The dollar weakened against the euro yesterday following the conclusion of the G20 meeting where it was announced that there would be more than $1 trillion provided in order to improve the state of the global economy. This has reduced demand for the dollar as a safe haven currency, as investors are more inclined to invest in riskier currencies on the back of this news. Additionally, it was announced that the G20 have agreed to let the IMF create $250 billion of Special Drawing Rights (its own currency consisting of dollars, sterling, euro and yen) in order to boost the foreign exchange reserves of every country. Stock markets also jumped yesterday following the announcement, with the FTSE 100 closing 4.3% higher and the Dow 2.8%.
Yesterday the ECB cut interest rates by just 0.25%, as opposed to an anticipated 0.50%. Trichet stated that he was not ruling out cutting interest rates further if required in the near future. Analysts are also predicting that the ECB will announce quantitative easing measures – it is likely that they will purchase private sector assets in order to do this. The ECB will announce “full details” of possible further non-standard measures in May, Trichet said. Trichet also stated that he expects the economy to improve next year.
Investors are now eagerly awaiting the US Nonfarm Payrolls data, which is due to be released today at 13.30 BST. It is expected that the data will show a rise in unemployment from 651,000 in February to 658,000 in March.
Other significant announcements taking place in the US today include Average Hourly Earnings, Average Weekly Hours and the Unemployment Rate. The Fed’s Bernanke will also be making a speech at 16.00 GMT. There are no significant announcements taking place in the eurozone today.
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