Range: 1.5420 – 1.5475
Sterling was sent into freefall yesterday after the BoE added an extra £75 billion to QE, raising the bar to £275 billion. The BoE is the first major central bank to pull the trigger in the next round of stimulus. This announcement was a month early as most were expecting the MPC to act after the inflation report. Sterling dropped to a low of 1.5270 after the announcement and 0.8740 against the euro, only to spend the afternoon rallying as positions were squared before today’s US employment report.
Jean-Claude Trichet signed off yesterday at his last press conference, passing over the helm to Mario Draghi. One finds it quite interesting as there were reports this morning of banks calling a European downward revision to growth with calls for a 50 basis-point cut in rates by the end of the year. Whether or not there will be such an aggressive reversal of rate in such a short space of time however remains to be seen. EUR/USD rallied after Jean-Claude Trichet announced more liquidity measures (it didn’t solve anything before) as the market squared positions ahead of the non-farm payrolls report today. Traders continue to trade with a bearish bias in this forex pair, however with some targetting lows of 1.2860.
Trading the yen over the last week has been similar to watching paint dry but that’s just how the Japanese officials want it as we trade in tight ranges. The BoJ didn’t inspire anything in its policy meeting overnight so the focus will be on today’s non-farm payrolls report. Is it that this forex pair could be the most sensitive to this report as we track US yield so anything out of the consensus could finally shake us out of the 76.30-77.30 doldrums. The consensus for today’s reports is a gain of 55,000 in payrolls and a 90,000 gain in private payrolls and the unemployment rate to hold steady at 9.1%.