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Forex Signal (Thu March 3 2011, 7:45am NY Time EST) - EU ECB Interest Rate

Discussion in 'Current Forex Trading Signals' started by Henry Liu, Mar 2, 2011.

  1. Henry Liu

    Henry Liu Former FPA Special Consultant

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    ECB (European Central Bank) will be rendering its rate decision today, it is widely believed that ECB will keep current rate unchanged. Here’s the forecast:

    7:45am (NY Time) EU ECB Rate Decision Forecast 1.00% Previous 1.00%
    ACTION: EUR/USD BUY 1.25% SELL 0.75%

    The Trade Plan

    ECB rate decision comes in two part, the first one is the 7:45am rate announcement followed by the 8:30am Press Conference where ECB chief Trichet issues the official statement on this rate decision. Since it is extremely unlikely to get a surprise from ECB, there is usually no volatility following this release, and our time is better served to focus on Trichet’s speech in 45 minutes.

    However, in the unlikely event that ECB surprises the market by hiking rates unexpectedly, then expect market to go into a buying frenzy for EURUSD and we should jump in immediately on a spike trade because no matter what the slippage or spread is, we will end up making positive pips.

    However, if ECB decides to keep rates unchanged (99.99% possibility), then we should stay out of the market.

    For more information about my trading methods:
    Henry's News Trading Method

    The Market
    ECB (European Central Bank) is likely to once again leave its minimum bid rate at 1.00% or unchanged this month. As all 50+ analysts agree on this scenario.

    The real event will be the Press Conference at 8:30am. However, since this is beyond the scope of news trading and into advanced market interpretation, I'm going to advice everyone to stay out of the market until Trichet finishes his press conference (usually within 1~2 hours).

    Here's the link to watch the Webcast Live at 8:30am EST.

    With recent tension in the Middle East and the fact that general inflationary pressure from food and energy have risen and are likely to keep on rising, Trichet may address this issue and possibly change his dovish stance to a more proactive one, at least that's what the speculators are counting on... however, knowing Trichet and how he usually conducts this meeting, it is highly unlikely for any surprises or changes in his tone, so I would expect some "buy on rumor and sell on news" type of situation, that is market may push EURUSD up only to lose steam and drop heavily during Trichet's Press Conference... I'll keep my fingers crossed :)

    Additional Thoughts
    Since the main focus of ECB Rate decision is usually on the press conference scheduled 45 minutes later, it is important to understand that the press conference is delivered in 2 parts: The first part is the prepared statement by Trichet and copy of the statement will be available on ECB's official website. Then it will be followed by a Q&A session, where onside media members will have a chance to ask questions, market reaction is usually unpredictable, therefore it is best to stay out of the market during the entire press conference.

    Pre-news Consideration
    There should be no pre-news consideration for this particular release, as the real event will be Trichet Press Conference at 8:30am.

    Historical Data & Chart For ECB Minimum Bid Rate Decision


    Thanks,


    [​IMG]
     
    #1 Henry Liu, Mar 2, 2011
    Lasted edited by : Sep 8, 2016
  2. Fred Langemark

    Fred Langemark Recruit

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    Wow, thanks Henry for posting the link to that webcast ... VERY interesting meeting with Trichet! Now if only I understood even 1/32 of what they were talking about ... :)

    Hanging in there for the rest of military school ...
     

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