A combination of monetary policy and economic data will dominate the currency markets on Thursday as the European Central Bank gets set to deliver its latest interest rate verdict. In the United States, a high-profile gauge of factory output will be released early in the North American session, giving traders the latest measure of health for the world’s largest economy.
Action begins at 06:00 GMT with a report on German consumer confidence courtesy of GfK. The consumer confidence index for August is projected to hold steady at 10.7, according to a median estimate of economists.
Reports on French consumer confidence, Spanish unemployment, and Italian business sentiment will be released between 06:45 GMT and 08:00 GMT. None of the reports are expected to have a major impact on currency prices.
The ECB rate decision will be delivered at 11:45 GMT. Although ECB officials are not expected to raise interest rates, they may provide further insight into the evolution of monetary policy over the next 12 months. At the last policy meeting, the ECB said interest rates would remain on hold for the rest of the year, but that quantitative easing would come to an end in December. Currently, the benchmark interest rate sits at zero and the deposit rate is at -0.4%.
Shifting gears to North America, the US Department of Commerce will report on durable goods orders at 12:30 GMT. Orders for manufactured goods meant to last three years or more likely rose 3% in June after falling 0.6% the previous month. Excluding the volatile transportation category, durable goods sales likely rose 0.5%.
Commerce will also report on the June goods trade balance at 12:30 GMT. Washington’s deficit with the rest of the world is forecast to widen to $67 billion from $64.85 billion in May.
Separately, the Labor Department will issue its weekly jobless claims report at 12:30 GMT. The number of Americans filing for first-time unemployment benefits likely rose by 8,000 last week to a seasonally adjusted 215,000.
Europe’s common currency is holding a narrow range ahead of the ECB rate statement. EUR/USD put up firm gains on Wednesday as the dollar continued to retreat. The pair now trades at 1.1731, with economic data and monetary policy to provide further guidance.
Cable has also steadied after posting strong gains during the previous session. GBP/USD is currently trading at 1.3200, having gained roughly 180 pips since Friday. The pair faces immediate resistance at 1.3240.
The dollar’s momentum loss was also observed against the Japanese yen on Wednesday, with the USD/JPY exchange rate falling below 111.00. The pair, which currently trades at 110.81, is keeping close tabs on the Bank of Japan’s upcoming policy meeting next week.