ECB shows little action to back up last week's comments as BOE hold rates and QE
03/Aug/2012 • Currency Updates•
Yesterday the Monetary Policy Committee (MPC) maintained interest rates at 0.5% and its asset purchase programme (otherwise known as quantitative easing, or QE) at £375bn. The BoE announcement left the market unsurprised as it was widely expected that figures will be held as they wanted to see how funding for lending and the asset purchases play out before taking further action. Last night the pound fell against the US dollar and traded within a range. There should however be some consolidation ahead of the key figures release in the US where a trading direction should be chosen.
The USD dollar has corrected in the Asian sessions as the currency markets advanced on the back of risk aversion after the European central bank followed the Federal Reserve in disappointing market stimulus hopes. All eyes are now focused on US employment reports. There is expectation to adding a further 100,000 jobs in July making a narrow improvement. The unemployment rate is forecast to remain unchanged at 8.2. The ISM Non-Manufacturing composite is expected to show service sector growth slowed and weakened since 2010. Also a major factor could be the all-important us non-farm payrolls release today.
The euro has trimmed its advances ahead of the ECB press conference after Mario Draghi disappointed giving no such promise for quick action. Draghi indicated that there will be no interventions for September for the Spanish and Italian economies. Bond buying remains an option in the near term to help stabilise the European economies. As expected, having cut rates by 0.25% to record lows last month, the ECB has left its key rates unchanged.