EURO REBOUNDS AFTER ECB’S PRAET CALLS FOR PATIENCE

The euro bounced back on Thursday, although gains were limited after an influential central banker urged patience with respect to monetary policy.

European Central Bank (ECB) chief economist Peter Praet said officials need to maintain a steady hand with respect to monetary policy as inflation and growth remain below target.

“We need patience and persistence,” Praet said, repeating ECB President Mario Draghi’s core messaging. “Therefore, maintaining a steady hand continues to be critical to fostering a durable convergence of inflation toward our monetary policy aim.”

The euro was last seen trading near session highs as the US dollar backtracked against a basket of world peers.

In economic data, German factory orders rebounded far less than expected last month. Factory orders climbed at a seasonally adjusted 1% pace in May, following a 2.2% decline the previous month, the Federal Statistics Office said. Analysts expected a gain of 2%.

Separately, the Swiss government said inflation weakened unexpectedly in June, with the consumer price index (CPI) dipping 0.1%. That translated into an annualized gain of 0.2%.

The Australian dollar declined on Thursday even as Canberra’s trade surplus rebounded much faster than expected.

The Australian Bureau of Statistics reported that the country’s trade balance surged to $2.47 billion in May, which was more than double what analysts had expected. The trade surplus had plunged in April as exports declined sharply.

For May, exports rose 9% while imports gained just 1%.

Gold prices failed to capitalize on a weaker dollar. After posting modest gains earlier in the day, the yellow metal pared gains to trade essentially flat.

EUR/USD

The euro notched modest gains through European trade but remains neutral over the short-term as traders turn their attention to US nonfarm payrolls data. The EUR/USD exchange rate is likely to maintain its neutral bias so long as prices remain capped below recent 14-month highs. Immediate support is likely found at 1.1330. The 1.1430 level remains a formidable resistance.

AUD/USD

The Aussie currency resumed its downtrend on Thursday, as the market struggled to regain momentum. The AUD/USD was last down 0.3% at 0.7586, where it is trading more than 100 pips below its recent three-month high. The pair has run into selling pressure north of the 0.7600 handle, a trend that is expected to continue after the Aussie was rejected at the 15-month trend resistance.

GOLD

Bullion prices traded higher through the European session but failed to sustain the rally ahead of North American trade. Gold’s inconsistency comes despite growing risk aversion in the financial markets. Traders should, therefore, continue to expect choppy market conditions for precious metals over the short term. As the following chart illustrates, gold recently completed a double-top formation, as prices continue to struggle for momentum.