Yen weakens following BoJ meeting; aussie gains on healthy job market

European Central Bank's Draghi to tiptoe to stimulus exit

The European Central Bank's (ECB) governing council left its monetary policy unchanged after concluding its meeting today (July 20).

Attention will now swing to ECB President Mario Draghi, who will hold a press conference at 2:30 p.m. Frankfurt time, or 8:30 a.m.

Markets were shaken last month by hawkish comments from Draghi which suggested that the bank would steam ahead with interest rate hikes and the reduction of its bond-buying program - schemes used to inject cash into the economy.

Ultra-low interest rates and a huge programme of bond-purchasing, or quantitative easing - effectively pumping money into the economy - were put in place when the economy was in a much more fragile state.

While Draghi said today the European Central Bank would discuss the future of quantitative easing in the autumn, he did not attempt to prime markets for a reduction in stimulus.

The bond-buying programme, together with ultra-low interest rates, was created to fend off the threat of deflation hitting the eurozone. Despite very low unemployment and improving confidence inflation remains well below their 2% target.

At the time of writing, the Euro to Pound Sterling (EUR GBP) exchange rate was trading at 0.8972 and the Pound Sterling to Euro (GBP EUR) exchange rate was trading at 1.1144.

Whilst Draghi did not directly set a time frame for the tightening of the ECB's now extremely loose monetary policy, he did assert that policymakers were "unanimously agreed" that such talks will, and should take place during the summer recess. "Headline inflation is dampened by the weakness in energy prices".

The bank decided Thursday to keep key interest rates for the euro area at record lows.

'We can always debate the amount, but the fact that the United Kingdom must pay what it owes to the European Union budget is a non-negotiable prerequisite at the start of the talks'.

The ECB earlier kept its deposit rate deep in negative territory and kept monthly bond purchases at 60 billion euros, in line with the expectation of most analysts in a Reuters poll.

GBP Weakens on Brexit Talk Roadblock as French Claim; "We Want Our Money Back " French Finance Minister Bruno Le Maire has evoked the spirit of Margaret Thatcher after telling the United Kingdom "we want our money back" in the European Parliament.

The Bank of Japan began a two-day policy meeting on Wednesday.

Earlier, the pound had been buoyed by better than expected official figures on retail sales for June, before the gains faded.

United Kingdom retail sales recovered at a faster than expected pace in June, data from the Office for National Statistics revealed Thursday.

'An ever larger number of passengers are flying EasyJet, two million more this quarter than a year previously.The probmem is that EasyJet is struggling to get its new passengers to pay the same as the old ones did, ' said Nicholas Hyett, equity analyst at Hargreaves Lansdown. The bank has said it won't raise its benchmark interest rate from zero until the purchases end.

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