As expected the European Central Bank hiked its key interest rate for the first time in 13 months as they begin to fight inflation expectations. The ECB announced it had boosted its key lending rate by 25 basis points (1/4%) to 4.25%. Attention turns now to ECB President Jean-Claude Trichet's monthly news conference at 8:30 a.m. Eastern. So far the reaction to the currencies markets has been somewhat muted as well as the reaction in the oil complex. The subdued reaction is most likely a result of the increase being already priced into the market.
Although the reaction is muted at the moment it certainly does not portray a bearish signal for oil rather just another bullish item in the bullish basket of plenty.
One more event this morning that could move the oil market is the jobs report due out at 8:30 am est. This report is expected to show the 6th straight month of job losses and only a small improvement in the unemployment rate. Again implications are to the interest rate market in the US and thus the dollar and oil. A weak jobs report suggests the Fed may not move so quickly to raise interest rates thus resulting in further weakness of the dollar (especially with ECB raising rates today) and ultimately bullish oil prices.
Stay tuned.
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