Draghi lifts the Euro

The US government remains closed following a meeting last night between President Obama and Republican House speaker John Boehner concluded with no agreement as the President told Wall Street to ‘ be concerned’.

The markets generally continue to ignore the US political circus for the moment as risk trades slightly positively through the asset classes; although this may well change as the debt ceiling date draws closer and Treasury Secretary, Jack Lew, reminds congress that the Treasury will run out of borrowing authority on October 17th. Rating agency S&P have noted that the US core GDP will diminish by 0.3% for every week the US Government remains closed.

Yesterday’s ADP report gathered extra market attention with the US jobs report release previously scheduled for tomorrow now very unlikely to materialise as the US senate remains in stalemate. The report was weaker at 166k versus the 180k expected with the previous two months being revised lower by 54k.

ECB President Mario Draghi gave the single currency a lift through the 1.36 level by not announcing any additional LTRO’s, reiterating that the ECB “are ready to consider all relevant instruments”. There was no mention of the higher exchange rate, unlike the discomfort he expressed in the February press conference.

The Asian session saw the release of the Chinese non-manufacturing PMI, which exceeded expectations coming in at 55.4 versus 53.9 previously; however, the market reaction was muted. Meanwhile, the NZD got a lift as RBNZ Governor published an article suggesting rates and mortgage restrictions will need to be lifted to curb inflation and house prices.

This morning we get the service PMI releases from Europe and the UK and this afternoon’s jobs data will no doubt be the focus as the market will scrutinise the weekly jobless claims data and the employment component of the non-manufacturing ISM component.

EUR/USD

Supports 1.3520-1.3450-1.3380 | Resistance 1.3650-1.3710-1.3800

USD/JPY

Supports 97.20-97.05-96.50  | Resistance 99.00-99.60-100.00

GBP/USD

Supports 1.6180-1.6130-1.6050 | Resistance 1.6280-1.6310-1.6390