s expected, the Governing Council left its monetary policy unchanged, while also making no alteration to its forward guidance language on interest rates or quantitative easing. There was, however, a slight change to the ECB’s statement. Policymakers removed the sentence claiming that the central bank will continue to use “all instruments” to tackle weak inflation, with President Mario Draghi saying “there is no longer that sense of urgency in taking further actions”.

Draghi’s overall message remained, on the whole, fairly dovish, although he was “more optimistic” on the outlook for the Eurozone economy. The central bank also revised upwards its inflation forecast fairly sharply, while issuing a modest upgrade to its growth forecasts. Yesterday’s meeting remained in line with our view that the ECB is in no rush at all to alter its monetary policy and begin raising rates or winding down its large scale asset purchases.

This afternoon’s nonfarm payrolls report in the US will undoubtedly be the main economic release in the currency markets today. Following Wednesday’s very impressive ADP employment number and the recent four decade low jobless claims data, we think a strong headline job creation number around the 200,000 level seems a very reasonable assumption. Earnings are expected to rise modestly, while the unemployment rate is forecast to fall further to a fresh nine year low 4.7%.

However, with the market now fully pricing in an interest rate hike at the Federal Reserve’s monetary policy meeting next week, even a very poor report is unlikely to derail the central bank’s plans to increase borrowing costs for only the third time in a decade in March.

GBP

Sterling fell to a fresh seven week low against the US Dollar on Thursday, with investors left slightly disappointed by Wednesday’s budget that it seems would do little to boost growth in the UK.

A spokesman of the UK government eased some concerns about the possibility of another referendum on Scottish Independence this year following the Brexit vote. Theresa May’s spokesman claimed that the Prime Minister does not believe there should be another referendum, with the discussion surrounding its possibility a “distraction” amid the imminent triggering of Article 50.

Manufacturing and industrial production data for January, set for release at 9:30am this morning, are both expected to show an accelerated. The latest GDP estimate from NIESR will also be worth watching out for this later this afternoon.

EUR

The ECB’s more optimistic message immediately sent the Euro sharply higher on Thursday, although the currency retraced gains to end 0.5% higher versus the Dollar.

The slightly more positive rhetoric from Draghi was reinforced by the central bank’s revised economic projections. Growth for this year is now expected to rise to 1.8%, with 1.7% growth forecast in 2018. Inflation for 2017 was revised upwards to 1.8% following a sharp increase in consumer prices in the past few months amid a stabilisation in global oil and energy prices.

German trade balance data this morning will be the only major economic release in the Eurozone today. The Euro will likely be driven almost exclusively by the US payrolls report.

USD

The Dollar lost ground against most major currencies on Thursday, ending the London trading session 0.3% lower.

Labour data out of the US economy yesterday continued to suggest that the Federal Reserve would be right to tighten monetary policy again later this month. Initial jobless claims remained around its four-decade low, albeit rising to 243,000 from 223,000. The four-week moving average, which smooths out week-to-week volatility, rose by just 2,250 to 236,500.

This afternoon’s labour report will be released at 13:30pm UK time today. The headline nonfarm payrolls number, unemployment rate and average earnings will all be watched closely by traders.