While the collective focus may be on Friday’s NFP report, today’s most market moving data came off of the euro’s docket. The ECB rate decision passed as expected. The central bank decided to keep the benchmark lending rate unchanged at its record low 1.00 percent for the fourth consecutive month. Yet, despite the stable overnight rate, the overall event was still influential.
The fundamental sway was in the commentary that followed. Setting a neutral tone to the governing group’s policy stance, President Jean Claude Trichet once again labeled the current level of rates “appropriate” and said there were no plans to raise the interest rate on its unlimited auction of 12-month funds. On the other hand, this shift to the middle hasn’t necessarily led the market to seriously consider a cut to be the next policy action. Keeping a long-term hawkish forecast in place, the group raised their growth forecasts - the regional economy is expected to grow 0.2 percent through 2010 (forecasts called for a 0.3 percent contraction in June). Furthermore, Trichet later stated that policy was being made with an exit strategy in mind.
