The European Central Bank (ECB) met forex market expectations on Thursday after it announced that it would keep its policy rate unmoved.
The effect on the euro of the expected decision to preserve current rates was minimal, and it dropped marginally to USD $1.1710 from $1.1719 just before the decision was announced.
This was still a significant rise on its position of $1.1664 the previous day. This came after the President of the European Commission, Jean-Claude Juncker, held a positive bilateral meeting with American President Donald Trump on Wednesday which appeared to bolster the trading relationship between the bloc and its transatlantic trading partner.
Looking ahead, it’s believed that changes to the European rate are likely to occur in the summer of 2019 rather than on this side of the new year. The exact timing of this change, however, is currently uncertain, and statements from the ECB so far have been vague.
This stands in stark contrast to the Federal Reserve in the US, which is believed to have two more rate rises up its sleeve during this year alone.
However, the ECB has gone as far as promising to relax its stimulus program, which is large in scale. At its meeting in June, it confirmed that this was likely to take place in December in advance of any rate rises.
Elsewhere on the forex markets on Thursday, the British pound found itself unable to sustain the high levels it enjoyed earlier in the week.
The GBP/USD pair traded at 1.3149, which represented a significant daily drop of 0.31%.
This was despite a range of somewhat negative economic data coming out of the US. Durable Goods Orders managed to gain 1%, for example, which was way below the predicted rise of 3%. Core Durable Goods Orders, meanwhile, had been predicted to rise to 0.5%, but instead only managed to hit 0.4%. And with unemployment claimant levels forecasted to hover at around 215,000, the data released showed that 217,000 claims had actually been made.
There’s plenty coming up on the forex market agenda next week, too. Monday sees a range of major statistical releases in the UK, including the June consumer credit levels, as well as mortgage approval rates for the same month.
Further Europe-wide releases come on the same day, including July’s figures on consumer confidence, economic sentiment and industrial confidence.
Investors in the Chinese yuan will be interested in the release of non-manufacturing PMI, or Purchasing Managers’ Index, data in the country on Tuesday. Elsewhere in the Asia-Pacific region on Tuesday, Australia will release a range of major statistics including year-on-year change in private sector credit rates for June.
One of the main forex market events of the week is likely to be the Bank of Japan’s interest rate decision, which will be made public on Tuesday. This will be watched closely by the yen’s forex traders, and also by those who are interested in how this major Asian economy chooses to tackle its monetary policy problems.