Undoubtedly the biggest event in FX markets today has been the ECB press conference, with dovish comments seeing immediate downside in the EUR. The central bank kept rates on hold as expected; however, EUR/USD fell over 1.5 points to break below the 1.1200 handle after ECB’s Draghi stated that the central bank is set to discuss whether additional action is needed in December, and that they are ready to expand the QE programme if needed. Other notable highlights of the press conference included ECB’s Draghi stating that downside remains in inflation and GDP and that a lowering of the deposit rate was discussed and that some members wanted to take action today.
As well as downside in EUR, the ECB news filtered through across FX markets, with EUR/USD weakness bolstering USD/JPY and weighing on GBP/USD. This saw the former consolidating above the 120.00 handle and the latter give back some of the gains seen earlier in the session. GBP initially saw strength earlier after UK retail sales (Inc Auto Fuel Y/Y 6.50% vs. Exp. 4.80%), with GBP/USD earlier breaking above the 1.5500 handle to print at its highest level for a month; however, it ended the European session relatively flat on the day.
Looking ahead, tomorrow sees manufacturing and services PMIs from France, Germany and the Eurozone as well as Manufacturing PMI from the US and CPI reading from Canada.