Investors await the ECB's Monetary Policy decision
EUR/USD continued trading above 5-month highs. This upward trend reflects the Euro’s strengthening against the USD over the past month with the debate about the war in Ukraine in the balance and uncertainty surrounding US politics.
The European Central Bank is expected to announce a 25-basis point interest rate cut today - to 2.5%. This coincides with the release of significant eurozone economic data, including retail sales figures. ECB President Christine Lagarde is scheduled to present the latest economic developments in a press conference this afternoon, providing insights into the Central Bank’s monetary policy stance and economic outlook.
French President Emmanuel Macron has initiated discussions on extending France’s nuclear deterrence capabilities to bolster Europe’s defense posture. This move aims to enhance collective security measures amid evolving global threats and geopolitical tensions.
The Bank of England has recently highlighted the prevailing ‘age of uncertainty’ - particularly concerning the trajectory of inflation, suggesting that rapid interest rate cuts are improbable in the near future. Huw Pill, the BoE’s Chief Economist, emphasised that due to inflationary trends, the Central Bank is unlikely to implement ‘larger and more rapid cuts to interest rates’ moving forward.
This sentiment aligns with the BoE’s recent decision to reduce the Bank Rate by 0.25 percentage points to 4.5% in February 2025 - a move supported by a majority of 7–2 within the Monetary Policy Committee (MPC). ?Deputy Governor Sir Dave Ramsden further noted that ‘significant economic uncertainties might necessitate either very gradual or swift rate cuts’ depending on evolving conditions.
In anticipation of International Women’s Day, Chancellor Rachel Reeves has called for urgent measures to dismantle barriers, hindering women from ascending to leadership positions. She emphasised the importance of creating an equitable environment that fosters female representation in top roles across various sectors.
The US ISM Services PMI for the latest period exceeded expectations, coming in at 53.5 compared to the forecasted 52.6. This stronger-than-expected reading signals continued expansion in the services sector, indicating resilience in business activity and demand. This positive result may reinforce confidence, potentially influencing market sentiment and Federal Reserve policy considerations.
The US ADP Non-Farm Employment report showed a significant slowdown, with only 77,000 jobs added compared to the forecasted 140,000. This weaker-than-expected figure suggests a cooling labor market, potentially signaling slowing economic momentum ahead of the Non-Farms Payroll tomorrow.
U.S. President Donald Trump has announced a one-month extension on the decision regarding auto tariffs for Canada and Mexico. This delay follows discussions with major automobile manufacturers and reflects ongoing negotiations aimed at addressing trade imbalances and protecting domestic industries.
Meanwhile - Trump has issued a stern ultimatum to Hamas, demanding the immediate release of hostages held in Gaza. He declared unwavering support for Israel, stating that all necessary resources would be provided to ensure the safety of the hostages and to hold Hamas accountable saying: " I am sending Israel everything it needs to finish the job, not a single Hamas member will be safe if you don't do as I say”.
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