EUR/usd
It's a big day for the single currency today. Since draghi took up the post as the ECB's head the euro has become much more volatile during press-conferences after the bank's meetings. It's mainly due to the fact that Draghi actively employs non-traditional means to help the suffering economy of the eurozone instead of sticking to the formal approach of his predecessor Trichet, who generally strived to maintain inflation. Besides, Mr Draghi's forecasts prove to be much more precise. For instance, he promises that the EU economy will turn to growth in the second half-year. Judging by the statistics, this acceleration is quite possible in the coming months. For example, the unemployment increase in February was the lowest for the last year (33K), which may be a signal of the coming consolidation and the further reversal. At the beginning and in the middle of the previous week we spoke much about the possible rate cut by the ECB in order to prevent the crisis from further extension. However, now these expectations are no longer that strong. The market players will now be very attentive to the estimates given to the economic situation in the eurozone and will also be interested to know if the bailout of Cyprus will really serve as a model for other countries. The US statistics yesterday again indicated that the growth rate in March could prove to be lower than in the preceding two months. ADP reported the employment growth of 158K in the private sector, the February statistics were revised up significantly, to 237K against the initially published 198K. Here we also add the decline of the ISM Manufacturing PMI (from 54.2 to 51.3) and also of the Non-Manufacturing one (from 56.0 to 54.4). Will we see again the activity decrease in summer and the Fed's attempts to find the way to stimulate the economy in September-October?
GBP/USD
The sterling is trying to save its face. Yesterday the currency took attempts to recoup the two figures lost a day before and managed to win back half of the decline for a while. gbpusd grew to 1.5160, but then again fell under the pressure at those levels. Analysts don't expect that today's meeting will end in the QE extension from the current 375bln. (34 out of 37 surveyed analysts of Blooberg confirmed that). The thing is that the minutes of the BOJ ‘s preceding meeting didn't show any growth of dovish sentiments. Anyway, traders somewhat fear to purchase the sterling before the decision is published.
USD/JPY
After a short hitch traders rushed to sell the Japanese yen on the results of the BOJ's meeting. The accompanying commentary highlights that the BOJ will target the growth rate of the country's monetary base, building it up by ¥60-70trln yearly (about $700bln or a bit less than $60bln a month). For this purpose the Bank will be purchasing government bonds of all maturities, including the 40-year ones. Before the publication of the decision usdjpy had been near 92.70, but now it is above 94.
oil
The poor US statistics in addition to absence of any signs of growth in Europe gave rise to the profit-squeeze in Oil. The WTI rates dropped yesterday by $3 to 94.40. The local high, hit on April 1, was 97.70 and since the beginning of the week trading has been mainly held close to $97/barrel. Friday's US payrolls are of utmost importance both for Oil and stock exchanges (the latter also suffered a big correction yesterday).
