ECB Subtle Policy Hint? Strong U.S. February Employment

John M. Bland, MBA, co-founder,

One of the major rituals of the U.S., and even global financial markets is to trade on the monthly U.S. employment data released on either the first or second Friday of each month. In addition to the number of jobs added or lost in the month, the report also provides the current unemployment reading and a wealth economic statistics economist can poor over to get the latest developments in the economy.

Strong U.S. February Employment Report February 2018 Jobs data saw a strong 313,000jobs gain in the month, also the January data were revised higher by 39,000. The unemployment rate was steady at 4.10%. The important Labor Participation rate improved to 63.0% from 62.7%. Average Hourly earnings remain depressed. They gained only 0.10% m/m and 2.60% y/y. Financial markets greeted the report positively.

ECB Sends A Subtle Tightening Signal? On Thursday, the ECB sent what might have been a subtle tightening signal to the markets. A week or so ago, traders had been expecting future guidance (long range) about an eventual ECB policy tightening after September 30 of this year. Since then, according to, “Recent geopolitical developments, such as heightened risk of a trade dispute and the recent elections in Italy, coupled with continuing low inflation have analysts projecting no change in the bank’s forward guidance on its asset-purchase plan". At this meeting, the ECB threw the markets a curve by dropping a line from 2016 which stated they would increase QE If the economic outlook worsened. This subtle change in language triggered an immediate EURUSD spike. However, in his regular press conference, President Draghi downplayed the removal of the text, saying that it had become out of date, and that its removal bore no significance for future policy actions. In my opinion, removal of the text DID clean up the policy statement, but on the other hand, it still began to set the stage for the start of an eventual policy tightening later this year.

GVI Trading. Potential Price Risk Scale

AA: Major, A: High, B: Medium

Mon 12 Mar 2018

A 18:00 US- 3-Yr Auction

Tue 13 Mar 2018

A 10:00 DE- ZEW Survey

AA 13:30 US- CPI

A 18:00 US- 10-Yr Auction

Wed 14 Feb 2018

AA 13:30 US- Retail Sales

A 13:30 US- PPI

A 15:30 US- EIA Crude

A 18:00 US- 30-Yr Auction

Thu 15 Mar 2018

A 13:30 US- Weekly Jobless

A 13:30 US- Philly Fed, Empire PMI

A 14:15 US- Industrial Production

Fri 16 Mar 2018

A 10:00 EZ- final HICP

A 13:30 US- Housing Starts/Permits

A 15:00 US- prelim Univ of Mich

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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