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Once again, the ECB instigated a decent amount of volatility into FX markets during their press conference, with the ECB President being more explicit (on behalf of the governing council) with regards to the expansion of the ECB’s balance sheet and their appetite to do more should conditions warrant. This quickly pushed EURUSD down by 1 big figure, and we’ve seen further modest losses since then, helped by a slightly weaker dollar overall. Far less dramatic has been EURJPY, which failed to break below the 142.00 level as the yen continues to come under selling pressure. For these two currencies, it continues to be a race to the bottom in terms of just how much further easing measures they can enact to avert deflation, but yesterday’s price action continues to suggest the market’s faith lies more with the Bank of Japan than the ECB in terms of being able to deliver.

And today is the US employment report at 13:30 GMT, which brings the risk of further volatility. Headline payrolls are seeing rising 235k, with the unemployment rate holding steady at 5.9%. After last month’s wobble, the dollar’s bull trend is back in play and a strong employment report will add further momentum to the divergence play on the majors, as the market anticipates the FOMC gearing up (by adjusting their forward guidance) for the next stage of edging towards a tightening of rates. Note that Canadian jobs data is also released at the same time, with a small fall in headline employment anticipated after Sep’s gain. The CAD remains weaker along with other commodity currencies (principally the NOK) in the face of a weakening oil price; USDCAD currently just shy of year high’s at 1.1467.

Further reading:

EUR/USD: Trading the US Non-Farm Employment Change

Draghi Did It Again; EUR/USD En-Route To 1.20 – Danske