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ECB Minutes Weigh On EUR/USD

ECB Minutes Weigh On EUR/USD

  • EUR/USD pares early gains following ECB release
  • ECB minutes state downside risks for inflation have risen
  • US jobless claims data place a question mark over NFP growth

The EUR/USD was in an ebullient mood early on today. climbing well above 1.13 at one point for a gain of 0.7%, but alas it has since lost most of it again following the release of the minutes from the latest European Central Bank meeting as well as US jobless data.

The ECB’s September meeting release was somewhat dovish with the central bank noting that there was still a “substantial degree” of stimulus working its way through the economy currently. The central bank also stated that most members of its governing council believe that downside risks for inflation have risen and that emerging market uncertainty is a concern.Initial jobless claims from the US were also released today, beating expectations with a 263,000 print versus 274,000 expected while the revision to last week’s number was immaterial (at minus 1,000 to 276,000).

The Department of Labor noted that two states had estimated claims, but what is more interesting is the pergence between the claims and the nonfarm payrolls print. Last Friday, we saw a horrible (relatively speaking) employment report that showed the US economy as having only added 142,000 jobs in September.

August, it must be noted, was weak as well at 136,000.

These two figures do not agree with the brighter picture of the labour situation painted by indicators such as the jobless claims series. Indeed, based on the claims data we should expect nonfarm payrolls growth to bounce back to at least 200,000.

The next major potential mover for FX markets are today’s Federal Open Market Committee minutes, due today at 1800 GMT.

— Edited by Michael McKenna

Mads Koefoed is head of macro strategy at Saxo Bank

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