Important Days Ahead

The next couple of days could be very critical for the currency markets, with key data out in all of the major zones. We have had a pretty uneventful few days up until now, with most of the majors trading in fairly tight ranges, but this could be about to change. The key data releases are:

Eurozone GDP – today at 10.00
Bank of England policy statement – tomorrow at midday
European Central Bank policy statement – tomorrow at 12.45
US Non-farm Payrolls – Friday at 13.30

Expectations are that the Eurozone will still be in negative growth, but that the depth of their recession will have slightly lessened, so watch for any surprises here. If expectations are met or even exceeded then the Euro could strengthen significantly, likewise if growth is still very down, then the Euro could weaken off.

The central banks’ policy statements are key in the BoE’s case because there is a lot of talk and recent voting in the MPC about extending the Quantitative Easing programme, and in the ECB’s case because they cut interest rates last month and rumours abound they might be prepared to do more cuts to try and stimulate their recessionary economy. Further QE would dilute the Pound and subsequently weaken it, and further interest rate cuts would weaken the Euro. So watch for the results of these two statements as rates will move very quickly if either of these things occur.

As for NFP in the US – this is pretty much the biggest data release in the US after the FED’s monthly policy statement, and gives an indication of the state of the US economy through its labour market. It has been a rocky road for NFP in the last few months, with some very good and very bad months – what will we get this time? Expectations are for a similar result to last month 165,000 jobs created. If this does happen or is exceeded then the Dollar might push back the last couple of days slight drops, if not, then we could see the end of the last few months Dollar strength.

If keeping an eye on the markets is not convenient for you then please take advantage of your CI account manager. We watch the markets closely and can keep you informed of exactly what is happening at any time.