Forex news for North American trading on Dec 3, 2015:

What a day.

ECB news:

  • Draghi: ECB will extend QE until March 2017
  • No additional QE from ECB
  • ECB cuts deposit rate by 10bp
  • Full text of the ECB decision
  • SNB declines to comment after ECB decision
  • FT reports the ECB left rates unchanged before the decision (they were wrong)
  • Five ECB officials didn't back today's decision - BBG
  • Draghi declines to say if deposit rate is at the lower bound
  • Draghi disappoints but caution still advised into NFPs tomorrow
  • ECB's Weidmann: Further stimulus wasn't needed
  • Draghi Q&A: Our conclusion about our policies is that they've been effective

  • ECB's Mersch: QE reinvestment is most important part of decision

Other news:

  • November 2015 US ISM non-manufacturing PMI 55.9 vs 58.0 exp
  • October US factory orders +1.5% vs +1.4% expected
  • US initial jobless claims 269k vs 269k exp
  • Fed's Yellen: Repeats Liftoff delay could risk abrupt tightening
  • November 2015 US Challenger layoffs 30,953 vs 50,504 prior
  • November 2015 US Markit services PMI final 56.1 vs 56.5 prior
  • Bill Gross: Avoid bonds and stocks in 2016
  • Fed's Yellen: Sees some margins of slack in the labor market but not many
  • Saudi's did not propose OPEC cuts at pre-meeting meeting

Market moves:

  • Gold up $9 to $1062
  • WTI crude up $1.32 to $41.26
  • S&P 500 down 30 points to 2049 -- worst day in 9 weeks
  • US 10-year yields up 15 bps to 2.32$
  • German 10-year yields up 20 bps to 0.66%
  • EUR leads; USD and CAD lag

What a day. I could write 10 paragraphs just about the ECB decision and the euro moves. Before the announcement the euro was near the lows of the day around 1.0550 on speculation of a big move.

The first surge higher came on the FT headlines about 5 minutes before the decision. That sparked a quick jump to 1.0650 then a whipsaw when the ECB actually cut 10 bps. Still that was a half-hearted move and the euro began a climb higher. and was at 1.0650 as the press conference start.

Draghi did not deliver and EUD/USD quickly ran to 1.0775 as it sunk in. He talked more and it hit 1.0891. That was the high for a few hours as brave shorts took it back to 1.0787. Then real money began to move in and it was a one-way street higher, especially after a soft ISM report and weakness in stocks. The high was 1.0981 and we finish about 40 pips off.

Cable drafted behind the euro and followed roughly the same pattern. It was one of the quietest 250 pip rallies you'll ever see as all the focus was on the euro.

USD/JPY got some attention as it slid a cent from the pre-ECB highs near 123.50. It was slow to react and it wasn't really until stocks started to turn over that it slid. That took a few hours but once it set in, the pair was on a steady track south.

The commodity block was an interesting case. AUD/USD fell 50 pips after the ECB on the thinking that less accommodation is bad for global growth. That made sense as AUD/USD slumped to 0.7300 from 0.7340. Yet the theme turned into USD selling later and AUD showed once again that it's resilient in a rally all the way to 0.7360. Similar story for NZD.

CAD wasn't quite as fortunate. It was at 1.3320 ahead of the decision then rallied to 1.3400 on growth concerns. USD/CAD fell back to 1.3350 from there but that's no impressive given the 3.3% rally in oil. This pair has been surprisingly quiet over the past few weeks, almost too quiet.

Thanks for joining us on a fun ride.

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