EUR/USD
As can be expected, all eyes today were firmly upon the eagerly-awaited ECB press conference, with the pair trading in a relatively rangebound manner in the lead up to 1245BST. Upon the ECB’s decision to cut all three key rates (marginal lending rate by 35bps to 0.40%, deposit rate by 10bps to -0.10%, main refi rate by 10bps to 0.15%), the pair immediately moved higher with the decision widely infitting with market consensus. However, these gains were then pared and EUR/USD moved into negative territory below 1.3600 as the release was accompanied by a statement saying further monetary policy measures to be announced in statement later. At the press conference Draghi announced targeted LTROs, discontinuation of sterilisation of SMP purchases, preparation of ABS purchases/QE and an extension of fixed rate full allotment until 2016. This added further pressure to the EUR/USD as the discontinuation of sterilisation of asset purchases and targeted LTROs up until this point had only been speculated about. However, the move to the downside was consequently halted as ECB's Draghi said the ECB has reached lower. This downward momentum was further slowed by the absence of a full-blown QE programme and news that the ECB is only preparing ABS purchases and as such failed to breach 1.3500 amid talk of Asian names heavily defending the handle. Late on in the session all of the ECB inspired losses were then pared as markets shrugged off the measures announced by Draghi as the finer points of the policies disappoint, with the size of the LTRO falling being below what some participants were looking for.
GBP/USD
In early trade, the GBP/USD was seen stronger, taking out stops at the 50 DMA at 1.6785, on the way to print a fresh weekly high at 1.6793. Today’s main release out of the UK was that of the BoE rate decision, which saw the central bank keep their monetary policy on hold as was widely expected. The pair was relatively unreactive to the release with participants awaiting the ECB rate decision. Upon the already discussed events in the Eurozone the pair moved lower as the broad-based USD strength stemming from the EUR/USD outweighed GBP. However, GBP did regain some territory as the EUR/GBP continued its declines to print its lowest level since December 2012 with a lack of pertinent news out of the UK or US to provide the pair with any further direction.
USD/JPY
During Asia-Pacific trade notable JPY strength weighed on the USD/JPY and EUR/JPY as participants awaited today’s ECB decision. However, with a lack of newsflow out of Japan, the pair traded in a relatively tight range throughout the European session ahead of the release. Upon the ECB’s announcement the pair moved higher given the broad-based USD strength. Nonetheless, gains were consequently pared with the USD/JPY seeing sharp losses in the latter stages of trade with JPY prevailing in a flight-to-quality trade ahead of tomorrow’s nonfarm payrolls release.