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Forex: Risk aversion remains dominant

Mario Draghi did little to surprise the markets yesterday by maintaining quite a consistent message and not announcing anything new or radical.  There was certainly a tinge more of a dovish slant to the press conference, but maybe not as much as had been expected and other than the odd reference to the ABS program and Ukraine situation, it was rather like listening to a broken record.  The euro as a result found it hard to build on the small bounce it recorded on Wednesday and simply drifted lower throughout the session.  Not only did Draghi do little to lend any support to the single currency but the weekly US labour market data surprised with a much better than expected initial jobless figure coming in below the 300k level at 289k.  This lent support to the dollar which has been a strong performer in the last few weeks.

Things are quite quiet on the economic data front today although Canadian unemployment should be monitored at 13.30 London time.  The geopolitical situation in Ukraine will continue to be closely watched, but as mentioned in yesterday’s Outlook, some of the usual assets you’d expect to be bid higher in such circumstances, crude oil for example, have actually done the reverse and been drifting lower in recent days.  Gold has also failed to meaningfully spike higher even though it has regained the territory above $1300.

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