The ECB meet today - expect euro volatility | Smart Daily Currency Note

Sterling

Sterling enjoyed a good day yesterday, rising to an eleven week high against the US dollar, helped by better than forecast Purchase Managers' Index (PMI) data for the manufacturing sector. Britain's factories output seems to be stabilising in April after months of contraction, sending sterling upward amidst hopes the recovery is consolidating and with export orders rising for the first time in over a year from demand outside the Eurozone. Today sees the same release for the construction sector which has been contracting consistently for the last six months - if it follows yesterday's trend we can expect sterling to react positively, though prices remain susceptible to any hint that the recent bubble of strong data could burst. Call in now for the latest news and up to the second rates.

Euro

It was a relatively quiet day for the seventeen nation currency yesterday. The euro strengthened against an underperforming US dollar but made little overall progress against sterling, with the market nervous ahead of today's European Central Bank meeting and interest rate decision. The expectation amongst traders is the ECB will announce an interest rate cut to record lows of 0.5%. Whilst this should weaken euro price levels (although much of the market movement is thought to already be “priced in”), the theory is this should increase consumer spending and henceforth help to stimulate an elusive recovery in the region. Any outcome around lunchtime other than the predicted cut to 0.5% is likely to have a material effect; furthermore, analysts will look for any positive steps being taken by the ECB to stimulate demand in the region alongside the anticipated interest rate cut. Please be in touch throughout the day for live rates and up to the minute reactions.

US dollar

The US dollar weakened yesterday on the news that fewer jobs were added than expected in April. Whilst the US dollar dropped on the back of the news, more pressing perhaps is the fear this data points to an increase in the overall rate of unemployment alongside a poor reading for the highly influential non – farm payroll data both of which are released on Friday. The US dollar did strengthen later in the day but last month's trend of soft data appears to be continuing. The other major announcement yesterday was the confirmation that the Federal Bank had left rates unchanged at 0.25% and would stay that low until the unemployment rate reached 6.5%. They also indicated that they would be willing to increase liquidity to the market if growth continued to fall which is a shift from the emphasis of their announcements earlier this year. Today will be significant, with the Trade Balance report released alongside more labour related data in the form of the weekly unemployment claims levels. Call in for how prices react to market developments.

Worldwide

Elsewhere, yesterday's Chinese manufacturing PMI data was a major talking point, with manufacturing showing to have expanded at a weaker pace throughout April – indicating that a slowdown in the world's second largest economy will extend into the second quarter of the year. The impact was felt by the Australian and New Zealand dollars which both had weak days, dropping by over 1% down against sterling and the euro. Furthermore, the Canadian dollar underperformed with commodity prices tumbling in the wake of news from China and following poor US employment figures. Australian construction statistics are released early this morning and later in the day Canadian Trade Balance data will be announced, talk to your trader to see if prices bounce back over the course of the day.