The EUR Comes to the Dollar's Rescue Ahead of Tomorrow's ECB Decision

Pound regains ground on euro following inflation-inspired losses

Commenting on the situation in markets, Michael Hewson, chief market analyst at CMC Markets UK said: "ECB officials aren't being helped in by political events playing out in the U.S. which is undermining the USA dollar, and means that the ECB's task in managing monetary policy is akin to playing a game of monetary Jenga with bond yields, which if they rise too quickly along with the euro could start to hurt the weaker parts of the European recovery story".

"Regarding non-standard monetary policy measures, the Governing Council confirms that the net asset purchases, at the current monthly pace of €60 billion, are meant to run until the end of December 2017, or beyond, if necessary", the European Central Bank continued, "until the Governing Council sees a sustained adjustment in the path of inflation consistent with its inflation aim".

Draghi emphasised the weakness of inflation across the Eurozone.

Oil prices retraced some of yesterday's gains with both Brent and WTI falling around 0.20% today.

Moneysupermarket.com plunged 2.50 percent after a profit warning.

But on the downside, shares of Nordea Bank AB (NDA.SK) dropped 5% after the Swedish bank's second-quarter profit of 743 million euros ($855.7 million) missed expectations (http://www.marketwatch.com/story/nordea-profit-falls-domicile-decision-in-sept-2017-07-20).

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The euro area current account surplus increased in May largely driven by trade surplus and primary income, data from the European Central Bank showed Thursday. A similar slower pace was last seen in January. The pound may react following the release of the United Kingdom retail sales at 11.30 GMT.

With no material stats out of the Eurozone or the United Kingdom today, we will expect the pound to remain relatively range bound through the day ahead of tomorrow's retail sales figures, which will provide the markets with more guidance on how the BoE will likely play it early next month at the next MPC meeting, the latest inflation figures certainly adding to the confusion.

The market reaction echoed the so-called "taper tantrum" that followed remarks by then U.S. Federal Reserve head Ben Bernanke in May, 2013.

Economists had expected jobless claims to edge down to 245,000 from the 247,000 originally reported for the previous week.

Global markets received a boost from the overnight actions of another central bank, as the Bank of Japan upped its growth forecast for the next two years but reduced its inflation outlook, in a sign of a fresh leash of life for looser monetary policy.

The two important economic data releases out of the USA gave a mixed picture of the economy. The Conference Board said its leading economic index climbed by 0.6 percent in June after rising by a revised 0.2 percent in May. Hong Kong's Hang Seng index rose 0.3 per cent to 26,740.21 while the Shanghai Composite Index was up 0.4 per cent to 3,244.86.

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