US Open Note – Euro steady after ECB; US jobless claims endorse economic recovery



ECB policy decision as expected

The European Central Bank (ECB) met analysts’ expectations today, leaving its interest rates unchanged and its asset purchases steady, reaffirming its pledge to maintain a flexible approach as regards the PEPP program within the envelop of 1.85 trillion euros. The policy statement did not bring up anything new, leaving euro/dollar below the key resistance of 1.2070 – 1.2100 despite the recent rising upside pressures in the market.

The global yield rally prompted the central bank to raise its government bond purchases within the limits in the previous meeting, but this action proved innefective as the German 10-year bond yield has quickly rebounded since then to target February’s highs. Perhaps, this deterred policymakers from sending any tightening signals today and instead they wisely adopted a wait-and-see mode. Besides, with the vaccine rollouts still facing challenges in the eurozone and the number of virus variants increasing in Asia, the economy could still be standing on a thin ice. Hence, the improving economic data in the region warrant some caution.

The pan European STOXX 600 continued to recoup Tuesday’s sharp losses and is set to close with moderate gains on the back of utilities, consumer cyclicals and technology shares.

US jobless claims beat estimates

Meanwhile, in the US, initial jobless claims for the week ending April 17 endorsed the bright prospects for the economy, showing a softer increase of 547k compared to 617k expected. With treasury yields, however, stuck in a downward move, and sentiment in the eurozone improving, the dollar seems to be struggling to attract additional buying interest.

From a technical perspective, the sharp sell-off in dollar/yen has driven the price back near the crucial ascending trendline which joins all the lows from January’s bottom. Therefore, an upside correction is likely in the coming sessions. Otherwise, the pair could face another steep decline towards the 106.77 barrier.

Pound/dollar was also on the back foot despite the melting dollar, extending the rejection near 1.4000 towards the 50-day simple moving average at 1.3860. UK Flash PMI readings and retail sales data for April could be the next catalysts for the pound early on Friday.

Earth day 

In other news, the Earth day will remind global leaders about their common environmental goals today and make them leave their business and political differences aside for a moment. Particularly, the focus will be on President Biden who will try to join the broken pieces Trump’s withdrawal from the Paris climate pact left. It will also be an opportunity for the President to boost his international profile.

Earnings

The earnings season continues, with chipmaker Intel Corp expected to post a drop in first-quarter revenue later in the day.

US futures were pointing to an uneventful opening on Wall Street.

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