Forex Calm Before ECB meeting, Trump Pushes China Deal
Forex traders are paying close attention to the European Central Bank’s (ECB) policy review later on Thursday, to see what it will do to cushion a slowdown in the Eurozone economy. Traders are also keeping an eye on U.S. President Donald Trump’s newfound eagerness to forge a final trade deal with China.
Reuters reported that some traders expect signals from the ECB of a delay in rate hikes until next year and a relaunch of long-term bank loans soon to counteract an economic slowdown.
The U.S. Dollar Index that tracks the greenback against a basket of six major currencies rose by 0.04% to 96.838 by 10:40 PM ET (3:40 AM GMT).
Hope that the trade dispute between China and the U.S. will finally come to an end boosted market sentiment.
On Wednesday, Bloomberg reported that Trump is pushing for a trade deal with China, which could help him with the 2020 re-election campaign. Investors are awaiting a final deal result that could end the year-long trade war between the world’s two biggest economies.
The Australian gained some ground against the dollar as the AUD/USD pair rose 0.15% to 0.7043.
Earlier in the week, the Reserve Bank of Australia (RBA) released disappointing growth data for the last quarter. GDP grew 0.2%, below the 0.3% that had been widely expected. The slower growth has contributed to anticipation of a rate cut this year. The Australian dollar also took a hit last month after the RBA stepped back from a long-standing tightening bias.
The USD/CNY pair inched up marginally by 0.01% to 6.7104. The yuan remained supported by a possible U.S. trade deal.
On top of setting a target band for the 2019 economic growth between 6% and 6.5%, the Chinese government also said at the ongoing annual meeting of the National People's Congress that the country is cutting taxes and fees by nearly CNY2 trillion ($300 billion) to support various industries.
The People's Bank of China (PBOC) set the yuan reference rate at 6.7110 versus the previous day's fix of 6.7053.
Elsewhere, the USD/JPY pair was down 0.04% to 111.71. Soft U.S. data, the dragging Sino-U.S. trade talks and the uncertainty surrounding Brexit are contributing to a risk-off sentiment.
The USD/NZD pair was up 0.21% to 1.4739.
Besides the ECB meeting results, traders are now looking to Friday’s U.S. non-farm payrolls release for February which will point to the strength of the labor market.