Euro Weakens After Interest Rate Decision

Overnight, the correlated stock market and higher yielding currencies, such as the Euro and GBP, rose as a result of a weaker Yen and yesterday’s positive Feb Beige Book.

Just recently, the US Initial Jobless Claims have posted a drop to 457K from a revised 462K whilst Continuing Claims rose to 5465K from the previous 5400k. Also, US Non farm Productivity climbed to 8.1% during the third quarter.

The USD has responded positively to this news forcing the EURUSD to retract to its present value of 1.5090(see chart) whilst the USDJPY has surged to highs of 88.25.

Early this morning, the ECB held its Interest Rate at 1% as expected. Their decision was supported by Trichet comments stating that their action was appropriate as some factors supporting recovery were of a temporary nature and that the recovery process would be uneven and at a moderate pace.

In addition, the ECB predicts its GDP growth for 2010 to be between 0.1% to 1.5% whilst its 2011 will be between 0.2% to 2.2%. The Euro is weakening against other majors since these news releases.

There are other Forex Event risks today with the release of the US ISM index(expected to rise to 51.6) and Ben Bernanke’s confirmation hearing, both of which are scheduled for 10.00am EST.