ECB a Draghi But Euro Not Laggy

Draghi did his best to knock down the euro without committing to any real action but after a dip the euro bounced back. The Swiss franc was the top performer while CAD lagged for the third consecutive day. Chinese trade figures are a focal point ahead of non-farm payrolls.

Draghi sparked a quick 80-pip euro selloff but the 100-day moving average at 1.3548 caught the declines and EUR/USD finished the day near 1.3600. The ECB 'firmly' recommitted to its vague guidance but Draghi said action will only come if there is pressure in money markets or the medium-term inflation picture softens. That wasn't enough for a sustained move.

The market was also reluctant to buy more dollars ahead of Friday's NFP report. Positioning figures shows speculators already deep into USD longs and late in the day there were some signs of profit taking. The ideal dollar scenario for the jobs report would +250K growth, something that could signal a faster pace of tapering. A downside miss from the 200K consensus is possible due to weather or holiday skews and that could clear the way for a rebound in beaten down currencies like CAD, AUD and JPY.

One data point that might attract more attention than usual is the Canadian jobs report. The loonie has fallen every day this week and there is talk the BOC could shift to a more dovish stance at the Jan 22 meeting. Jobs growth faster than the 14.6K consensus could cause some rethinking in the crowded anti-CAD trade.

Another trade that has been particularly one-sided recently is oil, which tumbled to an 8-month low oat $91.46 on Thursday. Late in the day, crude prices rebounded $1.20 in the first sign of life from oil in more than a week.

A speech that caught our attention came from the Fed's George as she nicely highlighted the two main assumptions of central bankers this year – that inflation will begin to trend higher and that business investment will pickup. If one or the other falters, it will be a gamechanger so we're watching closely.

In the near-term, look to Chinese trade data at 0200 GMT. The balance of trade is less important than growth in imports and exports. Both are expected up 5.0% y/y but softer readings would be an early sign of sagging global growth.