Big day: NFP vs. ECB
By Mark Jensen
Today is a very intense day. At 12:30 GMT we’ll get a pile of very important economic data from the US (especially Non-Farm Payrolls) and the beginning of the ECB’s press conference.
Comparing these events, we must say that NFP is more likely to surprise the market. A reading a bit above 200K is expected. After the big ADP figure (+281K), many investors expect solid NFP as well. Still, you can never be certain with NFP and even the most informed economists often miss with their estimates, not to mention that the predictions range from 160K to almost 300K. The unemployment rate can also bring volatility as so far it has surprised traders on quite many occasions. Taking into account the cautious attitude of the Federal Reserve, worse-than-expected data will have more impact on USD than the better ones.
The European Central Bank, on its part, isn’t expected to make any new big steps, while probably discussing the existing measures in greater detail and emphasizing its readiness to do more if the economic situation in the euro area deteriorates. We are especially interested in comments about the ABS purchase program (which should be more or less similar to the QE in the US) as well as about the further dynamics of the interest rates in the euro area. So, it’s probably worth paying attention so such pairs as EUR/GBP and EUR/NZD. The former is now testing June minimums in the 0.7960 area to the downside, while the latter is consolidating around 1.5600. As for EUR/USD downside risks prevail for today as well.