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Published June 7, 2019

The Kiwi traded in a tight range overnight, with the Euro the best performing currency.

ECB Holds Rates

The Euro rose around 0.5% against most majors as the European Central Bank held interest rates as expected overnight. Markets instead focused on the ECB’s statement that rates would “remain at their present levels at least through the first half of 2020”. ECB President Mario Draghi opened the door for further rate cuts to the already record-low rates and policymakers are also considering pushing out the timing of any hike or resuming a 2.6 trillion Euro bond-buying programme. Markets left chances of a first-rate hike in 2021 and expect quantitative easing to be the next step opposed to monetary easing where rates are already at 0.0%.

US Considering Delays on Mexican Tariffs

Market sentiment improved and US stocks rose after reports that the US is considering delays in the tariffs on Mexican goods as talks continue, tariffs were originally due to start on Monday. Investors remain cautious as Trump stated recently that he would decide whether to carry out his threat to Beijing with tariffs on at least USD300 billion in Chinese goods after a meeting of leaders of the world’s largest economies later this month.

Eyes on US Non-Farm Payrolls Tonight

Markets now turn their focus to tonight’s non-farm payrolls report, with 185K new jobs forecasted. The ADP report heavily missed forecasts earlier in the week and US jobless claims came in higher than expected at 218K vs expectations of 215K. A big miss in non-farm payrolls and especially wage growth will be negative for the USD and support the Fed’s recent shift in sentiment to cut interest rates.