The euro held gains after the ECB kept policy unchanged, disappointing some market participants who had bet on an easing.
A rate cut at the ECB’s next meeting appeared certain. After the ECB meeting, President Mario Draghi indicated the bank was prepared to cut rates at its next one in September. Government bond purchases and a revamped policy message are also likely at the ECB’s next meeting.
The focus then shifts to Bank of Japan (BOJ) and Federal Reserve meetings next week. The Fed is widely expected to cut rates, but there are growing views such a move may be a one-off event, not the start of a major easing cycle. The BOJ is also divided over whether to ease policy, but expectations for a move are low.
The Fed is widely expected to lower its target range of 2.25%-2.50% by 25 basis points at a meeting ending July 31. Yet, expectations for a 50-basis point have waned due to positive economic data. Before the Fed meeting ends, the BOJ announces its policy decision on July 30.
START TRADINGForex – ECB kept policy unchanged disappointing traders
Investors are likely to look to U.S. economic data later in the day. The focus then shifts to Bank of Japan (BOJ) and Federal Reserve meetings next week.
The dollar index was at 97.768 after reaching a two-month high of 98.173. The dollar index was up 0.7% on the week.
The Australian dollar slipped to $0.6945 and looked set for a 1.4% loss for the week.
The New Zealand dollar traded at $0.6657, down 1.5% for the week.
The dollar traded at 108.620 yen, near a two-week high of 108.755 yen. The greenback was on course for a weekly gain against the Japanese currency of 0.8%. This would be its biggest since the week ending April 5.
The euro traded at $1.1151, a mild recovery from a two-month low of $1.1102. However, the euro was down 0.6% this week.
Sterling edged down to $1.2449 and was on course for a 0.5% weekly loss. Cable has stabilised since Boris Johnson became Britain’s new prime minister. Yet, there is still uncertainty about Brexit’ s negotiations.
Sterling slipped 0.1% to $1.2437, below its weekly high of $1.2522. The pound hit a 27-month low of $1.2382 last week as fears of a no-deal Brexit jumped.
In commodities, oil prices rose on Friday and were on track for a weekly increase as geopolitical tensions over Iran remained unresolved. Brent crude futures were up 34 cents at $63.73 per barrel at 1117 GMT, equivalent to a weekly rise of 2%. They fell 6% last week. U.S. West Texas Intermediate crude was 40 cents higher at $56.42 a barrel, a weekly gain of 1.3%. It fell 7.5% last week.
PLEASE NOTE The information above is not investment advice.
Sources: Reuters, Investing, CNN money