USD Traded Flat ahead of European Central Bank Meeting

USD Traded Flat ahead of European Central Bank Meeting

On Thursday, July 22, the USD traded hugely unchanged as investor’s risk appetite recovered due to strong global earnings ahead of the European Central Bank policy meeting.

The Dollar Index which trails the greenback in opposition to its six other rival currencies traded flat at 92.767.

This was after a pullback from its three-and-a-half-month high of 93.194 last Wednesday.

Moreover, investor’s risk appetite returned to the foreign exchange market which caused that safe haven dollar to step back a little.

This was due to the concerns that the rise in the Covid-19 infections may affect the global growth which caused a sharp selloff in equities and riskier currencies earlier this week.

The USD/JPY pair declined 0.12% to 110.13 since the Japanese markets are closed due to the Marine Day holiday.

On the other hand, the GBP/USD climbed 0.20% to 1.3732 from its five-and-a-half-month low of 1.3573 last Tuesday.

Meanwhile, United Kingdom’s coronavirus cases due to the delta variant continue to surge and the people remain confused over England’s lockdown lifting.

Furthermore, SEK/USD jumped 0.36% to 0.1151 while CHF/USD and CAD/USD both fell 0.12% to 1.0883 and 0.17% to 0.7952, respectively.

Likewise, the risk-sensitive NZD/USD and AUD/USD plunged 0.26% to 0.6951 and 0.06% to 0.7353, respectively.

Even though the Aussie dollar slipped, it is still slightly increased from its eight-month low hit last Wednesday.

Earlier in the day, the National Australia Bank Quarterly Business Confidence Index was released and it was a lower than expected 17 figures from its previous 19 levels.

ECB Policy Decision

Additionally, the EUR/USD traded 0.05% to 1.1798 ahead of the ECB policy decision later in the day.

The central bank previously announced that it will implement some changes to its strategy for the first time.

Most analysts are expecting that it will maintain its dovish stance which could weaken the single currency over the medium term.

Also, they still expect that the net asset purchases under the Pandemic Emergency Purchase Program will end in March 2022.

Meanwhile, the pace of purchases was forecasted to fall during the autumn. 

An analyst said that the ECB’s new inflation goal is suggesting that their monetary policy might remain accommodative for a longer period of time.

Furthermore, aside from the ECB, investors are also eyeing the central banks of Indonesia, Ukraine, and South Africa who will all release their monetary policy decision on Thursday.

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