The European Central Bank provided no surprises yesterday as it kept rates on hold at 0% and maintained its current QE programme with asset purchases of €80bn per month. What was significant however was the lack of comments made by Mario Draghi during his speech at the press conference which followed. Draghi did however continue to reiterate, the all too familiar sentiment, that they are “using all instruments available in their mandate”. Draghi declared success over the deflation pressures seen last year, with it now at 2%, just above the ECB’s target. It seems that growth is returning to the Eurozone. The single currency strengthened against its major peers as these comments were announced.
Markets are now awaiting the next step, as Mario Draghi pointed out that the bank have no longer got a sense of urgency to take further action and as a result rates do not need to be lowered further. Could these be the first steps in moving towards tapering their ultra-loose policy? It certainly has markets believing it is.
The week ends with the most important indicator being released from the US, the Non-Farm figures, just after lunch. This is going to pave the way for the Fed to either raise rates or hold firm at the current level of 0.75%. Expectations of around 200,000 jobs to be added is expected, but after Wednesday’s private reading came out near the 300k mark, we could see again another job figures today.
If the figure is at or above what is forecasted, the Greenback is expected to strengthen. This will no doubt back up the FOMC to raise rates for the first time this year, when they meet on the 15th March. Leading up to the release of this data at 1.30pm, we expect to see volatility for the Dollar in anticipation of the figure hitting the wires.