As mentioned last week, all eyes were on the ECB Press Conference and specifically Draghi's speech. After raising the bar very high last week, albeit too high without the approval of the Bundesbank, with the comment '[the] ECB is ready to do whatever it takes', traders were looking for specific details on what that means. At the minimum a rate cut was expected if not a commitment to buy bonds. However, Draghi lost his credibility in an extremely disappointing conference and traders called his bluff. Euro sank 270 pips in less than 4 hours. However, the main points from the conference were that the 'Euro is irreversible' and that each country is responsible for its own debt. Elsewhere, the FOMC statement was closely watched but the market did not react as traders awaited the ECB Press Conference and today's US Non- Farm Payroll. The Fed left rates unchanged but are still closely monitoring incoming information, especially employment figures, to weigh in on their decision on QE3. The UK Manufacturing PMI number fell to -45.4 a 36 month low which led to Morgan Stanley lowering growth forecasts and Prime Minister David Cameron to vocally support the Chancellor George Osbourne. The US stock market also took a hit on Thursday's opening in reaction to Knight Capital's algo going wild and distorting market volumes.
Today's NFP will potentially give some strong trend bias for the coming week. Next week's RBA statement could provide some volatility around the AUD and Gold, as it is the choice for hedge fund managers in search for yield. After such strong moves from key news announcements the markets will typically range for a while so it is important to trade with overall sentiment and be disciplined and patient at the beginning of the month.
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