Majors traded in relatively narrow ranges overnight as markets await today’s key US non-farm payrolls report. Yesterday saw better than expected ADP private sector employment numbers and many in the market are now expecting that total payrolls will have increased in June by more than the recent consensus forecast of 90,000.

Yesterday was a day of two halves for the euro. The decision by the ECB to hike rates by 0.25% to 1.5% had been factored in and the single currency slipped further ahead of the post meeting press conference. There were fears that Trichet would signal a halt in the upward trend in interest rates with eurozone debt fears also weighing. Indeed, the euro fell a session low of $1.4220 against the dollar after Trichet noted that there are downside risks to the growth outlook. At the same time the release of the stronger than anticipated US ADP employment report boosted the US currency.

The euro, however, almost immediately erased some of its losses, rebounding back to trade around the $1.4350 level after Trichet indicated that the ECB remains committed to providing Portugal with liquidity following its debt downgrade and with Trichet also noting the upside risks to inflation.

Sterling, meanwhile took some early heart, yesterday, from a stronger than expected rebound in manufacturing output in May, after the sharp April fall. Industrial production though remained weak. However, the expected BoE announcement of unchanged rates focused attention on the prospect that UK exchange rates will remain on hold at just 0.5% for some time, while there is the possibility of further quantitative easing, leaving sterling again struggling against the US dollar and also slipping against the euro.