ECB RATE DECISION LOOMS LARGE FOR INVESTORS
Monetary policy is back in focus on Thursday as the European Central Bank (ECB) gets set to unveil its latest rate decision. The ECB is widely expected to stand pat on monetary policy, but could drop hints about its plan to begin unwinding record stimulus.
The ECB decision will come our way at 11:45 GMT. Policymakers are no doubt considering an appropriate course of action for eliminating quantitative easing amid strong signs the Eurozone economy is returning to health. Eurozone growth has been one of this year’s most pleasant surprises. This trend is expected to continue for the foreseeable future, with economic health extending beyond Germany and toward the periphery.
On the data front, Italy’s consumer and business confidence indicators will break the ice at 08:00 GMT. Two hours later, the Confederation of British Industry (CBI) will release its October trades survey.
In North America, a weekly jobless claims report from the US Department of Labor will make headlines at 12:30 GMT. Jobless claims are expected to rise by 31,000 after falling to 44-year lows during the previous week. US jobless have quickly returned to health after a pair of hurricanes ravaged the states of Texas and Florida during the summer.
The Commerce Department is also expected to report on the goods trade balance at 12:30 GMT. Washington’s goods trade deficit is forecast to rise to $63.8 billion from $62.94 billion.
A report on pending home sales courtesy of the National Association of Realtors (NAR) is scheduled to come at 14:00 GMT.
In policy news, Federal Open Market Committee (FOMC) member Neel Kashkari will deliver a speech at 14:30 GMT. Kashkari is one of the FOMC’s most dovish members.
Earlier in the day, New Zealand said its trade deficit narrowed less than forecast last month, as both imports and exports rose. Wellington’s trade deficit stood at $1.14 billion for September, down slightly from $1.17 billion the month before.
The euro took advantage of a weaker US dollar on Wednesday by overtaking the 1.1800 handle for the first time in almost a week. Th pair added to its gains overnight, reaching a high near 1.1830. Immediate support is located at 1.1775. On the opposite side of the spectrum, resistance is located at 1.1835.
The Canadian dollar took a beating Wednesday after the Bank of Canada kept interest rates on hold in an extremely dovish policy statement. The USD/CAD is riding three-month highs as it approaches the 1.2800 handle. The pair has gained more than 300 pips over the past week in a clear sign that the bulls favour the greenback.
Cable spiked on Wednesday, as capital flowed back into sterling after previous declines. The GBP/USD reached 1.3271 for its highest exchange rate in over a week. The pair is currently trading in the 1.3260 area, with immediate support at 1.3220.