Edited by Vani Rao
Euro rises against US dollar as European Central Bank keeps monetary policy unchanged
The US dollar slipped against the Euro on 6 March 2014 after the European Central Bank (ECB) decided to keep its benchmark interest rate unchanged at 0.5%. ECB President Mario Draghi ruled out changes to the current monetary policy, expecting steady economic recovery in the Eurozone.
The ECB President further maintained that he was encouraged by retail sales data on Wednesday, indicating that the business activity in the Eurozone rose to a 32-month high last month. Further, the Eurozone economy reported an improvement in the services sector, leading to a growth in job opportunities.
The EUR/USD pair gained 0.84% on Thursday, 6 March 2014, and the pair closed the day at 1.3861, up from the session low of 1.3722, as shown in the graph below. At the time of last reporting, the pair was trading at 1.3863, up 0.04%.
On Friday, 7 March 2014, the Eurozone and the US are scheduled to release key data that are likely to track movements in the currency markets between two economies. In the Eurozone, Germany will publish data on industrial production. Meanwhile, the US will release key government data on non-farm payrolls and unemployment rates.
Like the Euro, the GBP also continued with its gains against the US dollar on Thursday, 6 March 2014, as the Bank of England left interest rates unchanged at record low of 0.5%. Additionally, in the policy meeting, the UK left its quantitative easing program stable at £375 billion, which provided support to the GBP.
Meanwhile, the US Department of Labor reported better-than-expected US jobless claims data, which gave the US dollar some support. According to the report, initial jobless benefits last week fell by 26,000 to 323,000. Analysts were anticipating jobless claims to fall by 11,000 to 338,000. The better-than-expected jobless claims data, enabled the US dollar to hold against the GBP.
The GBP/USD pair ended Thursday’s session 0.10% higher at 1.6740, after trading between 1.6686 and 1.6770, as shown in the graph below. At the time of final reporting, the pair was trading at 1.6735, down 0.01%.
Analysts will be looking forward to a change in the relative price of the GBP/USD post the release of key data on Friday, March 7. The UK will release data on consumer inflation. Meanwhile, the US will report important government data on non-farm payrolls and unemployment rates.
The USD/JPY rose to its highest since February 21, hitting 102.82, before closing Thursday’s session at 103.07, as shown in the graph below. At the time of final reporting, the USD/JPY pair was trading at 102.9400, down 0.09%.
The positive sentiment in the US dollar triggered by the easing geo-political tensions between Russia and Ukraine as Russian troops engaged in military operations on Ukraine’s borders, returned to their bases.