The euro held below a three-day high on Thursday after the European
Central Bank, as expected, kept its policy rate unchanged and investors
waited to see whether there are any further hints on the pace of policy
The ECB’s decision keeps it on track to end its vast bond purchases by the close of the year and to keep rates record low at least through next summer.
Attention now turns to
ECB President Mario Draghi’s news conference at 1230 GMT for signs of
whether the ECB elaborates on how it will use redemptions from its bond
purchases after the scheduled close of the quantitative easing program
at the end of 2018.
“The key watch points will be the central bank’s interpretation of external risks and an improving inflation outlook, along with any commentary on the future reinvestment policy within its asset purchase program,” Morgan Stanley strategists said.
The euro was a shade weaker at $1.1710,
down form $1.1719 before the ECB decision. It had gained overnight from
a low of $1.1664 after European Commission President Jean-Claude
Juncker and U.S. President Donald Trump agreed to negotiate on trade.
Trump said they had agreed to “work together toward zero tariffs, zero non-tariff barriers, and zero subsidies on non-auto industrial goods”. He agreed to refrain from imposing car tariffs while the two sides launch negotiations, easing the threat of a transatlantic trade war.
markets were far more circumspect about the outcome of the summit than
equity and bond markets as investors waited for the fine print.
one thing we have learned from the last 18 months of Trump’s gyrating
trade policies is that whatever looks certain today is likely to be
undermined tomorrow,” Gavekal strategists said in a note.