ECB Looking More Hawkish
ECb have raised growth and inflation forecasts and this have given Euro bulls a reason to buy and push the EURUSD beyond the 1.06 level before the pair settles down at a around the 1.0580 level.
The ECB have also stated that the asset purchase program will continue until Dec but with the amount being purchased reduced from the figure of EU80bn to EU60Bn from April to December. However, Draghi still wants to have some ammunition if something goes wrong and he has said that if at an time the economic situation deteriorates the QE can still be extended or even expanded. Overall, he finds that at the current moment the economic outlook contains lesser risk to the downside and seems more optimistic.
Eyes are on the NFP today
The expectations for the NFP figure has risen as the ADP gave a solid number. Take note that an NFP number of 300 would be required for the US dollar bulls to gain strength and continue on its ascent.
Well supported as the ADP figures came out strong. Market are building up expectations of a stronger NFP too tonight. Missed expectations and we may see a fast moving reaction aka profit taking.
Draghi is more upbeat and signals cautious optimism. ECB have also revised 2017 inflation to 1.7% from 1.3% and revised growth modestly to 1.8% from 1.7%. Having said that Draghi have also cautioned that core inflation remains too weak for the Eurozone. So, do not expect tapering of QE to happen anytime soon.
Traders remain biased at selling into rallies. The Brexit journey has barely just started. A smooth process would be favorable to the Sterling but any uncertainty from economic reports might stir things up some more.
Pair is back above 115. However for USDJPY to continue on its ascent would require that the UST and JGB yield widen further and Nikkei which appears to look to go higher will be supporting a USDJPY upside move. A close above 115 would give more confidence for the more bulls to come into the fray.
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