EURO RISES TO FOURTEEN MONTH TRADING HIGH AS ECB KEEPS MONETARY POLICY UNCHANGED
DRAGHI LEAVES THE DOOR OPEN
European Central Bank President Mario Draghi pledged to keep the current bond buying programme unchanged, purchasing €60 billion per month, and maintaining the deposit rate for European banks at –0.4%, and the base interest rate at 0.0%.
However, Mario Draghi said ECB policymakers would discuss potential changes to the bank's bond-buying scheme in the autumn, boosting the euro currency to a new 14-month trading high against the U.S dollar, at 1.1656.
BOJ BACKTRACK ON INFLATION
The Bank of Japan this week kept interest rates unchanged at 0.00% and maintained its inflation target at 2.0%. However, as low inflation persists, Japanese policy makers decided to extend the timeline for the inflation target by one year, saying it expected inflation to reach 2% by fiscal year 2020.
After suffering a week of heavy trading losses, the USDJPY pair initially rose from a two-week trading low, to reach 112.49 following the Bank of Japan's back track on reaching inflationary targets. The USDJPY later fell back below the 112 handle, as U.S dollar index weakness continued to weigh on the pair.
U.S DOLLAR WEAKNESS PERSISTS
The U.S. dollar index fell to a ten month trading low against a basket of major currencies, as President Donald Trump failed to gain the backing needed to pass a new healthcare reform bill through U.S Congress.
Financial markets remain deeply worried that the pace of U.S. growth may now falter, as the Trump administration may now fail to pass through future tax and fiscal reforms, casting doubts that the Federal Reserve will raise interest rates further this year.
AUSSIE AT TWO YEAR HIGH
The Australian dollar climbed towards the psychological $0.80 cent level against the U.S dollar, following better than expected Chinese GDP figures, and an upbeat Australian jobs report for the month of June.
On Thursday the Australian dollar moved to a two-year trading high against the greenback, hitting $0.7992 cents, as statistics showed the Australian economy created 14,000 new jobs, beating expectations, whilst the unemployment rate held steady, at 5.6%.