Euro bulls take control

Both central bank monthly meetings yesterday afternoon passed
without incident, neither the Bank of England nor ECB changed
interest rates or embarked on further stimulus. ECB chief Mario
Draghi helped the Euro to post strong gains immediately after his
press conference after suggesting the key conditionality measures
of any ECB help ‘would not be punitive’. Fears over measures
country’s would need to adhere to benefit from the ECB’s OMT
program was weighing on Euro sentiment, so the comments from Mr
Draghi were very welcome and pushed the single currency towards the
key 1.30 level against the Dollar. This afternoon’s non-farm
payrolls provide the next near term turning point for the Euro and
Dollar. Expectations are for around 111K jobs added last month, but
mixed US jobs data on Thursday is keeping the bullish bias in check
for now.

Economically the non-farm’s matter less now with open ended QE
in place and the Fed tied to bringing the unemployment rate down.
It is much more important politically with the presidential
election now just over a month away. An improving labour market
benefits the incumbent candidate much more than the challenger,
even at this late stage. Or at the very least temporarily takes the
heat off after a strong showing by Mitt Romney in the first debate
earlier in the week.

Highlights next week include UK NIERSR GDP estimate, due on
Tuesday morning which should show mildly positive growth over the
last month. German CPI & ECB monthly report are the big ticket
items from the Euro zone and finally on Friday the University of
Michigan confidence survey.