Forex Trading: Euro Tumbles Following ECB Press Conference

Euro Tumbles Following ECB Press Conference

Despite the unveiling of the ECB’s plans to lower borrowing costs in the euro-zone yesterday, the euro fell against most of its main currency rivals during afternoon trading, after it was announced that growth-forecasts in the region have been reduced. Today, traders can anticipate significant market volatility when the US Non-Farm Payrolls figure is announced at 12:30 GMT. The Non-Farm figure is widely considered the most important economic indicator on the forex calendar and its impact is generally felt throughout the marketplace.

Economic News

USD – Non-Farm Payrolls Set to Impact USD

Better than expected US economic indicators boosted demand for the USD during European trading yesterday, resulting in the dollar turning bullish against several of its main currency rivals. Both the ADP Non-Farm Employment Change and ISM Non-Manufacturing PMI came in above their forecasted levels. Following the news, the USD/JPY shot up more than 65 pips to the 79.02 level. A slight downward correction later in the day brought the pair to 78.90. Against the Swiss franc, the dollar was able to trade as high as 0.9596, up close to 80 pips for the day.

Turning to today, all eyes are likely to be on the US Non-Farm Payrolls figure, set to be released at 12:30 GMT. Analysts are forecasting that the US added 121K jobs in August, which if true, would be less than in July and could result in dollar losses before markets close for the weekend. That being said, the Non-Farm figure has proven extremely difficult to predict. Any better than expected news could help the greenback extend yesterday’s upward trend.

EUR – Euro-Zone Growth Forecasts Weigh Down on EUR

The euro fell against most of its main currency rivals yesterday after the ECB President reduced forecasts for euro-zone growth and the ECB held interest rates at 0.75%. Additionally, better than expected US news boosted demand for the dollar, turning the EUR/USD bearish. The pair fell more than 90 pips to reach as low as 1.2560 before staging an upward correction to reach the 1.2605 level. Against the British pound, the euro fell more than 40 pips for the day to trade as low as 0.7905 by the afternoon session.

Today, euro traders will want to pay close attention to the US Non-Farm Payrolls figure. If the figure comes in below its forecasted level, speculations that the Fed will initiate a new round of quantitative easing in the near future may increase, which could help the euro recoup yesterday’s losses against the greenback. That being said, any better than expected news could result in the euro taking additional losses before markets close for the weekend.

Gold – Gold Briefly Comes Off 6-Month High

Gold briefly turned bearish during mid-day trading yesterday, following positive American news which boosted demand for the US dollar. A strong dollar typically leads to losses for gold, as the precious metal becomes more expensive for international buyers. Prices fell as low $1696.53 an ounce, down more than $16, before rebounding to the $1708 level......

Source : dailymarkets