Waiting on Trichet, On Deck US Jobs Data - On balance, German, French, and UK service PMI did not match the strength of the manufacturing PMI that were released earlier in the week. Surprisingly, the reading in the Italy, Spain, and Ireland were strong but the market is waiting to hear from ECB President Jean-Claude Trichet. The Euro ran past the 1.39 level and is priced for perfection right now because it is expecting the ECB to raise interest rates by two quarter-point hikes this year. If Trichet fails to warn that the ECB is ready to act soon to make sure high inflation does not become entrenched than look for the Euro to sell off. Once Trichet speaks the next focus for the Euro will be the self imposed deadline by the EU to address the sovereign debt crisis by month end. Meanwhile, the price of oil came off a little on news that Libya's Muammar Gaddafi and the president of the Arab League had agreed to a peace plan supported by Venezuela's president, Hugo Chavez. This also caused some safe haven flows to reverse, so the CHF, Yen, and gold were all down. The market's next focus will be tomorrow US jobs numbers. After yesterday's ADP Employment change figures came in better than expected, the market is increasing its expectations for a good US jobs figure tomorrow. Even if we do get a great number, let's keep in mind that job creation needs to average 300K a month before the Fed is ready to raise interest rates. In Canada, the CAD was little changed from yesterday's close and with no market moving data out of Canada today the market is expected to track global sentiment.
No comments:
Post a Comment