EUR/USD is steady in the Thursday session, after remaining unchanged on Wednesday. Currently, the pair is trading at 1.1312, up 0.05% on the day. On today’s calendar, the highlight is the ECB policy meeting. The bank is expected to hold rates at a flat 0.00%. As well, eurozone GDP is expected to post a gain of 0.2% for a second successive quarter. In the U.S., unemployment claims are expected to hold steady at 225 thousand. On Friday, Germany releases factory orders, and the U.S .will release nonfarm payrolls and wage growth
All eyes will be on the monthly ECB policy meeting. The bank is expected to stay on the sidelines and maintain interest rates at 0.00%, where they have been pegged since March 2016. With the ECB winding up its massive stimulus program in December, any improvement in economic data (or rise in inflation) is bound to raise speculation about a rate hike. The eurozone economy showed some strength in the first half of 2018, which led to talk of a rate hike in the second half of 2019. However, with Germany and the eurozone in the midst of a slowdown triggered by global trade tensions, it’s unlikely that the ECB will make a rate move before 2020. Current economic conditions are such that both downside and upside risks to the cross appear limited, so the euro could continue to drift.
The Federal Reserve has been in dovish mode since December, and this was reinforced by Boston Fed President Eric Rosengren, who is a considered a hawk on monetary policy. Rosengren said that there was some downside risk to the U.S. economy and called on policymakers to be “patient” for several more meetings in order to evaluate the risks to the economy. Without being explicit, Rosengren appears to support the Fed remaining on the sideline for the upcoming policy meetings until the Fed can better gauge the health of the U.S. economy.
