Mario Draghi dominated yesterday’s news as he held an ECB press conference after the governing body decided to keep the main benchmark rate at the current level. Draghi said monetary policy stimulus is filtering through to the real economy as he insists that the ECB has to see its QE plan through to the end. Draghi went on to say that the “ECB currently sees no reason to add to the QE program” previously there was talk of possibly adding to it, thus increasing the supply of Euros. Draghi also said “we expect the economic recovery to broaden and domestic demand should be further supported by monetary policy measures”. The Euro strengthened after the hawkish comments from the ECB President.
UK services PMI was released yesterday. Growth in the UK’s tertiary sector suffered its biggest slowdown in nearly four years this morning as the official PMI posted a 56.5 figure against expectations of 59.2. Sterling fell after this news as the service sector in the UK accounts for nearly 80% of GDP. Along with a weak manufacturing figure and a bounce in construction, combined growth across the three sectors was the slowest since December and the second weakest for two years, leading to Sterling weakness yesterday morning.
Across the pond, the US released its first clue in to this Friday’s Non-Farm Pay rolls. ADP employment posted a slightly better than the economists’ consensus at 201k, suggesting that this week’s all important number could be north of 200k. US ISM non-manufacturing was also released yesterday, with the figure disappointing at 55.7, its worst reading in over a year.
On today’s economic docket we have the official bank rate decision from the Bank of England, expected to remain at record lows of 0.5%, an MPC statement release after is tentative. We also have US unemployment claims scheduled for release, the markets last chance in a piece of high tier labour data ahead of Friday’s Non-Farm Payrolls.