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Round Up – US Employment Data & ECB Rate Decision

James Boston
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In a kick to touch European Central Bank chief Mario Draghi cited lack of information as a reason for the ECB not adjusting its benchmark interest rate at yesterday’s meeting. The rate was left on hold at 0.25% and markets liked it. The Euro rose almost a figure and a half to over 1.36 during Draghi’s much watched live statement.

The ECB is currently working on it’s quarterly 2 year economic forecast, this information will become available in the next month and the ECB bosses statement made clear that the Bank is “willing” and “ready” to act on this data. Key to any further monetary easing in the Eurozone will be inflation, currently at 0.7% it is well below the ECB’s target of just under 2% and it therefore remains highly likely that next scheduled meeting will see Eurozone rates fall to 0%.

In a much more muted affair The Bank of England’s (BOE) Monetary Policy Committee (MPC) also met yesterday. There was no element of surprise here as there was no change to either interest rates or quantitative easing expected or delivered. BOE Governor, Carney, has taken advantage of several opportunities recently to provide guidance on likely future MPC actions, including an imminent reversal of it’s monetary easing stance should unemployment continue to fall at its recent pace.

As a prelude to today’s crucial Non-Farm Payroll figures, US markets were boosted yesterday on the back of a better than anticipated weekly Initial Jobless report. Jobless claims dropped by 20k to 331k in confirmation that hiring is continuing to pick up at an accelerated pace. Market gains are always welcome but there is still a great deal of caution evident ahead of this morning’s numbers, 185k is the number to beat and any significant shortfall from this will see a rapid sell off.

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