The ECB is expected to keep interest rates steady

The main event of the day is the monetary policy meeting of the ECB where it is widely expected to keep interest rates constant. The rate on deposits is expected to be kept at 4.00%. Chief Lagarde has repeatedly stated that the central bank needs to be sure that the deflationary process is well underway before any move to ease policy. The EUR/USD pair surged above the 1.09 level, driven by optimistic German trade balance figures and Eurozone retail sales yesterday. Earlier today, German factory orders missed expectations and were at -11.3%. Other data include Spanish and French 10-year bond auction.? Weakness in the USD has also driven the pair higher. The fibre is currently trading at 1.0894.

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Speaking before the House Financial Services Committee, Federal Reserve chairman Powell argued in favour of the Fed’s inclination towards maintaining tight policy in order to bring inflation to the 2% target.? He mentioned that interest rates would be slashed later this year, provided that inflation dwindles further towards the target. Today, Powell will be testifying before the Senate committee on Banking, Housing and Urban affairs, in the context of which he will be discoursing about monetary policy again. Yesterday, data showed that only 140,000 jobs were added to the US economy in February, below expectations of 150,000.? Jobless claims, Q4 unit labour costs, Q4 non-farm productivity and the Goods trade balance are expected today. The US index is currently trading at 103.25 in the wait of some hawkishness from chairman Powell.