bulls aren’t even considering going long again until the next support area, which is not likely until the 1.6450 – 1.6500 area is tested.