EUR/USD Weakens as ECB Keeps Rates on Hold

EUR/USD extended its losses today as the European Central Bank left its benchmark minimum bid rate unchanged at 1.25% (Event A on the chart.). Such decision was expected by economists, but concerns that the Bank will avoid increasing of interest rates because of fiscal problems of the Eurozone hurt the currency pair anyway. Jean-Claude Trichet, President of the ECB, was moderately optimistic in his speech after the monetary policy decision and said that the ECB raised its growth projections for this year. EUR/USD currently trades at 1.4507 after it jumped as high as 1.4650 earlier.
The US trade balance posted a deficit of $43.7 billion in April, down from $46.8 billion in March. Forex market participants were expecting the deficit to widen to $48.6 billion. (Event B on the chart.)
Initial jobless claims was at 427k in the week ending June 4, a small increase from the previous week’s figure of 426k. The predicted value was 424k. (Event B on the chart.)
Wholesale inventories grew 0.8% in April, compared to the market expectations of a 1.0% growth. The March reading was revised to 1.3% from 1.1%. (Event C on the chart.)


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