AUDUSD & EURUSD, Daily
Thursday can be consider as a crucial Day given the world wide interest in all things central banking, while many important data to be released as well. The BoJ meeting will initial gain some interest, in which no changes in policy are expected in either rates or stimulus. The Bank may, however, downgrade its inflation outlook, while upping expectations for the economy, consistent with recent global patters and according to recent market chatter.
However mainly all eyes will be on tomorrow’s ECB meeting. After the ECB removed the easing bias on rates in June, but still maintained an easing bias on QE, the central bank expected to keep policy parameters unchanged at tomorrow’s council meeting, which will be followed by a longer summer break. The next policy setting meeting in September will bring updated set of staff projections and likely a further tweaking of the forward guidance, although a confirmation of a follow on QE program at reduced levels, i.e. the start of tapering, may not come until December, especially as the Fed rate hike expectations are also being pushed out. Rather than using the Jackson Hole meeting in August as an opportunity to flag QE tapering, central bank officials could use the gathering to try and re-assure markets that central bank support may have peaked, but that policy formalization will be conducted with caution and a close eye on market reactions. Bloomberg reports today seem to confirm that officials indeed remain reluctant to change the language already this week, but are working on details of tapering plans, which could be agreed in the fall.
Meanwhile significant releases will be out from UK and Australia. In Australia, the June employment report is the highlight the day. A 20.0k gain is projected following the 42.0k improvement in May. The unemployment rate is seen rising to 5.6% from 5.5%. In UK, Official retail sales for June will be out , and expected at 0.2% m/m rebound after the sharp 1.2% contracting on May .
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