European Central Bank leaves interest rates alone -- for now

Change is coming at the European Central Bank, but not quickly

The buck is down against the Euro and the Japanese Yen, but is holding onto gains against the British pound.

The European Central Bank president attempted to strike as dovish a stance as was possible given the circumstances in his news conference Thursday.

Decision day at the ECB, China-U.S. relations turn frosty, and France wants Britain to pay up. The figure for initial jobless claims portrayed a positive image by coming in below expectations.

Economists had expected jobless claims to edge down to 245,000 from the 247,000 originally reported for the previous week.

As a result the GBP EUR exchange rate remained biased to the downside, with the prospect of an imminent Bank of England (BoE) interest rate hike significantly diminished.

The two important economic data releases out of the United States gave a mixed picture of the economy.

Sales grew 0.6% on the month, beating forecasts by 0.2%, while sales excluding fuel increased 0.4% more-than-expected at 0.9%.

The prospect of reduced monetary stimulus has kept financial markets edgy, with investors sifting through clues to gauge how big central banks around the globe will unwind unconventional policy that have kept borrowing costs at rock bottom.

Central banks dominated European markets, with the euro, bonds and stocks whipsawing as the ECB held interest rates and President Mario Draghi signalled the bank would discuss its language on bond purchases in the autumn. They have since stayed at zero per cent, 0.25 cent and minus 0.40 per cent respectively.

The NZDUSD opens at 0.7355 (mid-rate) this morning.

Analysts think it's a near-certainty that the ECB, the monetary authority for the European Union's 19-country euro currency union, will start scaling back its 60 billion euros ($69 billion) in monthly bond purchases after their earliest termination date at the end of the year. The size was reduced in March from Euro 80 billion.

The Frankfurt-based central bank said it will continue the current quantitative easing measures until at least December, when the central bank will decide how to proceed - by either terminating or extending the stimulus program.

That promise is superfluous thanks to a pick-up in economic growth, but underlines the bank's determination not to signal a stimulus exit.

Mario Draghi reiterated concerns that inflation remains low, as he poured water over hopes that policymakers would soon scale back the bloc's huge money-printing programme.

"A very substantial degree of monetary accommodation is still needed for underlying inflation pressures to gradually build up".

The common currency jumped 0.42% and 0.83% against the dollar and the pound respectively, trading at $1.1563 and 0.8915p respectively. The euro rose to as high as $1.1575 as Draghi spoke, near the 14-month highs of $1.1583 from earlier in the week and being up nearly half a percent on the day.

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