Protests highlight of ECB meeting, USD weaker on industrial data

• Protestor confronts Draghi, ECB happy on stimulus for now despite good data

• AUD higher as jobs return to economy and rate cut hopes fade further

• German 10yr bund yield only 9bps from negativity

• US jobless claims due this afternoon

Good morning,

Yesterday’s European Central Bank meeting was given an exciting twist as a protestor confronted ECB President Mario Draghi during his press conference and threw glitter over the assembled central bankers present. Those watching the proceedings probably wish they were hauled off with her such was the lack of anything of note in Draghi’s statement or in the following Q&A.

Some commentators seem to think that Draghi needed to emphasise that the European Central Bank is not thinking about tapering its asset purchase program already. We’ve only just got the thing up and running and after a month of better than expected data, some people – I see you Germany - seem to think that we should be addressing the need to end it sooner rather than later. It is such optimism that has got Europe into the state it is now – the ECB is almost best known for its decisions to hike interest rates in the depths of the credit crunch courtesy of some high inflation readings. Current economic health indicators from the Eurozone are nowhere near the ‘tighten policy’ range.

Save for 10 years, get 0.1%?

Such is the pressure on bond yields in the Eurozone courtesy of the ECB’s plans to continue buying and the stagnancy of deflationary fears, you would now only receive a yield of 0.1% lending money to the German government for 10 years – a new record low. Euro remained quiet yesterday with GBPEUR hoping for another push towards the 1.40 level in the coming days.

Sterling has been quiet overnight and through yesterday and should continue to be so through today’s session. Tomorrow’s jobs report however will once again be a wage focused release.

Jobs on the rise down under

AUD has sprinted higher on the overnight session following a beast of a jobs report that showed unemployment having fallen to 6.1% in March. Economists were looking for the rate to hold at February’s 6.3% but instead got a pull lower to the best level since December. The Reserve Bank of Australia held interest rates at the beginning of this month and the probability of a cut at the May meeting has now fallen to 57% from 73% before the jobs numbers were released.

Dollar still under pressure

The main story of yesterday’s markets was the slip in the dollar, something that helped the AUD and the remainder of G10 currencies in the past few days. Industrial production data yesterday showed the largest fall since late 2012 and the worst quarterly performance in over six years. Given the falls in oil prices and other energy markets, it is no surprise that the oil and gas sector was the major laggard.

Sentiments as such were echoed in last night’s Beige Book summary of the economic conditions in the US economy. While the weather was mentioned frequently as a drag on output, it was seen as a bigger factor last year and so we must be prepared for news of further, structural issues within the US economy. I am confident on the US services sector however given the work my girlfriend gave the credit card while we have been over there through the past fortnight.

The focus of a quiet day today will remain on the US economy with the latest jobless claims numbers which should continue the recent trend of sub-290k claims over the course of the past week. Dollar weakness may continue on the run higher in the oil price, currently at its best level this year, but markets remain on edge heading into the weekend.

Have a great day.