The euro had a volatile time during the ECB rate statement and press conference but ended the day lower against most of its FX trading counterparts. Draghi emphasized that the ECB is open to further easing, as he spoke of their preparations for purchases of asset-backed securities later on. He also mentioned that the sanctions imposed by Russia could take its toll on trade and productivity, then eventually on overall economic activity. German industrial production showed a mere 0.3% uptick versus the estimated 1.4% gain. German trade balance and French industrial production data are up for release today.
The US dollar continued to strengthen against its FX trading counterparts in recent trading sessions, as data from the US came in stronger than expected. Initial jobless claims came in at 298K, lower than the estimated 305K figure and the previous 303K reading. For today, preliminary non-farm productivity and unit labor costs data are up for release, providing more insight on the jobs situation in the US. Stronger than expected data could lend more support to the dollar, as this would confirm that the US economy is on the right track to recovery.
FX Trading Fundamentals
The pound resumed its drop to its FX trading counterparts, as the BOE didn’t announce any changes to monetary policy as expected. Traders might sit on their hands and wait for the minutes of the meeting to see if there’s any change in bias or assessment among policymakers, before putting on larger pound positions in FX trading. UK trade balance and construction output numbers are due today and weak data could push the pound lower.
The franc lost ground during the ECB rate statement but made a bit of a recovery to the dollar, despite weaker than expected data from Switzerland. The SECO consumer climate report showed a drop from 1 to -1 instead of the estimated improvement to 4. Swiss unemployment rate is up for release today and it is expected to hold steady at 3.2%.
The yen raked in FX trading gains as risk aversion dominated trading in recent sessions, even as reports from Japan simply came in line with expectations. The current account surplus narrowed from 0.38T JPY to 0.13T JPY while the bank lending report marked a 2.2% annualized gain. Later today, the BOJ will announce its monetary policy statement and possibly address the weakness in Japanese data. If Kuroda emphasizes the resilience of the economy, the yen could gain further ground, but hints of potential easing could drive the currency lower.
The Australian dollar had a weak FX trading day, thanks to bleak jobs data. The employment change figure marked a 0.3K drop in hiring versus the estimated 13.5K gain while the jobless rate jumped from 6.0% to 6.4%. Earlier today, data on home loans fell short of expectations and marked a mere 0.2% increase instead of the estimated 0.3% rise. Later on, Canada will release its jobs report and possibly show a 25.4K rebound from the previous 9.4K decline.
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