There have been some positive moves in stock markets this week, with US indices once again touching highs for the year and stocks in Asia also in positive territory. The dollar has also been at new highs for the year on the dollar index, which resulted in a 28-month low on EURUSD yesterday. This provides a neat backdrop for the ECB meeting today, because if there is one thing the Eurozone needs, it’s a weaker currency. That said, it has more been a dollar move, so the euro is still higher vs sterling, the scandi currencies and then yen over the past month. There remains a strong hope that the ECB will move into some form of quantitative easing in the first quarter, so today will be about hints or otherwise along these lines. But it will also be about gauging success in their current programs, with the asset back securities program having only recently started.
Sterling was in positive mood yesterday as the Chancellor announced what was in effect a mini-budget, with changes to property purchase taxes, together with other adjustment on business taxes. This was seen adding some good news to the public finances, whilst leaving personal taxation unchanged, hence the slightly positive mood on sterling.
For today, beyond the ECB, there is an UK BoE decision at midday, but nothing expected and no statement is normally issued. Otherwise, it’s a question of positioning ahead of the US employment report tomorrow. ADP numbers yesterday were a touch softer, but not enough to dent expectations for another strong headline number. USDJPY continues its relentless rise, just a touch below the 120 level overnight. The Aussie is still also on the defensive below the 0.84 level, even after slightly better than expected retail sales data.