Single Currency Shows Limited Movement
The single currency has risen and euro/dollar is trading at 1.1350. German Factory Orders improved 1.0%. Today, European Central Bank is going to have a meeting. The United States will release ADP Nonfarm Payrolls, at unemployment claims and ISM Non-Manufacturing PMI. Tomorrow, we’ll take a look at Average Hourly Earnings, Non-Farm Employment Change, unemployment rate and Fed’s Monetary Policy Report.
Last week, the euro saw some significant gains. This was attributed to Mario Draghi’s statement about the ECB’s policy steps for the future. But, there seem to be some kind of misunderstanding as the President simply intended to reassure markets that the economy is recovering and that it’s better to wait this time of low inflation out. Instead, everybody assumed that ECB is ready for an exit from an ultra-loose monetary policy. ECB isn’t likely to resort to some drastic moves, particularly the asset purchase program won’t be removed until the inflation hits the 2% objective. Today, ECB are expected to stand pat. The majority speculates about the timeline for the Fed balance sheet tapering. But, members haven’t thought it through yet. Currently, fed fund futures are pricing in 50% odds for December rate hike.