German industrial orders data came in negative yesterday but the euro remains resilient as it has done for many months since ECB president Mario Draghi stepped back slightly from monetary policy measures and rhetoric that would really devalue the euro. After ‘Super Thursday’, the GBP/EUR fell to multi-week lows (stronger euro) below €1.18, more importantly, the pound is now back trading just 1.4 per cent above last month’s multi-year low against the euro. GBP is also trading well below its €1.19 average rate seen since Brexit.

Sterling

The Bank of England launched a bigger-than-expected monetary stimulus package. ‘Super Thursday’ included a raft of economic forecasts and announcements which caused an immediate fall in the pound. However, GBP’s 1.5 per cent drop against USD towards $1.31 was not as aggressive as many had thought. The BoE cut interest rates from 0.5 per cent to 0.25 per cent and issued a £70 billion Quantitative Easing package after warning the short-term outlook for growth had “weakened markedly”. But, in the accompanying press conference, governor Mark Carney said he was against the idea of driving interest rates into negative, suggesting there is not much more room for deeper rate cuts or a much more expansive QE programme. Still, Thursday’s minutes showed ‘most members’ of the MPC see another small rate cut later in 2016 if the UK economy slows as expected.

US dollar

Yesterday’s US non-farm payrolls were an important trading point as always for the US dollar. But expectations were well below the 200,000 threshold which the market tends to look for at 180,000. However, the overall US unemployment rate dropped to a new low of 4.8 per cent from 4.9 per cent with a small rise in wages. The context is simple; is the US economy gaining or losing momentum and therefore will the US raise interest rates before the November US election or much later? Ahead of yesterday’s key jobs data, the futures market had just a 10 per cent probability of a US rate hike by November 2016.