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Session Recap: Euro falls as Draghi opens the door to 'negative deposit rates'

FXstreet.com (San Francisco) - The Euro collapsed on the Thursday’s session following the ECB's rate cut by 25 bps and the possibilities of further cuts. But the major reaction came as Mario Draghi opened the door to negative deposit rates to try to encourage the banking lending. Draghi said they are "technically ready."

In the US, investors’ confidence was fueled by the lowest initial jobless claim figures in five years at 324K ahead of the employment report. Another key data was the reduction in the US trade balance deficit in March.

After posting its first negative day since April 25, the EUR/USD fell hard from 1.32 lows to test the 1.3435 level. However, the pair held above the 1.3000 region. The euro was also crushed against the Yen with 240 pips decline from 129.90 to 127.50, now at 128.00. And the EUR/GBP that is currently at 0.8400 after falling from 0.8480.

The USD/JPY rose to test the 98.40, highest since April 26 and USD/CHF climbed to the 0.9360 after jumping 100 pips from 0.9260.

Main headlines in the American session:

US: Trade deficit narrowed to $38.8 billion in March

US: Initial Jobless Claims fell to 324K

Draghi Q&A: Inflation expectations well anchored; economic weakness extended

ECB’s Draghi leaves door open for further rate cuts

US: ISM New York Index rises to 58.3 in April

Euro crushed by prospects of negative deposit rates

Stephen Poloz named new BOC governor

Wall Street rises on positive Jobs data and ECB cut

Wall Street rises on positive Jobs data and ECB cut

The US stocks market has closed Thursday with strong gains as investors' confidence was fueled by the lowest initial jobless claim figures in five years at 324K and the ECB movement to cut rates and open the door to negative deposit rates. The S&P closes at record high and the Nasdaq posted its highest close in 12 years.
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The USD/CAD is trading on a slightly bid tone following the appointment of Mr. Poloz as the new BOC Governor. After finding a major barrier at 1.0050, failed to be penetrated after up to four attempts since April 30, the exchange rate is now threatening supply area at 1.0123/1.0110, as per the drop-base-drop from April 29/30.
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