ECB Draghi voices Eurozone concerns today the world awaits 45th POTUS Donald Trump

20 January, 2017

Matthew Boyle

Yesterday was a busy day for data albeit little of any major note, as the market largely focussed the ECB interest rate decision and monetary policy statement. In the early hours of the morning we did have some important data from Australia as they released employment change and unemployment rate ecostats. This was a mixed bag as interestingly they showed an increase in the employment change to 13.5k from a predicted 10K, but an increase in the unemployment rate to 5.8% from a predicted 5.7%. The markets focus was largely on the lunchtime ECB interest rate announcement which perhaps unsurprisingly showed no change, remaining at 0% whilst the overnight deposit rate remained at a negative -0.4% – the market saw little movement. It was his speech at 13.30 which gave the market impetus, where he highlighted a number of key issues that the ECB faced. The key issues he raised were Inflation which is showing no signs of an upward trend, European Unity following Brexit and ongoing discontent in the Eurozone, and diverging paths with Trump about to take his place as the as the POTUS. As a result of these voiced concerns we saw the Euro weaken around half a cent against the pound but a cent against the Dollar. In the afternoon focus shifted to the U.S who posted a range of housing and jobless stats, and whilst generally these were very strong results being reports of low volatility did little to move rates. Interestingly by the end of the day’s trading the Euro had clawed back its earlier loses to the Greenback closing trading almost exactly where it opened.

Today whilst we do have a number of releases including Chinese GDP in the early hours and German PPI and UK retail sales in the morning, the market and indeed the entire world will be awaiting Trumps inauguration, and in particular his first speech as the 45th President of the United States. As we all have seen in recent weeks Trump does not pull any punches, so be prepared for a particularly volatile day where much could happen in terms of rates. Traders will be listening avidly to what he says and this could indeed move rates considerably – for example will we see him mention a trade deal with the UK? And if he does what and how much effect will this have on the Pound? Please take also take note that this will not only affect USD pairings, but will likely have a huge impact on a range of currencies, as aside from the USD being the most traded currency and pegged to a range of others including AED and SAR, his speech will set a tone and path for global economics which will affect all of the World economies. And as such we could see a huge amount of movement in rates today and in the coming weeks.

So, if you do have any upcoming requirements you would be well advised to let your broker know so you can stay in close touch, as we await the first speech of the new most powerful man in the world- Donald Trump. And as the world and Fx market will be hanging on his every word for hints and signs of his plans, there is no doubt we will see traders reacting accordingly, with rates potentially changing very quickly. Don’t be caught out and speak to your Currency Index broker for some friendly guidance on how to get the most out of your currency transfer in what is a particularly volatile time and busy day.