EURO UNMOVED AFTER ECB CHANGES, US JOBS NUMBERS EYED
The dollar fell today after Trump announced that he would sign a new policy to place tariffs on imported steel and aluminium.
His tweet came a few minutes after a report from the Bureau of Labor Statistics (BLS) showed that initial jobless claims fell to 1,870K while the initial jobless claims rose to 231K. The consensus for the latter was 220K. Late yesterday, the Fed released the Beige Book, which showed that the labour market was tightening and that wages were growing. Traders are now waiting for the official government employment numbers which are expected tomorrow.
The ECB held rates steady as expected. What was not expected, was the ECB’s decision to increase the QE. In the previous statements, the ECB mentioned a likelihood for increasing the QE if the economic conditions weakened. In today’s statement, the ECB said”
“The Eurosystem will reinvest the principal payments from maturing securities purchased under the asset purchase programme for an extended period of time after the end of its net asset purchases, and in any case for as long as necessary”
In Japan, a report by the cabinet office showed that the country’s economy expanded by 0.4% in the fourth quarter. This was higher than the analysts’ estimates of 0.2%. The economy expanded by an annualized rate of 1.6%. The growth was facilitated by business spending and increased exports. However, traders are cautious because of data released in February that showed a slowed industrial growth.
In Switzerland, a report by the State Secretariat for Economic Affairs (SSEA) showed that the labour market continued to tighten. The unemployment rate for February dropped to 3.2%. At the same time, on a seasonally adjusted basis, the rate dropped by 2.9% from January’s 3%.
The EUR/USD pair continued moving up today, reaching a two-week high of 1.2445. This came as traders interpreted the indications from the ECB and the impact of Trump tariffs while at the same time waiting for tomorrow’s job numbers. Tomorrow, traders expect the unemployment rate to drop to 4.0% and the NFP to remain at 200K. Meanwhile, the pair has completed a cup formation, which means there is a likelihood for a slight handle formation.
The USD/JPY pair traded at a narrow range of between 105.88 and 106.19 even with solid GDP revision. The cautious nature of the trade is mostly because traders are fearful about a slowing Japanese economy, especially in light of the tariffs to be imposed by Trump. The pair could experience a breakout if the job numbers tomorrow surprise the markets.
After wiping out the previous gains last week, the USD/CHF pair has tried to recover. Last week, the pair fell from a high of 0.9489 to a low of 0.9338. Today, the pair rose even as the Swiss job market continued to tighten. The pair is likely to cross the weekly high, especially if tomorrow’s job numbers beat or meet the analysts’ expectations.