Markets will be watching the European Central Bank and what course of action it will or will not take to ease monetary conditions. Should the ECB loosen monetary conditions, the euro is likely to suffer. On the other hand, if the central bank leaves its policy unchanged, the euro could advance. There are arguments for both decisions which are supported by economic data that is making the outlook for the policy meeting all the more uncertain. Under such circumstances volatility is usually high. In the UK, attention will turn to the Bank of England, but not for its policy announcement. The central bank is widely expected to leave its policy unchanged and offer no statement. But reports that the central bank, or at least a staffer, knew about the FX fixings that have brought down many a trader are going to be investigated. The investigation has called into question the credibility of the institute and could ultimately have a damaging impact on the local currency. In the US, weekly jobless claims and factory orders will be released. Data out was mixed, but the real focus continues to be on the US non-farm payrolls report, which is due out.

Sterling

Sterling continued to find support with the release of economic data. CIPS PMI services survey came in above market forecast with a record high employment component. The data continues to confirm a sustainable recovery has taken hold. As a result, the BoE is widely expected to leave its policy unchanged with no comments. The policy announcement could become secondary to reports that the BoE or an official within the bank knew something about the FX fixing scandal according to minutes of a meeting that were released.

US dollar

The signals given over the US economy were mixed and traders continue to shrug off the figures given the skewing seen by severe weather conditions. Two regions were particularly hard hit by the weather, while one region saw the pace of growth slowing and the other was stable.

Euro

The Ukrainian situation remains fluid, but for now, all sides seem to have agreed to talk and not fight, which will slowly turn attention back towards economic data and the ECB policy meeting. The meeting promises to send the euro in one direction given the lack of clarity over what will happen going into the meeting. On the one hand, there is the IMF who has put pressure on the ECB with comments suggesting the central bank needs to act to fight the threat of deflation.