The morning began with increased strength from the U.S index post the ECB meeting yesterday, as we near the start of a full blown QE programme confirmed for Monday 9th March. The USD index surged to reach fresh 11 year highs for the third day running, currently trading around the 96.7 region.
In terms of news sentiment, the morning started with the release of Consumer Inflation expectations, which has been revised down to 1.9% previously expected at 2.5% for the next 12 months. However this is fairly in line with recent inflation reports from the BOE, as Carney made it clear that we will experience low inflation in the short – run, therefore not much change in market sentiment. Still GBP/USD plummets below the 1.52 level as the USD index continues to surge and though in line with expectation, sentiment is still fairly dovish from the UK.
Slightly later came the release of Eurozone GDP figures which were as expected with the year on year at 0.9%, slightly better than the previous figure of 0.8%. This is again in line with what the ECB made clear yesterday, as Draghi expects GDP to rise gradually in the short to medium – run while inflation is expected to stay fairly stagnant. However as GDP has been revised up in recent months, the figures released were not as hawkish as traders may have wanted. EUR/USD continues to plummet as it broke below the 1.1 mark early today.
Later will see the release of Non-Farm Payrolls, as the Fed’s members are fairly split in terms of the timing of a rate hike; employment figures become ever more important in dictating the rate hike. The consensus of NFP is currently 240,000, slightly lower than the previous figure of 257,000 as the expectation is for Unemployment Rate to fall to 5.6%. Surprisingly last month saw unemployment rate increase to 5.7% though NFP data was positive, it seems Jobless claims is having negative impacts on the labour market. Yesterday’s Jobless claims data was fairly negative than expected, so it is likely Unemployment Rate may be under pressure once again even with positive NFP data. However the focus will be NFP and with the USD index still surging, it is likely traders are expecting more hawkish data from the U.S.
That’s the wrap for today. Good Luck with your trading endeavours.