ECB Rate Cut Delivered as U.S. Data Lines Up
Markets opened Thursday digesting a widely expected ECB rate cut, trimming the Main Refinancing Rate to 2.4% and the Deposit Facility Rate to 2.25%, down from 2.65% and 2.5%. The move reflects growing concerns over eurozone stagnation, with investors now shifting focus to a run of U.S. data — including housing, labour, and manufacturing prints — all landing ahead of a speech from Fed’s Barr.
Key Events – Thursday, April 17
European Central Bank (ECB)
- Main Refinancing Rate: 2.4% (cut from 2.65%)
- Deposit Facility Rate: 2.25% (cut from 2.5%)
The rate cuts, flagged by ECB officials in recent weeks, signal a firm policy pivot as eurozone inflation eases and economic momentum remains soft. Traders will now closely watch the ECB press conference at 12:45 GMT for further forward guidance.
U.S. Economic Data (March/April):
Philadelphia Fed Manufacturing Index: Consensus at 2 (down from 12.5)
A cooler housing and labour picture could reinforce the Fed’s cautious approach — making Barr’s 15:45 GMT speech more market-moving than usual.
Building Permits: Forecast 1.45M vs 1.459M previous
Housing Starts: Forecast 1.42M vs 1.501M prior
Initial Jobless Claims: Expected at 225K
Commodities
Oil
- WTI Crude: $63.06 (+0.95%)
- Brent: $66.30 (+0.68%)
Crude prices are climbing for a second straight session, lifted by signs of tightening U.S. inventories and renewed geopolitical risks in the Middle East.
Metals
- Gold: $3,323.63 (-0.80%)
- Silver: $32.48 (-1.07%)
After strong gains earlier this week, gold and silver are pulling back slightly, as profit-taking and a firmer dollar offset lingering safe-haven demand.
Currency Movements
- EUR/USD – The euro weakens to 1.1373, down 0.23%, after the ECB’s dovish decision. The EUR/USD exchange ratemay remain under pressure if Lagarde signals further easing or a lack of inflation urgency.
- GBP/USD – Sterling holds steady at 1.3243, down just 0.02%, showing resilience post-UK inflation miss. The GBP/USD pair continues to trade within a stable channel, though softer rate expectations cap upside.
- AUD/USD – Aussie dips to 0.6354 (-0.26%), hurt by lower iron ore prices and a modest rebound in the U.S. dollar. The AUD/USD rate may continue to struggle near-term without clearer China support.
- NZD/USD – Kiwi trades at 0.5917, down 0.14%, holding onto much of April’s gains. The NZD/USD pair is still supported by risk sentiment and rate differentials with Asia.
- USD/JPY – Yen weakens with USD/JPY up 0.69% to 142.87, as U.S. Treasury yields edge higher. The pair remains sensitive to Fed policy clues and broader risk appetite.
- USD/CHF – Swiss franc softens, with USD/CHF rising 0.60% to 0.8182. The move reflects a modest retreat from recent safe-haven flows and ECB spillover effects.
- USD/CAD – Loonie is marginally weaker at 1.3874 (+0.11%), ahead of Canadian CPI and BoC commentary due next week. The USD/CAD exchange rate remains anchored below key resistance near 1.39.
- USD/MXN – Peso is flat at 19.9211, with the USD/MXN pair near recent lows after strong April inflows. Mexico continues to benefit from positive carry and macro stability.
- USD/INR – The rupee edges higher, with USD/INR down 0.30% to 85.36, as energy markets calm and India’s trade data comes into view.
- USD/CNY – Yuan trades at 7.2964, little changed. The USD/CNY pair remains stable amid limited PBoC intervention and a narrow range in Asian markets.
Market Outlook
The ECB’s rate cut sets the tone for global central banks reassessing their paths amid easing inflation and patchy growth. In the U.S., today’s data and commentary from Fed’s Barr will provide insight into how resilient the U.S. economy is — and how patient the Fed will remain on rate cuts. Markets are now positioned for range-bound trading in FX, bullish bias in commodities, and tactical risk-on positioning in equities, barring any hawkish Fed surprises.