04 Dec 2014

Euro boosted after ECB fail to commit to QE

United States Dollar: GBP/USD got a boost from better bids in EUR/USD yesterday, this following the ECB monetary policy press conference. President Draghi was less dovish than expected in his statement which in turn saw EUR/USD push higher – GBP/USD got dragged higher with it. It rallied from 1.5650 to a high of 1.5723. It’s run out of steam through the overnight session though and fell to a low of 1.5626 a few hours ago. There’s been no top tier UK data to make mention of during the last 24 hours and there’s not much on the docket today either. The major focus for FX markets will be on US Non-Farm Payrolls today. Consensus is for 230,000 new US jobs to have been created in November.

We expect a range today in the GBP/USD rate of 1.5600 to 1.5725

Euro: Draghi took us a bit by surprise on Thursday and sounded a little less dovish than we and other commentators thought might be the case during his accompanying interest rate statement. The central bank did not announce any further liquidity measures and certainly didn’t indicate any immediate intentions to implement full blown QE, this after some initial confusion about his message. It’s a bit at odds with the most recent rhetoric and whilst it’s provided a boost to the euro it looks like it might only be temporary. QE is still on the cards and it wouldn’t a surprise for the ECB and markets to push the idea early next year, which in turn will likely put more downward pressure on the single currency. Anyhow, EUR/USD rallied from 1.2305 to a high of 1.2455 on the news, but has since settled a little lower to open this morning at 1.2370. The single currency is stronger vs. the pound too and GBP/EUR opens lower at 1.2650.

We expect a range today in the GBP/EUR rate of 1.2600 to 1.2700

Aussie and Kiwi Dollars: AUD/USD and NZD/USD have been fairly steady over the last 24 hours. AUD/USD has traded a range between .8350 and .8420 and NZD/USD opens this morning at .7760. There hasn’t been any data from Australia or New Zealand overnight but it doesn’t mean the two currencies will go quietly as we head towards the end of the week. US Non-Farm Payrolls will play a big part in which way AUD/USD and NZD/USD go over the next few hours.

We expect a range today in the GBP/AUD rate of 1.8600 to 1.8740

We expect a range today in the GBP/NZD rate of 2.0100 to 2.0240

Data Releases

AUD: No data

EUR: Revised GDP q/q

GBP: Consumer Inflation Expectations

NZD: No data

USD: Non-Farm Employment Change, Trade Balance, Unemployment Rate, Average Hourly Earnings m/m, Factory Orders m/m

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