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Draghi didn’t.

Draghi didn’t.

Mario Draghi’s words were more impactful than the European Central Bank’s (ECB) statement, which finally dropped the party line about the possibility of increasing the asset purchase program if the economy faltered. The slightly hawkish ECB statement sent EURUSD to 1.2446, but the currency pair took a U-turn after Draghi started speaking.

Mr Draghi stated that interest rates will be held “well past the horizon of net asset purchases”. The ECB also lowered their 2019 inflation forecast and warned that underlying inflation remains subdued, which is another factor affecting the single currency.


Donald Trump’s decision to impose tariffs, 25% on steel imports and 10% on aluminium imports, provoked Cecilia Malmström, EU trade commissioner, to warn the EU may retaliate. The import duties will go into effect in 15 days, although Canada and Mexico will be exempt while negotiations continue over the North American Free Trade Agreement (Nafta). The US may not be able to meet demand from domestic producers. If so, US steel customers could face a 25% rise in prices, particularly on UK exports of specialised steel.

Today’s Nonfarm payrolls data is expected to show a slight pickup in February and employment to have declined to 4% from 4.1%, but will likely have little impact. The market is focussed on the average hourly earnings figure. After increasing at the fastest pace in almost a decade, annualised wage growth is expected to fall 0.4%. If so, previous inflation fears which caused the steep drop in equities at the beginning of February are likely to ease.


Brexit tensions remained a significant feature with Trade Minister Liam Fox objecting to the idea of the EU punishing the UK. Further, there were concerns that failure to agree a transition deal in time for the March Summit would hinder a Bank of England interest rate hike in May, especially since Whitehall didn’t expect a Brexit deal until next year.

Global risk appetite improved slightly and Trump’s apparent focus on US-China trade issues eased fears that the UK would suffer, shielding Sterling. The Euro hit selling interest above 1.1175 and retreated to the 1.1220 area while the UK currency again failed to break the 1.3900 resistance area against the Dollar. Sterling opened at 1.38270 against the Dollar and 1.1225 against the Euro.

Data to watch:

07:00 EUR Exports (MoM) (Jan)
07:00 EUR Trade Balance s.a. (Jan)
07:00 EUR Current Account n.s.a. (Jan)
07:00 EUR Imports (MoM) (Jan)
09:30 GBP Consumer Inflation Expectations
09:30 GBP Manufacturing Production (MoM) (Jan)
09:30 GBP Industrial Production (MoM) (Jan)
09:30 GBP Industrial Production (YoY) (Jan)
09:30 GBP Manufacturing Production (YoY) (Jan)
13:00 GBP NIESR GDP Estimate (3M) (Feb)
13:30 USD Nonfarm Payrolls (Feb)
13:30 USD Average Weekly Hours (F
13:30 USD Average Hourly Earnings (YoY) (Feb)
13:30 USD Unemployment Rate (Feb)
13:30 USD Labor Force Participation Rate (Feb)
13:30 USD Average Hourly Earnings (MoM) (Feb)
17:40 USD Federal Reserve Bank of Boston President Rosengren Speech
18:00 USD Baker Hughes US Oil Rig Count

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