EUR/USD – Stable as ECB Statement Eyed

EUR/USD is steady on Thursday, as the pair continues to trade close to nine-month lows. In the European session, the pair is trading in the mid-1.33 range. Today's highlight is the ECB rate statement, with the ECB expected to maintain rates at their current level of 0.15%. Elsewhere, German Industrial Production posted a small gain of 0.3%, well below expectations. In the US, the day's major event is Unemployment Claims. Little change is expected in this release.

The ECB will be in the spotlight later on Thursday, but the markets are not expecting any dramatic announcements. In June, the ECB cut rates to a record low of 0.15% in order to boost growth and stave off deflation. However, inflation levels have not risen, and continuing tension with Russia over Ukraine has had a negative impact on growth. German numbers have softened and Italy is officially in recession, having posted a decline in GDP for two consecutive quarters. This leaves ECB President Mario Draghi in a difficult position, with few tools in his arsenal to boost the struggling Eurozone economy.

German numbers continue to point to trouble in the Eurozone's largest economy. Industrial Production posted a gain of 0.3%, but this was nowhere close to the forecast of 1.4%. On Tuesday, Factory Production declined by 3.2%, the steepest drop since October 2012. The Bundesbank is blaming tensions with Russia and stronger EU sanctions against Moscow for the weak economic numbers, as Germany is Russia's number one trading partner in Europe. With key indicators pointing downward and confidence in the German economy ebbing, we could see a decline in GDP in the second quarter, which could have a chilling effect on the shaky euro.

US PMIs posted strong gains in July. On Tuesday, ISM Non-manufacturing PMI looked sharp, rising to 58.7 points last month. This easily beat the estimate of 56.6, and was the index’s best showing since February 2011. This follows an excellent Manufacturing PMI reading last week, with the index climbing to 57.1 points, a three-year high. There was more positive news on Tuesday, as Factory Orders had an impressive July, gaining 1.1%. These solid numbers point to healthy expansion in the US manufacturing and services sectors, which has helped the dollar gain ground at the euro's expense.

EUR/USD 1.3377 H: 1.3392 L: 1.3365