EUR/USD has edged above the 1.36 in Thursday trading, as the pair continues to have an uneventful week. In the Eurozone, today's highlight is the ECB rate announcement. Elsewhere in the Eurozone, German Industrial Production rebounded with a strong gain of 1.9% in December, a five-month high. In the US, ADP Non-Farm Payrolls climbed to a two-year high. The markets are expecting another strong Unemployment Claims release on Thursday.
US employment releases started 2014 on a positive note, as ADP Non-Farm Payrolls looked excellent in December. The key indicator climbed to 238 thousand, up from 215 thousand a month ago. This easily surpassed the estimate of 199 thousand and was the best reading we've seen since December 2011. We'll get a look at Unemployment Claims later on Thursday, followed by the all-important Non-Farm Payrolls on Friday. With another QE taper in January a strong possibility, every employment release will be under the market microscope and could impact on the currency markets.
The ECB will announce its first rate statement of the year on Thursday. The central bank reduced rates in 2013 to spur inflation and increase growth, lowering the benchmark rate to a record low of 0.25%. However, inflation remains well below the 2% target, and Eurozone CPI posted a gain of just 0.8% in December. Traders should be prepared for some movement from EUR/USD after the rate announcement and Mario Draghi's follow-up press conference.
Germany has started off 2014 with sharp numbers. On Thursday, Industrial Production bounced back after two declines, jumping 1.9%. This beat the estimate of 1.6%. Earlier in the week, Unemployment Change and Factory Orders easily beat their estimates. The strong numbers we have seen in January are indicative of an improving German economy, which bodes well for the Eurozone.
