The ECB Left Interest Rates Unchanged

On Thursday, the European Central Bank left interest rates unchanged, holding them at record lows as it seeks to revive inflation and growth with cheap credit to the economy.

Markets were expecting a decision to keep interest rates unchanged, after the ECB cut its deposit rate deeper into negative territory in March, expanding its asset buying programs and offering a fresh round of low-interest loans.

The ECB said, it continues to expect the key interest rates to remain at present or lower levels for an extended period of time. On the other hand, the ECB President Mario Draghi said on Thursday, ‘events in Turkey since the coup attempt may impact economic sentiment in the euro zone.’ Euro settled at $1.10 vs. USD and could trade in a limited range between $1.10 and $1.11.

Despite the strong U.S. data, USD fell by 20 pips and traded at 97, during yesterday’s trading session. On Tuesday, Existing home sales rose 1.1% to a seasonally adjusted annual rate of 5.57 million in June, the strongest since February 2007.

Gold pared its losses as the dollar and European shares fell after ECB kept key interest rates unchanged. The yellow metal traded above $1,330.

The Pound settled at $1.32 on Thursday. As the GBP was still under pressure, it could not trade above $1.33.

The U.S. dollar declined sharply and fell by 200 pips vs. Japanese Yen, as oil prices weakened. The greenback is currently trading at ¥105.50 and could be backed by ¥105 during the course of the day.

Oil prices fell by 2% on Thursday, after a hike in U.S. gasoline inventories pushed supplies in the world's top oil consumer to a record high, supporting concerns over a global glut of oil. WTI settled below $44.50 and could decline to $45 by the end of the week.

The most important economic events:

• GBP Markit UK PMI Manufacturing SA (JUL P): (GMT 10:30) Important- Forecast (47.5) – Previous (52.1).
• CAD Retail Sales (MoM) (MAY): (GMT 14:30) Important- Forecast (0.0%) – Previous (0.9%).
• CAD Consumer Price Index (YoY) (JUN): (GMT 14:30) Important- Forecast (1.4%) – Previous (1.5%).
• CAD Bank Canada Consumer Price Index Core (YoY) (JUN): (GMT 14:30) Important- Forecast (2.0%) – Previous (2.1%).

Disclaimer
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