Mid-week update – 03/02/16 by Michela Jaccarini

Good morning everyone!

This week has been a calmer one than the last. The Euro has been particularly stronger than anticipated following Mario Draghi’s last ECB speech; on Monday positive German Manufacturing PMI (Jan) was issued and on Tuesday German unemployment was better than expected. Sterling has also tried to regain momentum in the past couple of days, this also being helped by positive Manufacturing PMI for January.

Yesterday, as expected, the Reserve Bank of Australia decided to leave interest rates unchanged at 2%. Following the announcement of the interest rate decision, RBA’s Governor Glenn Stevens explained that the Australian economy continues to grow however at a slower rate than previously anticipated, partly because of current oil prices. This slump in oil prices has had a direct affect on Australia’s terms of trade. Inflation remains low however still close to target, which is why the bank chose to keep monetary policy settings the same.

Today we have the ADP Nonfarm Employment Change for January which could be an indication for what is to come on Friday for NFP. A positive figure both today and Friday will strengthen the possibility for a rate hike by the FED in March. Good economic data signifies economic strength for the US which is a main catalyst for a rate hike.

Crude oil inventory figures will also be issued later on today.

Good luck.