The Euro plummeted towards its three weeks lows. Overview for 08.03.2019

The major currency pair surrendered to pressure from bears after the ECB decisions. 

On Friday morning, EURUSD is still under pressure. The current quote for the instrument is 1.1265.

Another meeting of the European Central Bank was over on Thursday. There were no surprises as the key rate remained unchanged, just as expected. In the comments that followed, the regulator said that it was going to keep the low rate value at least until the end of 2019, thus making the European currency plummet at once. Although frankly speaking, no surprises here as well: the Euro Area economy has been slowing down without any support. 

Another stab in the back was announcement of a fresh round of TLTRO, a targeted long-term refinancing operation program. It was also expected, but none of the European policymakers commented on the program before.

The program implies reinvestment of funds resulting from liquidation of payments on securities and is intended for a long period if time. In fact, securities bought by the ECB during the QE program, will be sold again and the money will be reinvested in new securities. These operations will have purposefulness and last until March 2021 at least.

Friday is going to be another busy day for investors. Today’s macroeconomic calendar contains a lot of reports. France and Italy will publish the Industrial Production in January. As a rule, investors don’t pay much attention to these reports, but they are quite important for general understanding of what is going on in the European industrial production. Italy is rightfully considered as a weak spot in Europe, while numbers from France are very often disappointing and unstable. 

In the evening, the USA are scheduled to report on the labor market in February. First of all, the Unemployment Rate, which is expected to go from 4.0% in January to 3.9% last month. The Non-Farm Employment Change is expected to be 181K after skyrocketing by 304K the month before. There is nothing wrong with decline here, because the labor market just can’t create a great number of jobs all the time. Another thing worth mentioning is the Average Hourly Earnings, which may add 0.3% m/m after expanding by 0.1% in January. These numbers are very important right now for market players and the USD. 

Why? Because if employers are ready to compete for labor force and offer them higher salaries (according to the statistics, it’s true), then the labor market will continue being healthy and stable. An employer that offers high salaries to its staff surely knows how to use them efficiently. As a result, other employers have to follow. The stronger the statistics, the better for the American currency. 

Later, investors will see reports on the Housing Starts, which is expected to improve (good for the USD). One more thing is the Building Permits – the indicator may decrease a little bit and it’s rather negative for the “greenback”.