.... momentum slows. Back below the MA target.
BOJ kept policy unchanges, increased growth projections but lowered inflation expectations.
The USDJPY moved higher before the release and extended above its 100 hour MA (blue line in the chart above) after the release. However, we have now seen the price comes back down below the 100 hour MA at 112.24. The last three hourly bars have closed below the MA line. That raises a red flag for the dip buyers.
Draghi tries to stay dovish
The market can sense when a central banker has played his final card. Draghi is still talking about the potential to do more. He is carefully avoiding anything that could be a hint of a hiking down the road.
Risks predominantly due to global factors and reform pace.
He encourages more structural reforms to keep the economy going.
Technically, the pair did not go below the 50% retracement level at 1.1476 and stayed above the 1.1435-65 area as well. In addition, the move back above the 1.1500 level and the 100 hour MA helped technically.
Draghi answers questions
- We were unanimous in not outlining a timeline [on tapering]
- We aren't there yet
- We need patience
- Longer-term yields have risen but are still low by historical standards
This jump in the euro is starting to look more like dip-buying than a reaction to anything Draghi is saying. EUR/USD quickly up to 1.1550.
Draghi opening statement highlights
- We confirmed asset purchases will continue at least through December
- Purchases will continue until ECB sees sustained inflation pickup
He's working hard to be dovish here but his big-picture optimism gave the euro a lift. The line about a 'very substantial degree' is word-for-word from the June 8 opening statement.
The USD is the strongest. The GBP is the weakest.
The snapshot of the strongest and the weakest show that the USD is the strongest while the GBP is the weakest. The GBP fell before the retail sales on Brexit concerns (and less favorable technicals) and the better did not do enough to turn the tide to the upside, and the selling returned (). The USD is seeing some upside momentum after its recent declines. The USDJPY's fall below the 50% retracement, 100 and 200 day MsA yesterday (at 111.637 to 111.88) could not be sustained and we are seeing a rebound in that pair. The AUDUSD also moved lower after their employment data came in as expected.
Draghi press conference coming up
The ECB left its asset purchases unchanged and maintained the language saying its ready to increase the size or duration of QE if required. There was speculation the ECB would take out the reference to 'size', 'duration' or both but they didn't and that's why the euro is lower.
Forex news for European morning trading on July 20 2017
Another busy session that has my typing fingers once more seeking a larger ice bucket but the pound that's needed rescuing more despite better UK retails data..
EU Brexit negotiator out with a press conference 20 July
- next Brexit talks must clarify reasons for disagreement over citizens rights
- EU insists on role of European court
The clock's ticking and they can't even get that far in 2 rounds of talks? Ouch.
UK trade minister Liam Fox out with a statement 20 July
Good luck with that one.
- UK and India undertaking a "trade audit"
- will exchange views in Sept
Meanwhile UK govt says Brexit repeal bill (legislation to transpose EU law into UK law) will next be debated on 7 Sept.
The eagerly awaited announcement from the ECB looms large 20 July
In short I don't see any significant change to Draghi's tone today.
If, as I reported last week, he plans then we might expect him to keep cards close to his chest today.
Results from latest Reuters/IPSOS poll now out 20 July
- 88% said they would vote from him again if 2016 elections held today
- 12% would not vote for him
- 7% don't know
I think I probably know the answer to this but would our readers who voted for Trump vote for him again now knowing all we have learned since the election?
We're seeing GBP sellers return after the post-data rally 20 July
GBPUSD currently 1.2980 again after failing to get back over the (now pivotal given the pre-data tumble from there) 1.3020 area. EURGBP back up from 0.8834 lows to post 0.8861.
Notable expiries for the 14.00 GMT cut today 20 July
- USDJPY: 111.65 (460m) 112.00 (390m)
- GBPUSD: 1.3000 (GBP 360m) 1.3100 (400m) 1.3400 (395m)
Those USDJPY contracts adding to the demand down there seen yesterday and the order board.
UK June retail sales data now out 20 July
- prev 1.1% rev up from -1.2%
- yy 2.9% vs 2.5% exp vs 0.9% prev
- core retails ex auto fuel mm 0.9% vs 0.5% exp vs -1.5% prev rev up from -1.6%
Market caught short with the upside risk as per my with a bad number pre-empted.