In Asian trading today, the Euro was on the defensive as investors await the outcome of the European Central Bank’s monetary policy meeting later today. While a consensus of analysts polled doesn’t expect the ECB to make any firm decision toward additional easing today, they don’t close the door on the likelihood that Mario Draghi will hint at that possibility in the future, especially if the threat of stagflation continues to be a concern. At the last policy meeting, the Eurozone’s inflation did not appear to have been on the ECB radar but analysts concur that at some point in the near future it may prove to be an unavoidable issue needing resolution. However, recent upbeat economic data including an unexpected uptick in Eurozone inflation may, for the time being, have eased some of the pressure on the ECB.
As reported at 11:09 a.m. (JST) in Tokyo, the EUR/USD pair was trading at $1.3728, recovering from an overnight low of $1.3707. The EUR/JPY traded at 140.715 Yen, a gain of 0.2% and pulling away from last week’s trough of 138.79 Yen, now that Ukraine tensions have eased. With risk appetite improving, the AUD/USD moved higher, rising at one point in the session to a weekly peak of $0.9033 before easing back to $0.9021, still a gain of 0.4% overall.
Non-Farms Holds Key to Dollar Direction
The U.S. Dollar Index had earlier hit a weekly peak at 80.272 .DXY, but slipped lower to 80.148 .DXY as a result of disappointing labor data from ADP which showed future new private sector jobs than had been expected in February. The U.S. government’s Non-farms Payroll Data will be released on Friday and could be a market mover, especially should they disappoint which would lead to more speculation that the Federal Reserve might halt its tapering plans.