No news is good news?
The European Central Bank remains on hold, but gave some clarity on the timing of when they will announce tapering its bond buying program.
Despite confirmation that the central bank won’t discuss changing forward policy guidance until the fall, the euro has moved significantly higher Thursday.
ECB President Mario Draghi reiterated that he has not asked policymakers to prepare options for tapering their substantial asset-purchase program, and that the governing council was unanimous in their decision to leave policy unchanged and wait for autumn.
While we think his overall remarks read dovish as ever, investors are certainly throwing their weight behind the positives. Draghi says that the economy is “finally” experiencing a robust recovery. The ECB only has to wait for wages and inflation to follow through.
Good, but not good enough.
Australia is seeing the best job creation streak in six years, but it was not enough to move Aussie dollar.
June marked another monthly gain that has been running since January 2011. The economy added 14,000 jobs in the month of June, but this was below the 15,000 gain expected by analysts.
The details look good as well. Full-time employment expanded by another 62,000 jobs. The annual increase was the largest since 2015 and brings the total number of full-time employment to 8.356 million. Part-time employment fell by 48,000 to 3.81 million.
Steady as she goes
Kicking the can down the road is nothing new for the Bank of Japan. Pushing back their timeline for achieving their two percent inflation target to 2020, they left monetary policy unchanged.
This marks the sixth time they’ve had to push back this date as “risks to the economy and price outlook are skewed to the downside” according to their statement.
Silver lining: the bank was more positive on the outlook for economic growth, raising their forecast from 1.6% to 1.8% for the year. But even an upgrade to the growth forecast did little to excite investors, the focus remains on the inflation story.
Maintaining their commitment to distort interest rates, the bank continues to struggle to stoke inflation. The yen is slightly higher against the US dollar, but has scaled back from overnight peaks. Clearly, the Bank of Japan will need to reach deeper into their pockets to effect a fuller solution.
EURUSD: Euro up almost a full percent against the greenback after the ECB announced that forward guidance may be up for a makeover in August.
GBPUSD: The pound is weaker despite a surprise gain in June’s retail sales. Analysts are citing seasonal effects for the bounce, and expect weak wage growth to put pressure on consumer spending in the coming months.
AUDUSD: Aussie dollar weaker after a miss in employment gains. Despite being lower than expected, job creation has been on an expansion streak since January 2011.
USDCAD: Canadian dollar trading flat against the USD as minimal domestic developments from either side fail to excite investors.
USDJPY: The yen pushed lower after the Bank of Japan pushed out the date for meeting inflation targets for the sixth time.