Forex Market Review – ECB holds rates at 1 percent, Draghi press conference in focus

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ECBEuro edged up against the dollar going into the European session back into the 1.25’s, edging as high as 1.2519. There was some nervousness in the build up to the European Central Bank policy meeting but remained supported above 1.2488. The pair was little changed after the ECB announced that it kept rates on hold at 1 percent. This was mostly expected by market participants.

 

The focus now shifts to the press conference to be given by ECB President Mario Draghi at 12:30 GMT. Investors will look out for signals whether the central bank will consider interest cuts in the future or if they will introduce stimulus measures such as bond purchases. If so, this would be positive for the euro.

 

Cable had a bullish run during the session as UK markets reopened after being closed since Monday. Some UK data on construction PMI released today helped support the pound as the numbers were at a level above 50 which suggests continued growth. May PMI came in at 54.4. Focus turns to tomorrow’s Bank of England policy meeting and interest rate announcement.  GBPUSD opened London at 1.5416 and rose to a high of 1.5514.

 

Yen is down 0.5  percent from yesterday’s close, due to a decline for safe havens as risk appetite is up today. Also fears over the threat of a Bank of Japan intervention have helped push USDJPY back over 79.00 for the first time this month to reach a high of 79.26 during European trading. EURJPY opened in Europe at 98.38 and rose to 99.28 on broad euro bullishness during the session.

 

Aussie outperformed most major pairs, up 1.1 percent against the greenback after being lifted by the release of stronger than expected Australian GDP number. First quarter GDP rose 1.3 percent, double expectations of 0.6 percent increase and brought  the year over year pace of expansion to 4.3 percent, Australia’s strongest pace of growth since  2007.