ECB HEADLINES THURSDAY’S TRADING SESSION
Economic data and monetary policy headline an active release schedule on Thursday, culminating in a high-profile interest rate decision by the European Central Bank (ECB).
Action begins at 07:00 with a report on German consumer confidence courtesy of the GfK institute. Two hours later, the CESifo Group will report on German business conditions for the month of January. The business climate, current assessment and expectations indicators are forecast to hold relatively steady.
Elsewhere in Europe, the Italian government will report on trade and industrial production for the month of November. The reports will be released at 09:00 GMT.
In monetary policy, the ECB will issue its interest rate decision at 12:45 GMT. Although no change in monetary policy is expected, the central bank could provide clues about the direction of quantitative easing later this year. Policymakers have already committed to scaling back on monthly bond purchases, but are keeping their options open in the event that the economy doesn’t perform up to par. Until now, that hasn’t been a concern as the Eurozone recovery deepens.
Shifting gears to North America, the US government will release the latest trade and jobless claims numbers at 13:30 GMT. Later in the morning, the Department of Commerce will report on new home sales for the month of December. The Kansas Federal Reserve Bank will also issue the manufacturing activity survey at 16:00 GMT.
North of the border, the Canadian government will report on retail sales at 13:30 GMT. Receipts at retail stores are forecast to rise 0.7% in November after surging 1.5% the month before.
In currency news, the US dollar is trading at its lowest level in three years, as concerns over trade policy continue to weigh. The US dollar index (DXY) fell below 90.00 on Wednesday for the first time since late 2015.
The Canadian dollar benefited from a slumping greenback on Wednesday, with the USD/CAD bottoming out near 1.2300. The pair was last seen trading at 1.2319, having declined 0.2% from the previous close. The pair remains in a firm downtrend, which could expose last September’s lows near 1.2200.
The euro set another multi-year high against the dollar Wednesday, as the EUR/USD spiked above 1.2400 for the first time since 2014. The pair was last seen trading at 1.2420, with the bulls eyeing the 1.2500 level. On the downside, immediate support is located around 1.2350.
Cable’s momentous rally continued on Wednesday, as the GBP/USD approached 1.4300 for the first time since Brexit. The pair is well supported near 1.4100, with the bulls likely to make another run higher amid the dollar’s perpetual slump. Investors should keep a close eye on upcoming US data, as this could influence the performance of dollar pairs.