Daily Market Report - 23/01/2015

The Euro suffered significant losses during Thursday’s session, most notably against the Dollar where the single currency fell to an 11 year low, dropping 1.2 per cent. The Euro’s losses were also noticeable against the Pound, where the fall was just above 1 per cent.

The move came after European Central Bank (ECB) president Mario Draghi announced a €60bn-a-month government bond-buying programme - much higher than the expected €50bn a month until the end of September 2016, meaning the programme will total €1.26 trillion euros. With its main interest rate at just 0.05 per cent. Draghi had a limited arsenal of weapons to counter inflationary pressures, after the Eurozone slipped into deflation in December for the first time since 2009, with a 0.2 per cent year-on-year fall in prices.

As recently as the beginning of this month, there had been speculation the bank would avoid a fully-fledged QE programme altogether. But last week a decision by the European Court of Justice effectively gave it the green light, when it ruled a previous monetary easing policy, called Outright Monetary Transactions (OMT), was compatible with European law.

The safe haven Dollar strengthened yesterday off the back of market uncertainty, despite disappointing jobs figures for the US.More Americans than forecast filed applications for unemployment benefits last week, a sign of lingering holiday turnover. Holiday staffing needs create swings in employment, making it difficult for the government to seasonally adjust its weekly data this time of year. Employment is likely to keep growing as the world’s largest economy shows signs its sustaining momentum amid a global slowdown.

Key Announcements:
GBP - 09:30 - UK Retail Sales (Dec) Ecpected to fall from 6.4% to 3.0%
USD - 13:30 - Markit PMI manufacturing figures (Jan) higher to 54.0 from 53.9

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