Forex traders are paying close attention to the European Central Bank’s (ECB) policy review later on Thursday, to see what it will do to cushion a slowdown in the Eurozone economy. Traders are also keeping an eye on U.S. President Donald Trump’s newfound eagerness to forge a final trade deal with China.
Reuters reported that some traders expect signals from the ECB of a delay in rate hikes until next year and a relaunch of long-term bank loans soon to counteract an economic slowdown.
The U.S. Dollar Index that tracks the greenback against a basket of six major currencies rose by 0.04% to 96.838 by 10:40 PM ET (3:40 AM GMT).
Hope that the trade dispute between China and the U.S. will finally come to an end boosted market sentiment.
On Wednesday, Bloomberg reported that Trump is pushing for a trade deal with China, which could help him with the 2020 re-election campaign. Investors are awaiting a final deal result that could end the year-long trade war between the world’s two biggest economies.
The Australian gained some ground against the dollar as the AUD/USD pair rose 0.15% to 0.7043.
Earlier in the week, the Reserve Bank of Australia (RBA) released disappointing growth data for the last quarter. GDP grew 0.2%, below the 0.3% that had been widely expected. The slower growth has contributed to anticipation of a rate cut this year. The Australian dollar also took a hit last month after the RBA stepped back from a long-standing tightening bias.
The USD/CNY pair inched up marginally by 0.01% to 6.7104. The yuan remained supported by a possible U.S. trade deal.
On top of setting a target band for the 2019 economic growth between 6% and 6.5%, the Chinese government also said at the ongoing annual meeting of the National People’s Congress that the country is cutting taxes and fees by nearly CNY2 trillion ($300 billion) to support various industries.
The People’s Bank of China (PBOC) set the yuan reference rate at 6.7110 versus the previous day’s fix of 6.7053.
Elsewhere, the USD/JPY pair was down 0.04% to 111.71. Soft U.S. data, the dragging Sino-U.S. trade talks and the uncertainty surrounding Brexit are contributing to a risk-off sentiment.
The USD/NZD pair was up 0.21% to 1.4739.
Besides the ECB meeting results, traders are now looking to Friday’s U.S. non-farm payrolls release for February which will point to the strength of the labor market.