Attention turns to ECB and BoE

Ahead of two key central bank policy decisions by the European Central Bank and Bank of England where no change is expected as well as tomorrow’s release of the US jobs report, range trading is likely to dominate. Risk aversion measures remain elevated however, and further slippage by US stocks was recorded overnight.

The USD remained supported within ranges, helped by firmer US Treasury yields. Fed officials overnight showed little inclination to alter the pace of tapering despite the recent turmoil in emerging markets suggesting that emerging markets can expect little relief from the Fed.

Meanwhile, US data releases provided mixed signals, with the ADP private sector employment report (a key indicator for tomorrow’s non farm payrolls data) coming in below consensus at 175k in January (consensus 185k) while the US ISM non manufacturing survey (a survey of service sector participants) was slightly higher than consensus at 54.0 in the same month.

Aside from the policy rate decisions December US trade data and Q4 non farm productivity are on tap today although neither are likely to be big market movers.

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