05 Mar 2015

Euro drops to fresh 11 year lows as Draghi confirms details of QE plan

United States Dollar: GBP/USD was steady throughout most of the day yesterday. It slipped to a low of 1.5216, once again dragged lower by the sell-off in EUR/USD. As expected, the Bank of England left interest rates on hold at its monetary policy meeting on Thursday. The ECB also left rates unchanged but as President Draghi went on to detail how the bank’s QE programme will work the euro started to sink, taking GBP/USD with it. Cable hasn’t fallen below 1.52 just yet as investors take a cautious approach to today’s US Non-Farm Payrolls report. Predictions are for 240,000 jobs to have been added to the economy in February – any number in excess of this will likely see GBP/USD fall further, down and through 1.52.

We expect a range today in the GBP/USD rate of 1.5100 to 1.5300

Euro: EUR/USD slipped through 1.10 yesterday to an eleven and a half year low of 1.0987 following the ECB statement and press conference. It did actually spike initially as the central bank upgraded growth forecasts, raising the 2015 forecast to 1.5%, up from 1% previously. It touched 1.1114 before gapping lower as Draghi went on to give details of the bank’s QE plans. They will purchase €60bn of assets a month from next week until September this year, the programme in total being worth €1.1 trillion with each central bank within the Eurozone being responsible for buying its own bonds. EUR/USD hasn’t really recovered since, although it does trade above 1.10 currently at 1.1015. It’s traded a very steady range in Asia as markets await the release of the US jobs report this afternoon. If it’s a good number, we might well see EUR/USD fall below its recent eleven and a half year low before the end of the week.

We expect a range today in the GBP/EUR rate of 1.3780 to 1.3875

Aussie and Kiwi Dollars: AUD/USD fell in lined with EUR/USD yesterday but its recovered overnight on a bit of profit taking ahead of today’s US NFP report. NZD/USD has been pretty flat and opens in London towards the bottom of its recent range at .7468. GBP/AUD and GBP/NZD haven’t done a lot in the meantime and trade at 1.9490 and 2.0375 respectively.

We expect a range today in the GBP/AUD rate of 1.9380 to 1.9600

We expect a range today in the GBP/NZD rate of 2.0240 to 2.0480

Data Releases

AUD: No data

EUR: Revised GDP q/q

GBP: Consumer Inflation Expectations

NZD: No data

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

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