Euro rose back to 1.09 again on Thursday ahead of the ECB meeting as the US dollar index gave up its three-digit peak in red. Thursday is set to be a positive day for European markets after a better performance on Wall Street, with falling US Treasury yields helping interest-sensitive growth stocks finish higher.
Investors expect a more hawkish ECB
Thursday will be dominated by the meeting of the European Central Bank later in the day and the release of US jobless claims and retail sales data. Thus, we shouldn't be surprised by fluctuations in EUR/USD and their crosses.
War-related recession and record inflation will be top concerns for policymakers. Despite reducing the pace of its money printing for months, the European Central Bank has not yet committed to an end date, worried about the effects of the war in Ukraine and sky-high energy prices. Compared with almost all other major central banks, most of which began raising interest rates in recent years, the European Central Bank is lagging behind.
Currently, the ECB plans to end its emergency bond-buying sometime in the third quarter, with interest rates rising afterwards. While many of the central bank's peers have already tightened policy, investors will be looking for a more precise schedule of how the extraordinary stimulus will be unwinded. Market analysts expect the ECB to end quantitative easing in the second quarter of 2022 rather than the third quarter.
Gold prices around multi-week highs
Gold prices have continued to trend upwards on Thursday, trading at a near-multi-week high of $1,980 per troy ounce, confirming its bullish bias. The precious metal's bid has been sustained throughout the day by a generalized risk-averse spirit coupled with the dollar's weakness during the Asian session.
Inflation pressure and the Russian invasion of Ukraine remain the main concerns, forcing central banks to take aggressive monetary policy decisions.
Events of the day
In addition to the ECB meeting, markets are waiting for the US retail sales data for March, which is expected to print 0.6% growth, increasing from 0.3% in February. The weekly initial jobless claims are also due today, expected to climb to 171k, a higher number than the 166k previous print.
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