Back
5 Dec 2014
Recap: Draghi procrastinates the decision; Euro shaken but here comes the NFP
FXStreet (San Francisco) - Mario Draghi offered today a bearish outlook on the Eurozone as he announced that the ECB cut GDP and inflation forecast for the year to come. He even said that new assumptions didn't mainly reflect lower oil prices and weak growth. Then pro-QE investors ran out of its short euro positions.
The ECB lowered forecasts for GDP and inflation for 2014 as well as 2015 and 2016. 2014 revised to 0.8% from 0.9%; 2015 cut to 1% from 1.6% and 2016 down to 1.5% to 1.9%. The ECB president said: "Inflation projections revised significantly downwards, mainly reflect lower oil prices and downward momentum for growth."
However, there was no commitment to ECB sovereign QE. Draghi indicated that the ECB needs more time to assess the impact of latest measures and he delayed QE for early 2015. So, the EUR/USD initially fell to 1.2275 but it quickly bounced off to a high of 1.2455 where the pair found new selling interest that sent it back to 1.2360. Finally the pair closed at 1.2375.
There was another big story in the currency market on Thursday. The USD/JPY finally touched 120.00 as the pair traded as high as 120.20. However, it failed to maintain gains and selling interest or profit taking, as you want to call it, sent it back to finish at 119.75.
According to Valeria Bednarik from FXStreet, positive US figures "should see the pair extending its rally into the year end, opening doors for a test of next critical long term figure at 125.00."
And here comes the Non Farm payrolls. Market expectation is for 232K new jobs in November with an increase in the jobless rate to 6.6%. There's a high chance of October's results being revised up from 214K previously reported. Watch out on weaker than expected ADP and ISM non-manufacturing reports earlier this week.
Key data:
Bank of England holds rates at 0.5 percent
ECB leaves rates unchanged
US weekly jobless claims fall by 17k, to 297k
Draghi: ECB to reassess current stimulus next quarter, prepared to do more
Draghi: ECB will be vigilant on oil prices
Draghi: lower inflation, accompanied by weaker real GDP growth and subdued monetary dynamics
Draghi: ECB has discussed all assets but gold
Canada Ivey Purchasing Managers Index declined to 49.2 in November from previous 54.2
US stocks closed negative but off lows; Gap reports sales rose 6% YoY
The ECB lowered forecasts for GDP and inflation for 2014 as well as 2015 and 2016. 2014 revised to 0.8% from 0.9%; 2015 cut to 1% from 1.6% and 2016 down to 1.5% to 1.9%. The ECB president said: "Inflation projections revised significantly downwards, mainly reflect lower oil prices and downward momentum for growth."
However, there was no commitment to ECB sovereign QE. Draghi indicated that the ECB needs more time to assess the impact of latest measures and he delayed QE for early 2015. So, the EUR/USD initially fell to 1.2275 but it quickly bounced off to a high of 1.2455 where the pair found new selling interest that sent it back to 1.2360. Finally the pair closed at 1.2375.
There was another big story in the currency market on Thursday. The USD/JPY finally touched 120.00 as the pair traded as high as 120.20. However, it failed to maintain gains and selling interest or profit taking, as you want to call it, sent it back to finish at 119.75.
According to Valeria Bednarik from FXStreet, positive US figures "should see the pair extending its rally into the year end, opening doors for a test of next critical long term figure at 125.00."
And here comes the Non Farm payrolls. Market expectation is for 232K new jobs in November with an increase in the jobless rate to 6.6%. There's a high chance of October's results being revised up from 214K previously reported. Watch out on weaker than expected ADP and ISM non-manufacturing reports earlier this week.
Key data:
Bank of England holds rates at 0.5 percent
ECB leaves rates unchanged
US weekly jobless claims fall by 17k, to 297k
Draghi: ECB to reassess current stimulus next quarter, prepared to do more
Draghi: ECB will be vigilant on oil prices
Draghi: lower inflation, accompanied by weaker real GDP growth and subdued monetary dynamics
Draghi: ECB has discussed all assets but gold
Canada Ivey Purchasing Managers Index declined to 49.2 in November from previous 54.2
US stocks closed negative but off lows; Gap reports sales rose 6% YoY