8 Mar: Trade war jitters dominate the action. ECB in focus today ahead of the US employment data, tomorrow: FXCharts

Most of the action has been in the stock markets today which initially headed down by around 1% as concerns continue over the possible fallout from a trade war, with the EU outlining a list of what possible retaliatory measures they may need to take against the US in the event of an escalation of the situation. Stocks have seen a late recovery  as the trade concerns appeared to ease and are closing pretty much unchanged on the day. Currency markets have been choppy, with the most interesting action taking place in the crosses, where EurGbp briefly made a new 3 month high, with Sterling pressured by a EU draft guideline for any future trade deal with Britain underlined the gap between the two sides as they negotiate a Brexit deal. EurChf is also on the move higher, underpinning EurChf.

In terms of data today, the US ADP report showed 235k growth in private sector jobs in February, above expectation of 200k while the prior month’s figure was revised up from 234k to 244k. The Trade deficit widened to USD -56.6b in January.

Thursday will begin a busy Asian session with the NZ Mfg Sales figures and the Australian Trade Balance (exp -$2.372 bio), both for January, ahead of the Japanese Q4 GDP (exp +0.2%mm) and the China Trade Balance (exp -$5.03bio). The main event of the day will be the ECB meeting, and traders will be entirely focused on whether, or not, Mario Draghi will change to wording of the statement to indicate a winding up of the QE programme. If so, expect the Euro to jump sharply higher, which is not what the ECB would wish, otherwise, no change to the wording will likely see the Euro retreat abruptly from current levels. The US will be thin, with just the weekly Jobless Claims to go on, with most traders by now looking ahead to tomorrow’s US Jobs/NFP/Average Hourly Earnings figures.