Forex Gold For Strong Signals

The Euro held broadly stable in Europe on Thursday, gaining support from the ability to hold 1.3550 support on Wednesday. There was a stronger reading for German industrial production with a 1.9% monthly increase and Spanish yields continued to decline following the latest auction. French concerns increased following a lacklustre bond auction and wider than expected trade deficit which maintained competitiveness concerns. As expected, the ECB left interest rates on hold following the latest council meeting with the repo rate at 0.25%.

Unchanged rates ensured that the main focus of attention was again on President Draghi’s press conference. He stated that current monetary conditions were acceptable, but also that the ECB had used stronger language to reinforce its forward guidance that interest rates would be at current rates or lower. The bank wants to avoid any unwanted upward pressure on money-market rates and will also resist any deterioration in the inflation outlook. Any increase in unease surrounding deflation could prompt additional policy action, but he was unwilling to forecast what action would be taken. 

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