Forex Market Review – Dollar rises ahead of NFP report; EUR at 1-mth low after ECB rate cut

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ECBEuro slid to a one-month low versus the dollar after the European Central Bank lowered the benchmark interest rate to a record low of 0.75 percent today while cutting the deposit rate to zero. The single currency accelerated its fall after a press conference by ECB President Mario Draghi who said that the ECB sees a weakening of growth for the euro zone and that downside risks to growth are materializing.


EURUSD extended its fall in the U.S. session to touch a one-month low of 1.2363. Euro slid to the a record low against the Australian dollar after Draghi’s comments, reaching  A$1.2019.  EURJPY dropped to 98.77, down 1.5 percent on the day.


Sterling jumped briefly against the dollar after the Bank of England adopted QE3, meaning it will restart its bond purchase program, in an effort to stimulate the U.K. economy.  GBPUSD rose in a knee-jerk reaction to 1.5605 after the announcement but then fell sharply after the ECB rate announcement, bringing cable down to 1.5499.


Dollar jumped against  yen after better than expected US job creation numbers. The ADP non-farm employment change rose to 176,000 from  136,000. Unemployment claims were also down. USDJPY rose to 80.08 after the US data from 79.64.


Focus turns to the more important Non farm payrolls report on Friday. We may see the dollar consolidate ahead of this data. The U.S. Labour Department report is forecast to show that 95,000 jobs were added to American payrolls in June. The 69,000 increase in jobs in May, reported on June 1, was the weakest growth in a year.