U.S. dollar weakness favoured gold, which rose well above our suggested target at $1,352, while USD/CAD dropped to a 27-month low. Moreover, euro soared following ECB meeting, despite the unchanged monetary policy.
Euro Soared as ECB Revised GDP Forecast to the Highest Since 2007!
Euro soared against the U.S. dollar on Thursday following the ECB meeting, despite that there was no cut to Quantitative Easing program and no change to the interest rates. The interest rate continues to be at 0%, deposit rate at -0.4% and bond buying program to stand at €60 billion per month until December of 2017. However, ECB President Mario Draghi hinted that changes to the QE program are coming and probably in October, as the decisions are complex and they need more time. In exact, during the Q&A session, the central bank chief stated that the case is not if they taper asset purchased but when.
In addition, the central bank raised its GDP forecasts for 2017 to 2.2% from 1.9% before, which is the strongest pace of growth in ten years. They also kept inflation forecast unchanged for this year but lowered it marginally by 0.1% for the next year. Before the end of the policy meeting, the GDP growth for the second quarter released by Eurostat and picked up to 2.3% against market expectations to be 2.2% as before.
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