The most traded currency pair has been fluctuating within a 100-pip range until Friday, and even Mario Draghi's comments or stronger-than-expected jobless claims and payrolls were not able to push it above 1.3657 or below 1.3548. As it was widely expected the European Central Bank refrained from any additional stimulus measures, leaving its key refinancing rate at a record-low of 0.25%. The ECB President Mario Draghi pointed out that borrowing costs can remain at present or even lower levels for an extended period of time. It was not a surprise as well that Draghi pledged to act if necessary, as last year his comments inspired investors all over the world and diminished the possibility of a breakup. At the same time, the fact jobless claims and ADP non-farm payrolls surprised markets to the upside, and, therefore, positive news from both parts of the worlds were not able to offset each other and EUR/USD remained relatively calm.
Friday, however, changed it all, as the Dollar plunged on disappointing jobs data. While the unemployment rate inched lower to 6.7% from 7.0% in November, as many workers left the labour force, the world's largest economy was able to create just 74,000 new jobs– the weakest gain in almost three years. The data came as surprise to all analysts, as the most pessimistic forecast stood at 100,000. It was expected that the U.S. economy will be able to create around 200,000 additional working places each month throughout 2014; however, latest data is raising concerns it was too early for the Fed to start tapering its stimulus. Following the data, the EUR/USD soared to 1.3687, USD/JPY reached 103.83, while the cable has almost regained previously-made losses.
During the next five trading days the U.S. Dollar, Aussie and Euro will be in the spotlight, as on Thursday the Bureau of Labor Statistics will unveil inflation data, which is expected to slow further, adding more pressure on the Fed. On the other hand, jobless claims and consumer sentiment are both expected to improve. The Australian currency can be highly volatile on Thursday, as Australian Bureau of Statistics will publish the nation's unemployment rate, which is expected to remain unchanged. At the same time, economy's inability to create more working places can raise concerns the RBA will trim rates further. Finally, on Friday German Federal Constitutional Court is due to announce a ruling regarding the constitutionality of the ECB's Outright Monetary Transactions policy, and hence, all crosses with the Euro can be attractive for traders on Friday.