Forex Intraday Round-up: EUR Remains Flat Ahead of ECB Meeting
The EUR/USD pairing remained largely unmoved by credit rating agency Standard & Poor ‘s downgrade of Greece’s debt to Selective Default. S&P justified the lower rating with the uncertainty around Greece’s buy-back programme. The pair reached its bottom boundary of 1.3042 at around 9.00 GMT and after briefly appreciating to 1.3082 at 12.35 GMT it was trading at its last session level of 1.3066/67.
Today is the European Central Bank (ECB) meeting, which according to FXstreet.com is not going to have a significant effect on the EUR/USD. Broader consensus expects Mario Draghi, president of the ECB, to stay in the sidelines leaving the lending benchmark rate at 0.75 percent. A request by Madrid for aid from the Outright Monetary Transactions (OMT) programme is seen as likely in the first half of the next year, unless the economic situation in Spain deteriorates quicker than expected.
“The ECB policy meeting will prove more interesting with the latest staff economic forecasts set to be released. We believe they are likely to reveal another significant downward revision to real GDP growth in 2013 from the previous mid-point of 0.5%, while a subdued projection for inflation in 2014 will serve to increase the likelihood of further monetary easing ahead weighing upon the euro” opined Lee Hardman, Currency Strategist at BTMU, as quoted by FXstreet.com
Figures of German Factory Orders were released today showing a 3.9 percent increase on a month-to-month basis in October and beating estimates and previous print at 0.9 percent and -2.4 percent, respectively.
Bank of England Governor Mervyn King and the Monetary Policy Committee decided today not to expand their quantitative-easing programme beyond the target of £375 billion and keep the benchmark interest rate at the record low level of 0.5 percent. The minutes of the meeting are expected to be published on Wednesday 19 December.
!m[The GBP Gains on Bank of England Policy Decisions](/uploads/story/979/thumbs/pic1_inline.png)“You’re going to have tight fiscal policy combined with ultra-loose monetary policy and that will remain the case,” said Joost Beaumont, an economist at ABN Amro Bank NV in Amsterdam. “The risks to the growth outlook are still a little bit to the downside and the fiscal consolidation in the U.K. next year will be harder than this year, so that will bite.”
Following the meeting the GBP/USD pair remained above the 1.6100 level and at 12.55 GMT was trading at 1.6116/17 close to its session high of 1.6121.
The South African rand gained for the fourth day today erasing its earlier losses after the country’s account deficit stayed the same in the third quarter. The ZAR climbed 0.2 percent to 8.7537 per dollar in the early morning session of trading in Johannesburg. “The market expected a significant extension of the current account deficit, so this took most people a bit by surprise,” opined Mohammed Nalla, head of strategic research at Nedbank Group Ltd., in a phone interview with Bloomberg. “That’s why the rand is a few cents stronger”