Post-ECB EURUSD volatile price action mirrors 2015 volatility
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.
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.