All eyes on ECB as bond yields continue to narrow

The single currency will be in the spotlight today with all eyes firmly focused on the design and implementation of the ECB’s new bond purchase program, details of which are to be released during an ECB press conference at 1.30pm. Details of the plan were leaked to the press yesterday causing peripheral bond yield spreads to narrow further. The euro traded a tight 15pip range against the dollar overnight in anticipation of a more turbulent session today. Analysts expect leading interest rates unchanged in the eurozone, to be released at 12.45pm, but a cut in the refinancing rate should not be ruled out. The expectations surrounding today’s policy meeting have seldom been so momentous, making today’s outcome crucial for the single currency.

In the warm up to today’s ECB conference, the MPC makes its latest policy announcements at 12.00pm today. The general consensus expect the committee to leave policy unchanged with the official bank rate at 0.5% and the asset purchase facility at £375bn. The Halifax house price index reported a decrease  in the value of UK homes this morning by 0.4%, disappointing the forecasts of +0.3%. However, despite the upcoming data release, today’s focus is the ECB conference and so we fully expect a quiet morning for cable. nancing rate should not be ruled out. The expectations surrounding today’s policy meeting have seldom been so momentous, making today’s outcome crucial for the single currency.

The highlight of the Asian market session was the Australian employment data released in the early hours of this morning. Although the overall employment change was down -8.8k , forecasted to increase by 5.1k, the market focused on the fall in the unemployment rate to 5.1%, despite the fall in the participation rate. The Australian dollar rallied 30 pips from 10185 to 10215, before printing a high of 10235. Tomorrow we will see the release of Australian trade balance data, forecasted at -0.30bn. Movements in the AUD today are reliant on the ECB today. If the outcome satisfies expectations we could potentially see a move towards 1.0300. mentous, making today’s outcome crucial for the single currency.

EUR/USD

Range - 1.2440 – 1.2750 | Support - 1.2500 | Resistance - 1.2680

AUD/USD

Range - 1.0100 – 1.0300 | Support - 1.0200 | Resistance - 1.0280

GBP/USD

Range - 15750 – 1600 | Support - 1.5830 | Resistance - 1.5950