FOREXYARD: Forex News Blog | |
| BOE and ECB Hold Rates Steady, Yen Rises Posted: 05 May 2011 05:20 AM PDT
As expected both the Bank of England and the European Central Bank held their based lending rates steady as all eyes turn to today's ECB press conference where a potential signal for next month's ECB interest rate increase could come. Commodities continue to trade lower, influencing equity markets with European bourses in the red. Silver prices dipped below the $38 level for the first time since early April. Speculations abound that the recent reversal in silver prices may be a signal for a market turn. The FTSE is down 0.7%, highlighting the risk-averse trading environment. In volatile trading, the best FX performer has been the Japanese yen with the USD/JPY falling below the 80 yen level for the first time since the G7 intervention in March. The USD/JPY continues to move south of this key level, increasing the risk of future acts of intervention in the FX markets by the Japanese Ministry of Finance to weaken the yen. The Canadian dollar is also reversing with the greenback strengthening. The USD/CAD reached as high as 0.9773, its highest level since mid-April. Traders' attention now turns to the ECB press conference where all eyes will be on ECB President Jean-Claude Trichet. The key words to follow during Trichet's speech are "Strong vigilance". This should be the signal both economists and traders are looking for. An increase to future ECB rates would be a catalyst for the euro while a pause in the ECB tightening cycle should trigger a sell-off in the euro. The EUR/USD is currently trading at 1.4820 prior to the press conference. The first resistance is found at yesterday's high of 1.4940 with a target at the 2009 high of 1.5140. Support comes in at the bottom of this week's consolidation pattern at 1.4750, followed by 1.4630. |
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