Global Themes

Euro jumps as ECB turns more positive; US jobs risk tonight

The euro was sharply higher overnight after the European Central Bank said the Eurozone economy had seen a pick-up in inflation and the risks to growth were now more “balanced”.

The news saw the euro gain as markets speculated the ECB might consider winding back its money-printing stimulus program some time over the next year.

With the key French election due at the end of April, further volatility is expected in the AUDEUR.

Bond yields hit Aussie

In other markets, the AUDUSD saw further losses as US ten-year bond yields finished at the highest level since September 2014.

Higher US interest rates usually lead to a weaker AUDUSD. The market widely expects the US Fed to raise rates when they meet next Thursday (source: Bloomberg).

The AUD’s largest losses were against the euro. The AUDEUR fell 0.7% as it hit one-month lows.

Jobs risk

Tonight’s focus will clearly be on the US non-farm payrolls due at 12.30am (AEDT).

After the very strong reading from the ADP monthly jobs report on Wednesday night, which beat expectations by more than 100k, there remains the potential for a stronger than expected number.

If so, the AUDUSD could see further losses.

The market is looking for 190-200k new jobs.

By Steven Dooley -- Currency Strategist (APAC)

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