The ECB cut interest rates by 50 bps in line with expectations.

The BoE cut interest rates by 150 bps, three times

greater than expectations. While this adds to the enormous

monetary stimulus already in motion globally, markets remain

unconvinced that it is enough to save the world from a major

economic downturn.

Equity markets slumped again by margins regarded as normal

these days. The FTSE lost 5.7% (despite the singlebiggest

interest rate cut in the UK since 1992). The Dow

closed 4.85% lower, and the S&P was down 5%. Once again

the dollar benefited as US Treasuries were bought. The

greenback gained ground against the euro, appreciating for

most of the day from $1.2957 to just below $1.2700. Momentum

seems to be swinging towards more dollar appreciation

again.

With the market as nervous as it is right now, its reaction to

weaker-than-expected US non-farm payroll data is difficult to

predict. It appears as if people are expecting the worst already,

so maybe financial markets will not react significantly

to the reading. The market is expecting another decline of

200K in US jobs. This would be the 10th month in a row of

rising unemployment in the US.

Despite a US dollar that strengthened for most of the day,