EURO, DOLLAR BRACE FOR DATA-DRIVEN SESSION
The global financial markets face a steady stream of economic reporting on Thursday. Although no major releases are expected, the data will speak to the economic recoveries of Europe and North America and will in turn impact the currency markets.
Action begins at 06:00 GMT with a report on Switzerland’s trade balance. The Federal Customs Administration is expected to show a higher trade surplus for the month of May, reflecting stronger exports.
Forty-five minutes later, INSEE will release its latest survey on France’s business conditions. The report is expected to show no change in the current business climate.
At 08:00 GMT, the European Central Bank (ECB) will release its latest Economic Bulletin, a closely-watched publication that’s published two weeks after each Governing Council meeting. The ECB’s Governing Council voted to leave monetary policy unchanged at the June meeting.
Traders considering the British pound will be keeping a close eye on the CBI Industrial Trends Survey, which captures the outlook on national manufacturing.
In North America, the US Labor Department will issue its latest jobless claims report for the week of June 16. Claims are forecast to rise 3,000 to a seasonally adjusted 240,000 thousand.
North of the border, Statistics Canada will report on retail sales at the same time. Canadian retail receipts are forecast to rise 0.2% in April. Excluding automobiles, sales are expected to rise 0.7%.
The euro has held in a relatively tight trading range since falling from highs north of 1.1280. The EUR/USD exchange rate continues to trade in the familiar 1.1170 region. The pair is targeting the 1.185 region as the next zone of critical support. This area represents the 200-hour moving average and the 38.2% Fibonacci retracement. A clear break above this level would expose the pair to further upside north of 1.12. However, upward action is contingent upon the US dollar, which has established a higher trading range in recent sessions.
Cable snapped back to health on Thursday amid a growing rift at the Bank of England (BOE). As it turns out, there may in fact be a rate hike in 2018 after the central bank’s chief economist Andrew Haldane said the BOE should normalize monetary policy “well ahead of current market expectations.” After briefly falling below 1.26, the GBP/USD rallied to the 1.2670 region on Wednesday.
Retail sales could be a strong catalyst for the Canadian dollar on Thursday. The loonie has been progressing higher on signs the Bank of Canada (BOC) may be ready to raise interest rates sooner than previously expected. The Canadian economy outshined its global peers in the first quarter to become the fastest-growing G7 nation. The USD/CAD exchange rate is down over 200 pips since 9 June.