Market awaits today's ECB meeting and Friday's Non-Farm Payroll

Tom Tong03/Απρ/2014Currency Updates

Asian session has been quiet with most players on the sidelines and primed for Draghi’s speech at today’s ECB meeting.


London closed with sterling slightly down against the dollar, although the pound scuttled up against the euro taking leverage from strong construction data and uncertainty over today’s ECB meeting and conference.

The construction industry was shown yesterday to be safe as houses. Confidence within the industry has now jumped to 7 year highs. Yesterday’s data also offsets the disappointing manufacturing PMI which caused a slight sterling dip.

Construction PMI remained stable at 62.5 in March after February’s reading of 62.6. This equates to 11 months on the bounce of growth. The city has forests of glass and steel being thrown up and across the South East there is a canopy of cranes. Most is residential, with house building at its highest pace in 10 years. The continuation of Osborne’s Help to Buy suggests this is set to continue for some time.

No data of note out of the UK today


London closed with the euro dipping against sterling and the dollar, the drop stemmed from a pincer of strong data out of the US and the UK, coupled with uncertainty over the likely action of the ECB.

ECB policy makers meet in Frankfurt today to consider a vote on radical action to fend off deflation. The fear is deflation gripping properly which would surely lead to the Eurozone flipping its economic recovery into reverse. The street is split over whether the ECB is likely to act. Everybody remembers Draghi’s comments last summer in which he said- «he would do whatever it takes to save the Eurozone.» More recently the surprise ECB interest rate cut took many by surprise and perfectly illustrated the measures they are ready to employ. Whatever decision is taken today will surely lead to euro pivots across the board. It’s tricky to dodge the fact that the ECB is in a difficult position. Data this week has shown that unemployment continues to hover close to record highs. Equally inflation remains far from the target of 2% and is sat at 0.5%. Therefore action would be warranted. However, the ECB is infamously hard to predict.

Set to be a packed day for the Eurozone – Markit services PMI and retails sales this morning. The interest rate decision is set for 11.45 GMT. At 12.30 we have the monetary policy statement and press conference.


Strong data out of the US served to lift the dollar across the board. London closed with the greenback up against both the euro and the pound. Elsewhere US stocks continue to fly – investors pushed the S&P 500 to a record intraday peak of 1893.

Payrolls increased in March by their most in 3 months- adding to the evidence that the job market is recovering from the effect of the savage winter which left many unable to work. The numbers also beat all forecasts by Bloomberg contributors. The solid ADP number should lead to impressive Non-Farm Payroll. 200k is the number being thrown around. As ever the typical volatility following a Non-Farm Payroll release has left most in the market waiting for the numbers tomorrow before entering positions.

Clearly yesterday’s ADP numbers are positive for the wider economy, an increase in companies hiring will surely lead to a pickup in household spending which contributes to 70% of the overall economy. Evidence of this was displayed in this week’s vehicle sales which came in very strong. In short the US is starting to see the improvements that the market wanted. The Fed will surely be watching closely as QE is handcuffed to both the unemployment level and economic growth.

Data of note today includes initial jobless claims, continuing jobless claims, trade balance, market services PMI and non-manufacturing PMI.


Written by Tom Tong

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