Will The ECB Comments Fly As The Market Preps For Thursday?

The aussie rate decision over night provided a bit of a bid tone in the Asian session, by leaving rates alone, after having cut their key "Cash Rate" twice already this year.

Risk-off tone to the morning with rumours and conversations flying around the eurozone, whether Draghi can act as suggesting and whether any more time will be given to Greece (in the US session both the German Finance Minister and Dutch PM highlighted that Greece is not allowed a third bailout).

German Newspaper Die Welt provided its two pennies (marks) worth, writing: "ESM violates law and EU treaties." All Member States are jointly liable for the bonds issued by the ESM, and this without credit and limit of liability. It is not excluded by Article 21 and also shows that the ESM procured unlimited additional funds from the ECB that the central bank will print out. Obviously Draghi's letter in the German press has recently not won everyone over...

However, Spanish and Italian bond yields continued to decline on the European session, somewhat disjointing the markets confused by whether we really were risk-on or off. In reality, the US participants went back to the market yesterday, digesting some of the Jackson Hole news further along with prep for Thursdays ECB meeting, hence causing a rather mixed session. Poor US Manufactoring data was also thrown in for good luck.

Our trades called on Sunday/Monday are playing out really well with good positions in GBP/JPY, NZD/CAD and GBP/CHF playing out nicely, a few hundred pips being a nice way to start September.

EUR/USD
Seems to still be rejecting the 1.2620 handle, wouldn't be surprised to see a slight pull back prior to Thursday as the Bulls try and get better prices and the Bears try and jump a ECB disappointment. A strong pin off of the 1.25 handle would put us long, though I suspect this won't happen prior to Thursday now.

GBP/USD
Still sat at resistance not really willing to move much. Key to watch the current range we are sat in, similar to the Euro I wouldn't be surprised by a slight pop lower prior to Thursday.

AUD/USD
Move higher on the aussie rate decision followed by the general move lower in risk-off trading has created a small little pin today. Potentially good for a small move or a continuation from Friday's pin but I would keep stops tight.

USD/JPY
Range is holding well on this pair and we have been capitalising playing a few range trades. Unless the pair manages to break the range this could remain choppy for a while.

GBP/JPY
Price is trying to break higher but struggling (doesn't bode that well for our long position), position has struck of T1 today in which we closed 50% but we are still looking for a push to T2 or T3.

NZD/CAD
Now well in the money and a risk free trade, touched T2 today and closed 50% of the position, we now look for a move to push T3.

GBP/CHF
Currently in the money and allowed a dip to provide a better entry price.