The dollar is holding near 13-month lows against a basket of major currencies on Thursday after being hit by Fed’s comments following policy meeting on Wednesday. More cautious wording from the Fed on the inflation outlook cooled down expectations of another interest rate hike towards the end of the year and sent the greenback further down against its major counterparts.
The Fed maintained the target range at 1.00%-1.25%, in widely expected outcome of its July meeting and made no big changes to the statement. The US central bank wants to begin the process of shrinking its balance sheet and used common wording : ‘relatively soon’, which seems that the Fed is on track to make an announcement on quantitative tightening at the next meeting in September.
The most important releases in the European session are EU money supply and private sector bank lending.
Lending to households and non-financial corporations continued their upward trend in June, signaling the ECB’s accommodative monetary policy is feeding through to the private sector. This should eventually generate higher inflation but the ECB is being challenged currently by a stronger euro, which is a strong headwind to inflation.
M3 Money supply is forecasted at 5.0% in June, unchanged from the previous month, while forecast for private sector loans stands at 2.7%, slightly above previous release at 2.6%.
Releases are due at 08:30 GMT.
In the American session, US Durable Goods Orders and US Weekly Jobless Claims are the most important releases.
Durable Goods Orders m/m is expected to rise strongly in June after disappointing results in past couple of months. Forecast for June stands at 3.0%, compared to -0.8% in May marks the first increase in three months and the strongest rise since last October.
Core Durable Goods (excluding transportation) are expected to increase modestly in June, according to consensus at 0.4% vs 0.3% in May.
US weekly jobless claims are forecasted to rise to 240K from 233K last week but remain near multi-year lows, signaling that US jobs sector is holding firm.
Releases are due at 12:30 GMT