Keith Underwood No Comments

DRAGHI SPEAKS, THE MARKET LISTENS

Mario Draghi, ECB President, spoke Friday at the Euro Banking Congress in Frankfurt and stated that the bank is ready to “step up the pressure” and expand its stimulus program if inflation does not show signs of quickly returning to the bank’s target. Do not take for granted that when the ECB President speaks, he means it.

Mr. Draghi stated that “If on its current trajectory our policy is not effective enough to achieve this, or further risks to the inflation outlook materialize, we would step up the pressure and broaden even more the channels through which we intervene, by altering accordingly the size, pace and composition of our purchases”.

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Keith Underwood No Comments

September Non-farm payrolls

Friday’s release of the September labor departments non-farm payrolls increase of 248,000 and a drop from 6.1% to 5.9% in the unemployment rate will certainly put the wind back in the sails of US dollar bulls. Strength in the labor market will provide the FED with the confidence to guide US interest rate expectations higher as well as sooner, while the ECB and BOJ ease conditions on their struggling economies. Dollar strength in developed markets, known as G10 currencies, is broad based and gaining momentum as a result.

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