FX.co ★ Will the markets understand Draghi's speech today?

EUR/USD, GBP/USD

On Wednesday, US data on construction came out good but this did not scare investors and the euro and the pound declined slightly. The number of housing starts for the month of June was 1.22 million against the expectations of 1.16 million. Meanwhile, the May figure increased from 1.09 million to 1.12 million. Issued permits given for the construction of a new house added up to a total of 1.25 million against the expectations of 1.20 million. The stock market grew by 0.54% boosted by good quarterly reports from companies. Oil increased by 1.82% while import growth added 0.576 million barrels from the US.

Today, all attention of investors will be drawn to the press conference by ECB President Mario Draghi (14:30 CET) after the announcement of the Central Bank rate decision (13:45 CET). It is expected that Draghi will not make any more or less clear statements about the beginning of reduction of incentives. This is because there will be more "beautiful places" to make statements such as Jackson Hole in late August and in September for the Fed meeting about working conditions. In general, before the completion of next year's (June 2018) quantitative easing program, the simple assurance of Draghi about the regulator's work and plans could send the euro to a significant correction. By analogy, the Fed's quantitative easing folding plan may indicate that ultra-low rates will remain for some time after the completion of the entire folding cycle. On a neutral background, such statement may look quite "aggressive in its softness" in order to provoke a significant correction. The euro area's balance of payments for May is expected to grow from 22.2 billion euros to 23.3 billion euros. In the UK, retail sales for June are projected to grow by 0.4%. Although, the previous 1.2% decline is unlikely to force investors to look at this indicator positively. In the US, the index of business activity in the manufacturing sector of Philadelphia in the month of July is expected to decrease from 27.6 to 23.4. The index of leading economic indicators is expected to increase by 0.4%. The number of weekly applications for unemployment benefits is expected to 245,000 against the previous figure of 247,000.

The main scenario being considered is still the shallow correction of counter-dollar currencies: the euro to 1.1440 and the pound sterling to the range of 1.2930/70.

USD / JPY

As expected in the previous review on the 18th, the yen continued to decline until today.

Today, the decision of the Bank of Japan on monetary policy was held.