Super Mario Strikes Again

5 December, 2014

Tom Arnold

Thursday was much anticipated as we had central bank meetings for the UK and Europe, along with various other releases from across the globe.

Kicking the day off, overnight we had Australian retail sales, trade balance and import/export data. They came out above expectations which initially gave the Aussie some strength, gaining nearly a cent against sterling but was quickly reversed as the broadly weak dollar continued its recent slide.

After a few low key releases and bond sales, the central bankers had their turn to move the markets. The Bank of England came first but with no change to interest rates or QE, as expected, the exchange rates stayed flat. That was until the ECB’s turn, where we also saw no change but once the subsequent press conference started the markets reacted. As Super Mario Draghi spoke, it became clear the ECB had no concrete plans to introduce QE. Markets had widely anticipated this was the next logical progression to help stimulate growth and had been priced in accordingly, but with his words, the markets priced it back out again and the euro surged in value. The euro rallied a cent against the pound and over 1.5 cents against the dollar, which was previously sitting at over a two year high against the single currency.

As the euro did its thing, the US had a couple of ecostats of its own, with initial jobless claims and continuing jobless claims ahead of the employment data today. The figures missed the expectations so having spent the day gaining against sterling, the trend bucked and the greenback lost half a cent. Above the border in Canada the Ivey PMI figures came out but although better than expected, the Loonie failed to make any ground and ended nearly a cent cheaper for those buying with sterling.

It was a busy day, somewhat disappointing for those euro buyers yesterday so will today be any better?

We have plenty out to play with and some real key releases from the major economies. German factory orders kick off the day followed by UK consumer inflation expectations, which is a real hot topic for traders currently as regular readers will know. Add in EU GDP and it could be a volatile one for sterling/euro rates.

In Canada there is labour productivity figures, import/export and unemployment figures which again are of high importance. Followed closely by US unemployment figures and jobs data including the all important non-farm payrolls. The above all come out at 1.30 so any Canadian or US dollar buyers or sellers may be wise to transact beforehand! The week rounds off with US factory orders, consumer credit change and a couple of speeches from Fed members Mester and Fischer.

Happy Friday everyone!