Dollar Gets Lift Ahead of Key NFP

Just ahead of the release of key employment data from the U.S. Bureau of Labor Statistics, the U.S. Dollar managed to hold onto earlier gains after getting a much-needed boost from unexpectedly upbeat data which would support the Fed’s curtailing of its quantitative easing measures. Last week’s applications for new jobless benefits struck a 5½ year low while the ISM employment index struck a 14-month peak, suggesting that the release of non-farms payrolls numbers could meet exceed analysts’ expectations though some analysts say that a surprise to the downside is not likely to detrimentally affect the long term outlook for the U.S. Dollar.

The EUR/USD pair was trading at $1.3192, a loss of 0.6% on the day before recovering later to $1.3209. Yesterday, the European Central Bank left monetary policy unchanged and the benchmark interest rate at the current 0.5%. In his speech after the announcement Mario Draghi said that though the worst appeared to be over interest rates would remain at their current levels for the foreseeable future. Furthermore, the ECB would monitor the economic situation carefully with a view to cutting interest rates further if conditions warranted given that the low inflationary trend would provide scope for additional stimulus.