ECB Rate Decision In The Headlines

A combination of economic data and monetary policy will drive headlines on Thursday, with the European Central Bank (ECB) scheduled to deliver a pivotal rate announcement.

Action begins at 06:00 GMT when the German government releases final CPI numbers for May. Germany’s harmonized index of consumer prices (HICP) is forecast to rise 2.2% annually.

The UK government will report on retail sales at 08:30 GMT. Receipts at retail stores likely rose 0.5% month-on-month and 2.4% annually.

The ECB will deliver its policy verdict at 11:45 GMT. While no change in policy is expected, ECB officials could outline their course of action for the remainder of the year. The ECB will likely do away with its quantitative easing program this year by tapering bond purchases beginning in July.

Shifting gears to North America, the US Department of Commerce will report on retail sales at 12:30 GMT. Sales are projected to rise 0.4% month-on-month following a gain of 0.3% the month before.

Separately, the Labor Department is also scheduled to report on jobless claims at 12:30 GMT. The number of Americans filing for first-time unemployment benefits is expected to rise slightly to 224,000 for the week ending 8 June.

Earlier in the day, the Chinese government reported a bigger than expected slowdown in retail sales, industrial production and fixed-asset investment for the months of April and May. The retail sales slowdown was especially noticeable, as receipts grew only 8.5% annually for May compared with 9.4% the previous month.

AUD/USD

The Australian dollar fell back below 0.7600 on Wednesday, with prices deteriorating well into Thursday’s Asian session. AUD/USD was down 0.3% at 0.7556 in overnight trade. The pair is now testing the 0.7552 support. On the opposite side of the spectrum, the Wednesday high of 0.7608 offers the first major resistance for the pair.

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EUR/USD

Europe’s common currency rebounded sharply on Wednesday as the dollar pared gains following the Federal Reserve’s policy decision. EUR/USD briefly fell to a low of 1.1748 before recovering closer to 1.1800. At the time of writing, the pair was trading around 1.1793, where it was little changed. Immediate resistance is likely to be met at 1.1810, the high from Wednesday. On the flipside, immediate support is located at 1.1765.

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GBP/USD

Cable traded through volatility on Wednesday as traders reacted to the Fed. The pair reached a low of 1.3319 before rebounding back above 1.3380. GBP/USD opened the Asian session around those levels and is currently unchanged. The pound bulls are eyeing the 1.3400 resistance level for confirmation of a breakout. Above that, the 200-period simple moving average of 1.3590 offers the next resistance barrier.

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