ECB Cuts Rates by 25 Basis Points
As widely anticipated, the European Central Bank (ECB) reduced interest rates by 25 basis points yesterday, bringing the deposit rate down to 2.5%. With economic uncertainty still looming, the ECB’s meeting statement and post-meeting remarks emphasised the importance of data-driven decision-making.
While policymakers have signalled a willingness to lower rates further if necessary, the future policy path remains uncertain. Markets are currently pricing in around 40 basis points of additional rate cuts by year-end, but the pace and timing of these reductions remain unclear.
Euro Holds Gains but Faces Overnight Pullback
Following the rate cut, the euro remained strong in currency markets, holding its position against major rivals. However, some of these gains were pared back overnight, as traders reassessed the implications of the ECB’s stance.
US Labour Market Report Expected to Drive Volatility
The main event of the day will be the release of the US labour market report for February. Key figures include:
- Non-farm payrolls: Expected to rise by 160k, indicating steady job growth.
- Unemployment rate: Forecasted to remain at 4.0%.
- Average wage growth: Predicted to hold steady at +4.1% year-on-year.
These numbers introduce event risk for the US dollar, as any surprises in employment or wage data could shift market sentiment and impact FX trading.
How to Navigate Market Volatility
With interest rate decisions and key economic data shaping currency movements, market volatility is set to continue. If you’re looking to capitalise on opportunities or hedge against risks, our Qumoney experts are here to help with tailored insights and strategies.