European Central Bank sticks with its stimulus measures

Inflation was nominally above the ECB’s goal last month when it reached 2 percent, yet without real evidence that it’s sustainable over the medium term at those levels, Draghi’s stance is that such a discussion is premature.

Draghi stated and acknowledged that the Eurozone economy is slowly getting back up on its feet, the economic recovery is seemingly gathering momentum and that the recent bout of economic data has made the European Central Bank more confident that the robustness of data will translate into a more sustainable economic recovery, and will continue to “firm and broaden”. Draghi accordingly announced small upgrades to eurozone growth forecasts, now seen at 1.8 percent this year and 1.7 percent next.

“If one wants to assess the balance. we would say that the domestic sources of risks have been more contained”, Draghi said at a news conference after the bank left its stimulus programs unchanged.

This afternoon’s nonfarm payrolls report in the United States will undoubtedly be the main economic release in the currency markets today.

Economic sentiment is at a six-year high, trade is rebounding, services and manufacturing output is rising, and unemployment is at its lowest since 2009.

The decision comes even though inflation now stands slightly above the central bank’s target of just below 2%. After gaining in the first two months of 2017, the Aussie has fallen 1.8 percent in March, largely due to a resurgent USA dollar.

A spokesman of the United Kingdom government eased some concerns about the possibility of another referendum on Scottish Independence this year following the Brexit vote.

The decline appears to have been largely driven by Brexit jitters as markets growing increasingly nervous ahead of Prime Minister Theresa May’s plans to invoke Article 50, triggering at least two years of uncertainty as the United Kingdom negotiates its exit from the EU. The latest GDP estimate from NIESR will also be worth watching out for this later this afternoon.

The ECB meeting has probably been the most important event this week so far. Meanwhile, Euribor futures fell as money market investors started to price in rate rises from the European Central Bank as early as December 2017. The next possible resistance for the euro-franc pair is seen around the 1.09 region.

The euro also hit a 1-1/2-month high of 122.745 yen EURJPY=, up nearly 1 percent on the day. There are no major economic reports on the calendar for Canada or New Zealand but softer data including the drop in dairy continues to keep the New Zealand dollar under pressure. Increased chances of a Bank of Canada rate hike came as data showed US employers hired workers at a robust pace in February, which could give the Federal Reserve the green light to raise interest rates next week despite slowing economic growth.

USD – USD requires a strong jobs report today – need to match that 2.8% average hourly earnings expectation, but probably need 2.9% or more to really move the needle.

This afternoon’s labour report will be released at 13:30pm United Kingdom time today.