Dovish Draghi Dunks Euro

Rumors of Draghi's downfall were greatly exaggerated. He was as strong as ever in Thursday's press conference and sent the euro to a fresh 27-month low. The pound and CHF also lagged badly while the US dollar easily led the way. The RBA statement on monetary policy is due later.  24 hours after our Aussie short hit its final target with 340 pips, both of our USDCHF longs hit their final targets at 0.9690 and 0.9720 for a total of +350 pips. New Premium Insights will be issued tomorrow ahead of the US jobs report. Ahead of the ECB decision there was a report about discontent with Draghi's leadership and some speculation he could be replaced with a less-dovish leader but he challenged those reports head-on and preached a message of unanimity.

He also didn't back down from the dovish comments that supposedly got him in trouble. He reiterated that the ECB is moving toward the size of its 2012 balance sheet, said the ECB was unanimous in its commitment to act again if needed and that forecasts could be lowered again.

The euro dropped to 1.2375 from 1.2533 and finished at the lows of the day.

But the story wasn't just euro weakness. The pound fell hard to a one-year low of 1.5828 and the yen continued its descent after a brief bounce in early European trading.

The focus now shifts to the US with non-farm payrolls due on Friday. The chance of an upside surprise continued to build after jobless claims fell to 278K compared to 285K expected. Ashraf wrote about the chance for a strong number and we also note that economist estimates from today and yesterday average 245K compared to the 235K consensus.

The risks to the downside for the US dollar aren't in the number but, rather, in the avg hours and wages data. Q3 productivity data released Thursday showed softer unit labor costs and a large downward revision.

Up next, at 0030 GMT it's the RBA's statement on monetary policy. It's a quarterly report that sets out the assessment of economic conditions. There's scope for the RBA to cut its inflation projections and that would give the market a reason to look for more dovish commentary and AUD weakness.