Euro Awaits ECB Meeting
A rebound in equities on Thursday helped the dollar extend its gains in early Asian trading today but fell back slightly in late Asian session. The Dow Jones Industrials and S&P 500 both closed up 1.8%, lifting Tokyo stocks. Stock markets in China remain closed on Thursday and Friday to commemorate the end of WWII.
ADP Employment figures and factory orders both missed expectations but did little to guide the market on the Fed’s next move so had limited impact on the dollar. The greenback reached a high of 120.69 yen before easing to 120.43 yen in late Asian session. The euro was weaker against the dollar as it slipped to 1.1219, but it was firmer against the pound at 0.7342. Sterling continued to drift lower against the dollar. It was down at 1.5276 dollars after trading as high as 1.5325 dollars on Wednesday.
The aussie attempted a recovery after weak retail sales data sent it lower against the dollar. Retail sales fell by 0.1% in July from the previous month. This was sharply below estimates that they would expand by 0.4%. Trade figures were better though, with the deficit coming in much lower than expected. The aussie had reached a low of 0.6991 against the greenback before jumping to 0.7018 in late Asian session.
Oil prices slipped back on Thursday after gaining almost 2% yesterday. A larger-than-expected rise in US crude oil inventories weighed on prices. WTI Crude was down -0.4% at $46.05 and Brent Crude was down 0.6% at $50.22.
Looking ahead to the rest of the day, Services PMI data is due for the UK as well as the final services PMI for the Eurozone. In the US, the weekly initial jobless claims and the ISM non-manufacturing composite will be closely watched by investors, in addition to the US trade figures for July.
But the highlight of the day is likely to be the European Central Bank’s press conference which will follow the conclusion of its latest monetary policy meeting. No change in policy is expected but with recent dovish comments from ECB officials, markets will be looking to see if ECB President Mario Draghi will hint at further monetary easing by expanding or extending its QE program. Recent events such as the ongoing slowdown in China and the global market volatility have heightened the downside risks to the Eurozone economy, putting the ECB on guard for further action.