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EUR/USD Sinks as FX Market Gets Another Disappointment, This Time from ECB

August 2, 2012 by

EUR/USD was rising today, but dropped sharply after the European Central Bank refrained from decisive actions to bolster the failing economy of the eurozone (event A on the chart). Last week, ECB President Mario Draghi promised to do all that is necessary to support the euro and market participants expected the promise to translate in something material on today’s policy meeting, but such expectations proved to be wrong.

Initial jobless claims (seasonally adjusted) rose to 365k last week from 357k the week before, while analysts predicted an increase to 375k. (Event A on the chart.)

Factory orders posted a drop by 0.5% in June instead of the expected rise by 0.4%. Moreover, the May increase was revised from 0.7% down to 0.5%. (Event B on the chart.)

EUR/USD for 2012-08-02

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