On Monday, the pound made some small gains following the UK PMI Service data that were swiftly erased. Yesterday the pound made more gains and at even greater velocity. However the ground made was even more swiftly eradicated this time as the interest rate decisions from the UK and the euro zone went head to head.
There was no surprise that the UK kept interest rates on hold but more uncertainty surrounded the asset purchasing program – No additional QE was announced. This saw the pound make up about 1 cent against the euro and the dollar. Just over an hour later, the ECB once again defended its economy through the hawkish tones of Mario Draghi. This lead to a flurry of euro strength especially during the Q&A session with the world’s media that followed the press conference.
Despite the euro zone lowering their growth forecasts; once again, Draghi remains convinced that growth will return before the end of the year. This resulted in GBPEUR falling well below 1.15 and EURUSD moving up to 1.31 whereas earlier in the week, levels of 1.29 seemed more likely.
From the US, the initial jobless claims figure came out better than expected leaving little room for clients buying the dollar above 1.50. Once again, it would appear that the pound has been labelled the donkey in this particular three horse race.
The recent lows on the US Dollar are looking increasingly under threat especially with the US non-farm payroll data due later today. There would appear to be no relief on the horizon for the pound either as no key data is due until Tuesday next week. It almost seems inevitable that Friday afternoon profit taking will see the dollar gain more strength especially when you consider all-time highs on US share prices this week.
On the whole, this week has been volatile across board and with support levels for the euro and the dollar once again being tested; will it be a case of when rather than if?
11.00am – EUR – German Industrial Production (YoY) (Jan): Expected to decline further to -1.2%.
13.30pm – CAD – Net Change in Employment (Feb): Expected to improve to 8,000.
13.30pm – CAD – Unemployment Rate (Feb): Expected to worsen to 7.1%.
13.30pm – USD – Non-farm Payolls (Feb): Expected to improve to 160,000.
13.30pm - USD – Unemployment Rate (Feb): Expected to remain at 7.9%.