Draghi failure weighs heavily on the euro 03 August 2012 13:03 Tweet 09.00 AM GBP Despite an extremely volatile day of trading, Sterling ended relatively flat across the board, making gains against the euro during the afternoon. Sterling made slight losses against EUR in early trading as sentiment grew for a positive stimulus plan to be announced by Mario Draghi after the European Central Bank (ECB) interest rate announcements; however, these gains were quickly reversed after Mario Draghi's comments as the markets reflected on another case of over-promising and under-delivering. As was widely expected the Bank of England left interest rates on hold at 0.5% whilst deciding against any further quantitative easing (QE), leaving the level of QE at £375Bn. Elsewhere, Sterling was supported by significantly better construction PMI figures for the month of July which came in at 50.9 against a forecast level of 48.0 pointing to signs of economic growth in an important sector of the UK economy. Today's UK data release: Purchasing Manager Index services figures for July - a higher than expected figure would indicate slight improvements in economic outlook, and provide some strength for Sterling. EUR All eyes focused on the euro yesterday as hopes grew that Mario Draghi and the ECB would reveal an ambitious stimulus plan to deal with the ever deepening debt crisis; however after Draghi’s fighting talk last week, his long anticipated speech after the ECB left interest rates on hold was extremely vague leading the markets to aggressively sell the euro. Despite support for Draghi’s pledge to do “whatever it takes on the euro” last week, comments yesterday that “even if we were ready to act now, there are no grounds to do so”, whilst declining to commit to any Bond buying programmes, shocked the markets which, given the current economic crisis engulfing the eurozone, shocked the markets. After the dramatic loss of credibility for Mario Draghi, pressure will grow on the euro as the ECB president surely faces a leadership test in the coming weeks which will divert attention from the crisis gripping the eurozone. This was highlighted immediately after Draghi’s speech with Spanish 10 year bond yields breaking aggressively through the critical 7% level, after starting the day closer to the far more comfortable level of 6%. Elsewhere credit rating agency, Standard and Poor’s, decision to affirm Portugal’s credit rating at BB with a negative outlook was extremely negative but not unexpected. Today's European data release: German and eurozone PMI (Purchasing Manager Index) figures and important eurozone retail sale figures for June. USD Yesterday saw a mixed day for the US dollar which like most currencies lost ground against the euro in early trading before making significant gains as the day progressed. The US dollar was able to strengthen in its safe-haven capacity as uncertainty gripped the eurozone, but was also supported by better than expected economic data which saw initial jobless claims figures beat expectations at 365,000 better than expected 370,000 level. Elsewhere Factory orders for the month of June disappointed, missing forecasts of a +0.5% increase in June coming in at -0.5% but was largely overlooked as attention focuses on todays vital non farm-payroll figures Today's US data releases: Important non-farm payroll figures and figures showing the rate of unemployment, followed by ISM non-manufacturing figures.