Trading From Chicago, USA

While I was stuck in a long-haul flight to Chicago, the Bank of England left rates unchanged today at 5.5% so that it can assess the impact on the economy of last month’s cut. The ECB also kept the main refinancing rate at 4%. ECB president Trichet said today they are “prepared to act preemptively so that second-round effects and risks to price stability do not materialize” and they do “not tolerate” inflationary pressures. This signals a tightening bias, which will be a strong supportive factor for the Euro in the near-medium term. Recall that Eurozone inflation stayed at 3.1% in December, the fastest since May 2001. EUR/USD jumped at least 170 pips to 1.4815 after the announcement.

Another forex market mover came from Fed’s Bernanke who said Thursday that “additional policy easing may well be necessary” to offset “downside risks” to the US growth. Undoubtedly a big blow to the USD.

Friday:

Japan Eco Watchers survey 0500 GMT

UK industrial production 0930 GMT

Canada unemployment rate 1200 GMT

Canada international merchandise trade 1330 GMT

US trade balance, import price index 1330 GMT

Fed’s Rosengren speaks 1800 GMT

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