The Euro struggled to gain traction during the Asian trading session in the wake of the surprise decision by the European Central Bank while the greenback’s gains were kept to a minimum as investors await the release later today of the all-important private sector payrolls data. Yesterday, the ECB announced an interest rate reduction of 25 basis points, catching market players by surprise with the timing, especially given the most recent release of upbeat economic data from Germany. Mario Draghi said the move was made to forestall any possibility that the Eurozone economy could slip into a deflationary period and that the central bank still had scope for further rate cuts.
As reported at 11:49 a.m. (JST) in Tokyo, the EUR/USD pair was trading 0.1% lower at $1.3407, recovering from Thursday’s fall to $1.3295. The EUR/JPY steadied at 131.61 Japanese Yen, edging up from the 1-month trough o 131.18 Yen struck yesterday. The U.S. Dollar Index also edged higher as a result of the Euro’s decline, trading at 80.897 .DXY, a gain of 0.1% but easing off the 6-week peak of 81.460 .DXY.
Markets Direction Attention to U.S. Jobs
Markets will focus their attention on the release of the non-farms payrolls data, with analysts expecting the data will show that 125,000 new jobs were created in October, reflecting in part the impact of the federal government’s shut down. Analysts also expect the unemployment rate to move higher to 7.3%. A better than expected number of new jobs will give the Federal Reserve Bank some scope to maneuver with respect to its monthly bond purchases, with many believing that tapering could begin in December given the unexpected uptick in U.S. economic growth.