The European Central Bank announced an across the board interest rate cut of 0.10% (or 10 basis points) to become effective on September 10th; that announcement took markets by surprise as analysts had believed that the ECB would leave interest rates unchanged at this time. Earlier, the Euro hadn’t been able to keep momentum in positive territory against the U.S. Dollar and had moved closer to this week’s 1-year trough; but after the announcement, the Euro moved rapidly lower in a knee jerk reaction as markets wait for the ECB president, Mario Draghi to preside over the customary press conference during which he might hint at further stimulus.
As reported at 7:53 am (EDT) in New York, the EUR/USD pair is trading near the session low at $1.3051, more than 100 pips from the day’s high; the EUR/GBP is also lower at 0.7935 while the EUR/JPY is at lower at 137.0265. Whether or not the Euro continues to slide will depend on Draghi’s comments regarding future stimulus.
U.S. News to Draw Market’s Focus
Now that the ECB’s actual decision is out of the way, markets will direct their attention across the pond to the U.S. Markets are awaiting a number of U.S.-based data points including the ADP labor change report, jobless claim figures, Markit’s PMI numbers, crude oil figures and several speeches from various members of the Federal Open Market Committee. On Friday, the week’s market mover, the non-farms payroll report, will be released and expectations are that 225,000 new jobs will have been added in August.