European markets return following the Easter Bank Holiday, with a delayed reaction expected to Friday’s disappointing non-farm payrolls figure. With only 120,000 jobs created last month, investors are now pricing in the possibility of more quantitative easing, which has weighed on the US dollar. However, the trend could reverse itself if equity markets continue to slide causing safe haven buying of the greenback. Elsewhere, the Bank of Japan was seen leaving its monetary policy unchanged at their meeting. The yen saw strong gains after the policy announcement, since some had speculated that the central bank would surprise investors with further economic stimulus.

markets return from the Easter break buoyant after the RICS house price survey showed its smallest decline since June 2010. The data could have been positively skewed by warmed weather and an expiry of a tax exemption for first time buyers. The pound has benefitted from a stronger euro/dollar and is trading back up near five-day highs. Against the euro, sterling remains within ranges seen last week.

US dollar

The US dollar has failed to capitalise on sleeping European markets over the Easter holidays as the non-farm payrolls data released on Friday was particularly disappointing after a strong ADP employment report earlier in the week. As a result of the weak jobs report, investors stated to price back into the market the possibility of a third round of quantitative easing, which is weighing on the US dollar.

Euro

Positive German trade figures released should help buoy the European market. French industrial output is also due for release but trade in currency markets is more likely to be driven by movement in equity markets. European equity markets are expected to open sharply lower which could weigh on the euro again as safe haven demand for the US dollar picks up.

Japanese yen

The Bank of Japan decided to leave its monetary policy unchanged. The central bank remained cautiously optimistic about the country’s growth outlook as there had been some speculation prior to the announcement that the bank could surprise markets with further economic stimulus, as they did in February.

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