Forex news for January 22, 2015:
- ECB unveils €1.1 trillion QE program
- ECB leaves rates on hold
- ECB program will be decentralized
- Full text of Draghi’s introductory statement
- ECB will buy bonds even if they have a negative yield
- Draghi: majority was so large about need to act on QE that no vote was needed
- Weidmann and Lautenschlaeger said to have opposed ECB QE
- US initial jobless claims 307K vs 300k estimate
- FHFA house price index for November +0.8% vs +0.3% estimate
- German banking association says QE will have ‘marginal’ effects
- IFO calls ECB move ‘illegal’
- January 2015 eurozone consumer confidence flash -8.5 vs -10.50 exp
- Danish central bank cuts rates again
- US weekly EIA oil inventories +10071K vs +2670K expected
- Latest polls show shows Syriza widening lead in Greek poll
- Carl Ichan made a big bet against the euro but it wasn’t easy
- S&P 500 up 31 points to 2063
- Gold up $9 to $1302
- WTI crude down $1.30 $46.49
- USD leads, EUR lags
The euro was slaughtered on the QE announcement and the US dollar bulldozed technical levels.
When the chips are down, Draghi finds a way to deliver and he did again today with a huge QE package. What made it dicey to trade was the leak yesterday. The numbers weren’t significantly bigger than rumored but on the rumors, the ECB fell and then ripped right back. Traders had trepidation about the same thing today. The euro dropped a cent on the first headline about the size of the program but nearly retraced on the decentralization comments. But from there it was a one-way street all the way to 1.1371. It made a stand at 1.1450 for awhile but every level gave way. It ended up being the sixth largest one-day EUR/USD fall on record.
And it wasn’t in just the euro, cable started US trading near 1.5200 and broke 1.5000 late in the day. Most currencies finished on their lows against the US dollar with AUD/USD also breaking 0.8000 and USD/CAD above 1.2400.
USD/JPY was under some pressure early, especially as EUR/JPY fell to a three-month low. But after touching 117.25 it shot 125 pips higher, helped by a huge rally in stocks.
These are crazy days and it will probably continue with Syriza leading ahead of Sunday’s Greek election.
FX ticker
If you’re looking for more on the ECB decision, check out the video I made with Greg right after the decision.
