2016 is turning out like 2015 when we look at high impact policy announcements from central banks – same action, slightly different players.
Murderous price action following ECB rate cut then promise not to cut
Last Thursday 10 March 2016, ECB cuts rates from 0.5% to 0.0% but during the following press conference “Draghi added that the Government Council sees no need for further rates cuts“. In 6 hours following the ECB rate announcement, EURUSD falls 170 pips then u-turns, stabilises 400 pips higher for nearly 600 pips movement.
Murderous price action following ECB-rate-cut-promise-not-to-cut
Recall these incidents last year:
- 15 January 2015 – Swiss National Bank discontinues the minimum exchange rate which is effectively a currency peg to the Euro in a surprise announcement.
- 18 March 2015 – EURUSD jumps 400 pips over 3 hours following FOMC decision not to hike rates yet despite saying to hike rates for more than a year.
- 11 August 2015 – USDCNH up 1600 pips in 5 hours after PBOC devaluation.
- 18 December 2015 – Nikkei 225 round trips 3.8% up 3.8% down following BOJ not-unanimous decision to buy stocks.
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Soh Tiong Hum is Director of TerraSeeds Market Technician Pte Ltd. TerraSeeds is a trading educator in Singapore since 2005.
Soh's Twitter account @sohtionghum
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"I do not have a financial advisor's license. I am not qualified by any regulator to give financial advice. I do not know you the reader. Your investment means and motive may be different from me. My posts here are based on observations and meant for education. I am not responsible for for any consequence from your actions."