The Euro experienced a strong rally against the US dollar yesterday when data for Manufacturing PMI and Economic Optimism were released much lower than expected. The Manufacturing PMI had been expected in line with the previous number at 55, and was released at 51.4.
The market perceived a lower chance of an imminent interest rate hike in the US, due to a poorer economic outlook, and price jumped from 1.11637 pre data to a session high of 1.12595. Economic Optimism data had been expected slightly higher than the previous data at 48.6 but was released at 46.7. Although not as important as the PMI number it helped fuel pessimism for the US dollar.
Tomorrow we have a scheduled monetary policy meeting by the European Central Bank (ECB), an interest rate decision will be announced at 12:45pm. The market consensus is for the main lending rate to remain at 0% and the main deposit rate at negative 0.40%
More importantly at 1:30pm there will be the usual post meeting press conference by the ECB President Draghi. A lot of attention will be paid as to whether there will be any hints to the possible extension of the quantitative easing programme. The market is not expecting increases in the amount of bond buying or extensions to the length of the programme.
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