The Euro holds high levels against US dollar, gained on Tuesday’s strong dollar’s fall, ahead of today’s ECB policy meeting. European central bank is expected to keep rates on hold on today’s meeting as Eurozone growth and inflation remain anemic. Growth cannot pick up due to high unemployment that stands around 10% and industry sitting on huge unutilized capacity.
On the other side, inflation holds around zero and undershoots central bank’s target at 2% for over three years.
This signals a need for more stimulus to the European economy from the ECB with extended asset-purchase programme and further policy easing expected in coming months.
The euro trades around 1.1250 at the beginning of the European session, just off fresh high at 1.1270.
Sterling consolidates above Wednesday’s low at 1.3317, hit on extended pullback after failure to sustain break above 1.3400 barrier. Overall sentiment remains positive.
The Aussie dollar hit three-week high against US dollar and eventually cracked 0.7700 barrier, driven by upbeat data. Australian trade deficit narrowed to A$2.4 million in July from June’s gap of A$3.25 million, beating the forecast at A$2.75 million.
The second antipodean currency, New Zealand dollar, also remains well supported against its US counterpart and holds around 16-month high at 0.7483, posted on Wednesday.
Gold was slightly higher in Asia and holding gains in early Europe, supported by positive Chinese trade data. Imports rose by 1.5% in August, against forecasted drop by 4.9%, signaling stronger domestic demand.
Gold remains within narrow consolidation range, following Tuesday’s surge, with prospect of further rise after recent weak US data discouraged expectations of US rate hike in near-future.
Strong Chinese data also supported Asian stocks which maintain recent gains and hold near one-year high
MSCI’s broadest index of Asia-Pacific shares outside Japan eased 0.1%, but that followed four days of gains which took it to the highest levels since July 2015.
South Korean stocks lost 0.3%, having also touched a one-year top this week, while Shanghai turned a fraction firmer.
Japan’s Nikkei lost 0.3%, easing away from a three-month top in the face of a firm yen.
Highlights of the day
Europe

The ECB is not expected to increase its monetary accommodation this week, with most forecasters tipping no change at all to any of its settings.
However, warning comes from another round of very tepid economic data out of the Eurozone, notably from Germany. Annual inflation slowed unexpectedly in August, suggesting that price pressures in Europe’s largest economy remain weak despite the ECB’s ultra-loose monetary policy – which ought to help.
The Eurozone has struggled with little or no inflation for the past year. The ECB expects consumer price rises to stay below its target of just under 2% for some years despite its stimulus.
German prices, harmonised to compare with other European countries, were up by 0.3% on the year after rising by 0.4% in July. The market had been looking for a 0.5% gain. The ECB President Mario Draghi is sure to face a few tough questions on this when he meets the press after the policy decision.
Release of ECB’s monetary policy is due at 11:45 GMT and the press conference of central bank’s President Mario Draghi due at 12:30 GMT.
America

US weekly jobless claims
The markets have moved to price out September US rate hike after US jobs data disappointed last week. However, with the employment picture still perceived to have the strongest link with Federal Reserve policy of all the data releases, any snapshots of the situation are at a premium.
Initial jobless claims for the week of September the second are expected to have increased by 265,000, inching up from the prior week’s 263,000.
Continuing jobless claims for the week of August the 26 are expected to come in at 2.15 million, which would be steady from the previous week’s numbers.
Fed rate-hike expectations are now centred on a move in December, with downside risk even to that.
Data are due at 12:30 GMT.

Important levels

EURUSD
The Euro remains tall and holds within 40-pips consolidation, as Thursday’s fresh rally offsets downside threats, triggered by Wednesday’s close in red. Firm break above consolidation top at 1.1270, which is reinforced by pivotal Fibonacci 61.8% of 1.1365/1.1122 bear leg barrier, would spark fresh extension of recovery rally towards 1.1300/39 targets.
Consolidation low at 1.1227 marks good support, loss of which would open way for deeper correction and expose next strong supports at 1.1200 zone, then 1.1169 and 1.1138.
AUDUSD
The Aussie is back to strength after a day-long consolidation and probes above 0.7700 barrier. This marks the last obstacle en-route to key short-term barrier at 0.7758, break of which would open key med-term resistance at 0.7833 peak of 21 April.
Initial supports lay at 0.7650 zone, followed by 0.7620 and 0.7600.
Technical studies hold strong bullish tone, but overbought conditions warn of correction in the near term.
US Crude oil
The oil price continues to move higher, extending recovery from $42.99 (01 Sep correction low). The price establishes above daily Ichimoku cloud and looks for test of pivotal barrier at $46.91 (Fibonacci 61.8% of $49.34/$42.99 pullback), break of which would trigger further upside extension towards $47.84 and $48.44 barriers.
Initial support lies at $46.00 zone, while daily cloud top marks key near-term support at $45.45, which is expected to contain correction., Market Analysis