Employment in the US, the world’s largest economy increased with the creation of another 243K jobs in January. The jobless rate fell back to 8.3% from 8.5%. Fed Chairman Ben Bernanke may keep the door open to expand the balance sheet further in an effort to encourage a stronger recovery. There’s little in the way of seeing another round of quantitative easing as the risk of a double-dip recession subsides.
The Euro pared the advance to 1.3205 to maintain the range from earlier this week, and the single currency is likely to face additional headwinds in the following week as the fundamental outlook turns increasingly bleak. Although the European Central Bank is widely expected to keep the benchmark interest rate at 1.00%, we are likely to see President Mario Draghi maintain a dovish tone at the press conference following the rate decision, and the central bank head may take additional steps beyond the three-year loan facility scheduled for the end of the month as the heightening risk for contagion continues to pose a threat to the world financial system.