USD Slips, ECB & BoE Unchanged
USD Slips, ECB & BoE Unchanged
The dollar eased against the euro and the yen in the Thursday session, falling to 1.5441 and 103.42, respectively. Central bank decisions garnered the lion’s share of the attention today, with the European Central Bank and the Bank of England both announcing rate decisions in the morning.
The US economic calendar was light today, which saw weekly jobless claims improve to 365k versus 380k a week earlier. Meanwhile, wholesale inventories posted a 0.1% decline in March compared with a 1.1% increase in February. Friday’s data will see the March trade deficit, expected shrink to $61.3 billion down from $62.32 billion in February.
Euro Edges up on ECB
The ECB, as expected, left monetary policy unchanged when it announced its decision earlier today holding rates steady at 4.0%. Bank President Trichet reiterated the ECB’s hawkish bias, expecting risks to inflation outlook to remain clearly on the upside and must ensure current high inflation remains temporary. Further, Trichet added that the Eurozone is “currently experiencing rather protracted period of high inflation”. His comments propped the euro higher, reinforcing sentiment that the ECB will likely maintain its hawkish bias for the remainder of the year and preserving the yield differential over the US, which is seen to be euro positive.
EURUSD trades near the 1.54-level, with interim resistance eyed at 1.5440, followed by 1.5480 and 1.55. Subsequent ceilings are seen at 1.5530, backed by 1.5560 and 1.56. On the downside, support is eyed at 1.5360, followed by 1.5320 and 1.5280. Additional floors are eyed at 1.5250, followed by 1.52 and 1.5170.
Bank of England Unchanged
The Bank of England kept rates unchanged at 5%, stabilizing the sterling’s losses for the time being. Heading into the decision, rumors for a surprise rate cut given weak economic conditions in the UK, had weighed on the sterling - pushing it to multi-month lows. Nonetheless, the BoE will likely cut rates in June due to the lingering weakness in the housing market so we view any rebounds in the currency to be selling opportunities.
MG Financial Group
http://www.mgforex.com
Angelo Airaghi is a Commodity Trading Advisor, registered with the National Futures Association and the Commodity Futures Trading Commission. He has been an active professional since 1990 working for major international financial companies. In the past 10 years, Angelo Airaghi has been an analyst and commentator for national and international media.
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