Counting Down To ECB Meeting
The European Central Bank policy meeting is Thursday. As market moving events go, it is the only game in town. EURUSD has been on a steady stroll upwards as traders anticipate (hope) that President Mario Draghi will give clues to the ECB’s exit strategy, from its quantitative easing program. Most bank analysts do not expect any change in the forward guidance, yet the recent EURUSD gains suggest otherwise.
EURUSD stayed below yesterday’s 1.1580 peak as it meandered sideways in a narrow range, but stayed above the intraday uptrend line.
Elsewhere, Sterling was a non-event. GBPUSD hasn’t recovered from Tuesdays soft inflation report which has greatly reduced risks for a near term rate hike.
The Bank of Japan policy meeting is scheduled for Thursday. That was all the excuse USDJPY traders needed to stay sidelined. USDJPY traded sideways in a 111.89-112.22 range which left the downtrend intact. A downgrading of US rate hike expectations is still weighing on the currency.
The antipodean currencies were buoyant although the trading bands were narrow. AUDUSD continued to consolidate gains made after the release of somewhat hawkish Reserve Bank of Australia policy meeting minutes and by recent gains in iron ore prices.
NZDUSD is supported by the broad US dollar weakness. It opened in New York at 0.7368, close to the middle of its 0.7342-0.7386 range.
This morning’s US Housing data releases could cause a bit of a ruckus. Housing Starts are expected to be 6.2% in June, a large jump from the May 5.5% decline. Building Permits are forecast to rise 2.8 %, in June, up from a decline from 4.9% in May.
The weekly EIA Crude Stocks change reports is also due today. A large drawdown will lift WTI prices and undermine USDCAD. Conversely a large build should support USDCAD while putting downward pressure on WTI prices.
FX Ranges for major currency pairs