The BOE delivered a more dovish rate hike yesterday while the ECB more or less met expectations with their decision. However, Lagarde wasn’t exactly firm with her communique as the central bank just committed to one more 50 bps rate hike in March. There was an attempt to try and walk that back here but the damage has been done and suddenly the Fed doesn’t sound that much more dovish when compared to the ECB.
Broader markets cheered the policy decisions as both stocks and bonds rallied, though the Dow was a bit of a bummer in US trading yesterday. The S&P 500 continued with its breakout push from the day before, although futures are pointing lower today after Apple’s earnings miss earlier here. That is weighing on tech sentiment in particular, with Nasdaq futures down 1.6%.
The dollar is steady after yesterday’s modest advance alongside the yen, as traders continue to digest the conclusion of the central bank bonanza this week. EUR/USD had its shot above 1.1000 but failed and AUD/USD also tried for a break above its August highs of 0.7125-36 and that came up short as well. Meanwhile, NZD/USD is also failing to firmly push past 0.6500 so all of the hopeful breakouts are now suddenly turning in the other direction.
The US non-farm payrolls data later today will be the focus and that might set up for a more sideways and choppy session in Europe. If anything else, watch out for wages data as that might be more of a key factor rather than the job numbers itself.
The estimate for the headline number is +185k and a downside miss might point to softness in the labour market, although overall conditions are still holding up relatively well I would say.
In terms of wages, average earnings is the focus and it is estimated to come in at +0.3% m/m and +4.3% y/y.