13 Feb 2014
Session Recap: Euro down on negative rates talks; GBP rallies
FXStreet (San Francisco) - The ECB brought out the big guns to attempt to push down the Euro on Wednesday as Benoît Cœuré affirmed the ECB is widely opened to cut rates into negative levels. The EUR/USD declined hard while the GBP/USD rallied as the Sterling was fueled by an upbeat BoE GDP forecast.
In an interview with Reuters, Benoît Cœuré commented that a negative deposit rate 'is a very possible option.' The Member of the Executive Board of the ECB affirmed that a negative rate “is something we are considering very seriously. But you should not expect too much of it. It can help to provide an additional incentive, but it is not the answer to everything. But it is possible and something that we have been discussing and as you know, we are technically ready to do it."
Then, the Euro declined for second day against the Dollar and the Pound. The EUR/USD extended decline from 1.3680 to close at sub-1.36 levels. "Ahead of Asian opening, the pair trades in between the 38.2% and the 50% retracement of its latest bullish run, with the hourly chart showing price well below a bearish 20 SMA and indicators barely correcting oversold readings, which suggest the risk remains to the downside," pointed Valeria Bednarik from FXStreet in a recent report.
The EUR/GBP declined around 110 pips to trade at 0.9189, lowest since January 31. According to Jamie Coleman, this slide was due on 'divergent rate views.' While ECB is thinking on negative deposit rates, the BoE is cementing the idea that it 'will be the first central bank to hike this cycle,' as Coleman pointed.
The GBP/USD performed its best day in nearly 3 months after rising around 150 pips to close at 1.6595. The GBP/USD rallied amid optimistic BoE quarterly inflation report and upbeat BoE GDP forecast. The cable managed to break above the 1.6440/60 range that prevailed overnight, pushing the GBP/USD to levels just shy of 1.6600.
Main headlines in the American session:
IMF says Australian monetary policy should remain accommodative
Fed’s Bullard expects 3% economic growth in 2014 or better
ECB's Hansson: ECB should consider QE
BOE's Carney: Won't take risks with recovery
US Monthly Budget Statement shows a $10.42B deficit in January
Senate gets majority vote to hike US debt limit
Wall Street closed mixed amid earnings and ratings
In an interview with Reuters, Benoît Cœuré commented that a negative deposit rate 'is a very possible option.' The Member of the Executive Board of the ECB affirmed that a negative rate “is something we are considering very seriously. But you should not expect too much of it. It can help to provide an additional incentive, but it is not the answer to everything. But it is possible and something that we have been discussing and as you know, we are technically ready to do it."
Then, the Euro declined for second day against the Dollar and the Pound. The EUR/USD extended decline from 1.3680 to close at sub-1.36 levels. "Ahead of Asian opening, the pair trades in between the 38.2% and the 50% retracement of its latest bullish run, with the hourly chart showing price well below a bearish 20 SMA and indicators barely correcting oversold readings, which suggest the risk remains to the downside," pointed Valeria Bednarik from FXStreet in a recent report.
The EUR/GBP declined around 110 pips to trade at 0.9189, lowest since January 31. According to Jamie Coleman, this slide was due on 'divergent rate views.' While ECB is thinking on negative deposit rates, the BoE is cementing the idea that it 'will be the first central bank to hike this cycle,' as Coleman pointed.
The GBP/USD performed its best day in nearly 3 months after rising around 150 pips to close at 1.6595. The GBP/USD rallied amid optimistic BoE quarterly inflation report and upbeat BoE GDP forecast. The cable managed to break above the 1.6440/60 range that prevailed overnight, pushing the GBP/USD to levels just shy of 1.6600.
Main headlines in the American session:
IMF says Australian monetary policy should remain accommodative
Fed’s Bullard expects 3% economic growth in 2014 or better
ECB's Hansson: ECB should consider QE
BOE's Carney: Won't take risks with recovery
US Monthly Budget Statement shows a $10.42B deficit in January
Senate gets majority vote to hike US debt limit
Wall Street closed mixed amid earnings and ratings