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The pound stole the spotlight from the euro since the pound was the most volatile, as well as the worst-performing currency of the session, even though U.K. retail sales was better-than-expected.

As for the euro, it was mixed ahead of the ECB statement, but it did get some selling pressure across the board and ended up mostly lower when it was revealed that the ECB refrained from changing its language on its QE program.

And interestingly enough, the Swissy was getting some selling pressure, too. In fact, it encountered more selling pressure than the euro itself.

  • Swiss trade balance: CHF 2.81B vs. CHF 2.89B expected, CHF 3.39B previous
  • German PPI m/m: 0.0% vs. -0.1% expected, -0.2% previous
  • German PPI y/y: 2.4% vs. 2.3% expected, 2.8% previous
  • U.K. retail sales m/m: 0.6% vs. 0.4% expected, -1.1% previous
  • U.K. retail sales y/y: 2.9% vs. 2.5% expected, 0.9% previous
  • ECB maintains refinancing rate at 0.00%
  • Marginal lending rate maintained at at 0.25%
  • Likewise, deposit rate maintained at -0.40%
  • QE extension until December 2017 (or beyond) at €60B per month affirmed
  • ECB apparently DID NOT remove easing bias on QE program
  • ECB presser coming up; watch it live here

Major Events/Reports

ECB monetary policy decision

As expected, the ECB announced in its official press statement that it decided to maintain its current monetary policy.

As such, the refinancing rate is maintained at 0.00%, the marginal lending rate is kept at at 0.25%, and the deposit rate is steady at -0.40%.

Moreover, the ECB affirmed that monthly asset purchases will continue at a monthly pace of €60 billion “until the end of December 2017, or beyond, if necessary.”

Contrary to expectations that the ECB will remove its easing bias on its QE program, however, the ECB retained its warning that (emphasis mine):

“If the outlook becomes less favourable, or if financial conditions become inconsistent with further progress towards a sustained adjustment in the path of inflation, the Governing Council stands ready to increase the programme in terms of size and/or duration.”

What a bummer.

Anyhow, market players are now waiting on what ECB Overlord Draghi has to say, so the euro’s fate is not sealed yet. You can watch the ECB presser here, if you’re interested.

BOJ presser

BOJ Shogun Kuroda had a presser after the BOJ announced earlier during the Asian session that it was maintaining its current monetary policy.

Kuroda didn’t really say anything new, but he did confirm that the BOJ still has an easing bias but sees no need to ease further yet when he said the following:

“It’s not as if we have run out of policy tools. We think the momentum for hitting our price target remains intact and can be sustained under the current policy framework.”

“With the momentum for hitting 2 percent inflation sustained, I don’t see the need to conduct another comprehensive assessment of our policy framework … We also see no need now to ramp up stimulus.”

By the way, Forex Gump has a write-up on the most recent BOJ statement, if you want more of the details. You can read it here.

Upbeat U.K. retail sales

The Office for National Statistics released the U.K.’s retail sales report for the June period earlier today.

And according to the report, retail sales volume in the U.K. recovered by 0.6% month-on-month after contracting by 1.2% previously.

This is a better result compared to the consensus for a +0.4% recovery. Moreover, the rise in retail sales was broad-based since only predominantly food stores and fuel stores reported a decline in retail sales volume.

Year-on-year, retail sales volume rebounded by 2.9% (+0.9% previous), which is a bigger increase compared to the +2.5% consensus.

And since the June reading for retail sales is finally in, we also now know that retail sales volume grew by 1.5% quarter-on-quarter and is expected to add roughly 0.09% to GDP growth after previously being a drag and subtracting 0.08% from Q1 GDP growth.

More risk-taking ahead of ECB Presser

The major European equity indices printed more gains, so risk appetite clearly persisted into today’s morning London. And according to market analysts, the risk-on vibes was due to risk sentiment spillover from yesterday’s U.S. session and today’s earlier Asian session.

  • The pan-European FTSEurofirst 300 was up by 0.16% to 1,516.10
  • Germany’s DAX was up by 0.41% to 12,502.75
  • The blue-chip Euro Stoxx 50 was up by 0.52% to 3,512.50

The risk-on mood also gave U.S. equity futures a modest boost.

  • S&P 500 futures were up by 0.05% to 2,472.62
  • Nasdaq futures were up by 0.04% to 5,920.62

Major Market Mover(s):

GBP

The pound was the worst-performing currency of the session, even though U.K. retail sales was better-than-expected and is even expected to have a positive contribution to Q2 GDP growth.

There were no apparent catalysts, but market analysts were quick to pin the blame on Brexit-related jitters, as well as lack of confidence that the rebound in consumer spending is sustainable.

GBP/USD was down by 75 pips (-0.57%) to 1.2946, GBP/JPY was down by 68 pips (-0.47%) to 145.28, GBP/NZD was down by 125 pips (-0.71%) to 1.7609

EUR

The euro was mixed during the session and was actually mostly higher before the ECB released its official press statement. But when the ECB released its press statement, the euro found itself drowning in a bearish tide (except against CHF for some reason) and ended up as the third worst-performing currency of the session. It remains to be seen if the ECB presser will change the euro’s fortunes, though.

EUR/USD was down by 37 pips (-0.32%) to 1.1485, EUR/JPY was down by 20 pips (-0.22%) to 128.87, EUR/NZD was down by 72 pips (-0.46%) to 1.5621

CHF

The Swissy was the second worst-performing currency even before the ECB statement rolled around. And it was able to hold onto that (dis)honor when the ECB did finally release its official press statement.

The risk-on vibes may have been a factor for the safe-haven Swissy’s weakness. But it’s also possible that the SNB is sneakily weakening the Swissy again.

USD/CHF was up by 62 pips (+0.65%) to 0.9611, EUR/CHF was up by 35 pips (+0.32%) to 1.1039, AUD/CHF was up by 44 pips (+0.58%) to 0.7601

NZD

The Kiwi was the best-performing currency of the session, very likely because of the risk-on vibes since there wasn’t really anything else that could have pumped up demand for the higher-yielding Kiwi.

NZD/USD was up by 16 pips (+0.23%) to 0.7351, NZD/CAD was up by 14 pips (+0.15%) to 0.9274, NZD/CHF was up by 55 pips (+0.79%) to 0.7066

Watch Out For:

  • 12:30 pm GMT: ECB Press conference; watch it live here
  • 12:30 pm GMT: U.S. initial jobless claims (245K expected, 247K previous)
  • 12:30 pm GMT: Philadelphia Fed manufacturing index (23.4 expected, 27.6 previous)
  • 2:00 pm GMT: Euro Zone consumer confidence (unchanged at -1 as expected)
  • 2:00 pm GMT: CB’s U.S. leading index (0.4% expected, 0.3% previous)