• ECB comments Draghing euro lower
  • China unexpectedly cuts rates 
  • Light day for economic data
  • Canada continues weak path

After yesterday’s ECB policy statement and press conference, the euro fell by 1.8%, the biggest one-day drop since the central bank announced its quantitative easing (QE) program back in January.

Yesterday, ECB’s President Mario Draghi signaled his willingness to add more stimulus to the Eurozone’s sluggish economies. He reminded market watchers that the “ECB is ready to act if needed” and that his committee is “open to the full menu of monetary policy tools”. Our chief economist put together a more detailed piece on the conference which highlights the implications of Draghi’s statements in global currency markets. A very informative and relevant article that can be found here.

In the economic calendar for today, few key economic indicators are due to be released so the level of volatility in currency markets is likely to be low.

In recent news, China’s central bank unexpectedly announced it will cut interest rates in yet another attempt to jumpstart its slowing economy. This is the sixth time the Chinese central bank decided to cut rates since last November. Most currencies and equities around the world are being damaged by this unpleasant surprise.

EURUSD continues its downward move after yesterday’s press conference, and the falling levels are being magnified by a recent announcement that central bank of China will cut in interest rates by 25 basis points effective tomorrow. The euro is being crushed by the events that took place in the last 2 days, moving from high 1.13s to almost below 1.10.

GBPUSD is trading with less volatility today, as the currency pair trading levels remain rather flat in absence of key economic indicators.

USDCAD was trading relatively unchanged from yesterday’s close until the announcement of Chinese interest rate cuts hit trading floors. After the news, the currency pair spiked up by a full cent, ratifying once again the Canada’s economy and currency are very much tied to Chinese performance.