Euro skewered by ECB Chief’s negative talk

The euro has been well and truly Draghied- falling almost two cents against the Dollar and around a cent against Sterling after the ECB chief revealed the governing council discussed cutting the overnight deposit rate below zero and suggested the Bank was operationally ready to do so when needed.Euro skewered by ECB Chief's negative talkThe prospect of negative interest rates is a sell signal that any sane currency trader could not ignore, which explains the speed and scale of the move so far.

Whether we see further falls in the single currency depends now on if the ECB actually goes through with it, which unfortunately is looking unlikely until the New Year.

With the downgrades to growth across the euro zone, market sentiment over further rate cuts seems to be ‘what are you waiting for?!’

This afternoon the US non-farm payrolls for November are released.

Expectations are for around 90,000 new jobs added over the month which is about half of Octobers total.

The main drags on job creation are expected to be Hurricane Sandy and the general slowdown in corporate earnings we saw in Q3.

For the US Dollar any disappointing number will reaffirm the trend in the EUR/USD, with the Dollar strengthening as risk is sold.

Looking at the Fed with policy explicitly tied to the unemployment rate, we may see a change in wording at the next meeting rather than any change in policy which is pretty set for the foreseeable future.

We begin next week with a large amount of Chinese data which will set the tone for risk during the week.

Key data highlights also include the German economic sentiment, the UK jobless claims and the US retail sales.

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