Range trading persists ahead of ECB announcement today

US data continues to outperform following a robust ADP report yesterday that rose above the 200k consensus to 238k, causing a number of banks to revise their NFP forecasts significantly higher.

The highly anticipated FOMC minutes from the taper meeting in December turned out to be a non-market moving event as the minutes revealed little on the committee’s thinking that was not already apparent after Chairman Bernanke’s post-meeting press conference. The tone indicated that the central bank will proceed with caution in its approach to slowing down asset purchases.

The Asian session saw AUD weaken following stronger domestic data and further below consensus data from China.

Retail sales from Australia came in at 0.7% versus the consensus of 0.4% but with Chinese CPI dropping to 2.5% year-on-year from the expected 2.7%, the AUD traded back through the 0.8900 level.

The policy meetings from the BoE and ECB will be today’s highlights

There have been suggestions in the weekend press that the former are likely to release a statement following the MPC meeting moving the stimulus benchmark unemployment threshold currently at 7% to 6.5%.

Personally, I feel that Governor Carney has made it clear that the 7% level is an indication and not a line in the sand to reduce QE measures. I also feel that the quarterly inflation report is a superior stage to make such announcements, with official forecasts to back up such a move.

The ECB meeting is unlikely to see any further adjustment to policy today, with ECB President Mario Draghi likely to dismiss recent stronger data from Germany and instead reminding the market that the ECB is ready to fight deflation and has all the tools available should the threat increase.

EUR/USD

Supports 1.3570-1.3525-1.3490 | Resistance 1.3655-1.3680-1.3725

USD/JPY

Supports 104.50-103.90-103.45 | Resistance 105.10-105.50-106.00

GBP/USD

Supports 1.6435-1.6380-1.6335 | Resistance 1.6485-1.6500-1.6550