ECB will announce its policy decision on Thursday.

US existing home sales declined to an annual rate of 5.12mn for June from 5.41mn previously which was below consensus forecasts of 5.38mn and the lowest reading since July 2020. The data maintained concerns over the housing sector.

Euro-Zone consumer confidence dipped again to -27 for July from -23.8 previously and weaker than consensus forecasts of -24.9.

The ECB will announce its policy decision on Thursday with uncertainty over the scale of a rate hike. The bank is also scheduled to announce its new tool to contain peripheral bond yields.

There will be volatile Euro trading after the decision, especially with Italian political uncertainty also a key element.

Italian political developments will also be important. In comments on Wednesday, Italian Prime Minister Draghi stated that he would only stay in office if there was unity in coalition partners.

There are, however, major splits in the parties and Draghi is expected to resign on Thursday.

The headline Canadian inflation rate increased to a fresh 29-year high of 8.1% from 7.7% previously, although this was below market expectations of 8.4%.

The underlying rate increased to 6.2% from 5.9% and was slightly above consensus forecasts of 6.1%. The overall Bank of Canada core readings also moved higher on the month.

The Bank of Japan made no changes following the latest policy meeting with interest rates at -0.1% and a 0% target for the 10-year yield.

Reaction was measured as there had been no expectations of a change at this meeting.

The Euro struggled to maintain support on Wednesday amid reservations over the underlying Euro-Zone outlook. Russian rhetoric unsettled the Euro as Foreign Minister Lavrov warned that Russia’s intent in Ukraine and moved beyond the Donbas. There was further uncertainty over gas supplies to Germany.

US yields held steady during the day as the Fed stayed in in blackout period. EUR/USD dipped to 1.0175 before regaining ground and traded around 1.0220 on Thursday.

There was a muted reaction to the Bank of Japan policy decision. USD/JPY settled around 138.30 with net gains on Thursday as US bond yields edged higher.

The Swiss franc edged lower on the day with USD/CHF settling just above 0.9700.

Sterling was unable to make further headway with uncertainty over tax policies. GBP/USD failed to extend gains above 1.2000 with EUR/GBP edging higher to 0.8520.

Commodity currencies failed to hold intra-day highs, but with buying on dips. AUD/USD settled close to 0.6900 on Wednesday and traded close to this level on Thursday. There was a measured Canadian dollar reaction to the inflation data. USD/CAD settled around 1.2880 and edged lower to 1.2870 on Thursday.

Economic Calendar

12:45Deposit Facility Rate(JUL 01)-0.50%-0.50%
12:45ECB Interest Rate Decision(JUL)
13:30USD Philadelphia Fed. Manufacturing Index(JUL)5.5-3.3
13:30CAD New Housing Price Index (M/M)(JUN 01)0.50%
15:00USD Leading Index(JUL)-0.40%-0.40%

*All rates shown are indicative of interbank rates and should only be used for indication purposes only. It is important to note that foreign exchange rates fluctuate and that rates may vary depending on the amount and the base currency that is purchased or sold. Rates are correct as of 8:00am UK time. CentralFX are not responsible for the rates shown.