Forex Today: ECB policy announcements, PMI data to lift market volatility

Here is what you need to know on Thursday, July 24:

Financial markets will take a break from trade-related headlines on Thursday and pay close attention to the European Central Bank's (ECB) monetary policy announcements. Additionally, the economic calendar will feature preliminary July Manufacturing and Services Purchasing Managers Index (PMI) data for Germany, the Eurozone, the UK and the US.

As markets cheered the news of the US-Japan trade deal, risk flows dominated the market action on Wednesday. Wall Street's main indexes registered strong daily gains and the US Dollar (USD) Index closed in negative territory for the fourth consecutive day. Early Thursday, US stock index futures trade mixed and the USD Index holds steady above 97.00. The White House said late Wednesday that US President Donald Trump will visit the Federal Reserve on Thursday.

During the Asian trading hours, the data from Australia showed that the S&P Global Composite PMI improved to 53.6 in July from 51.6 in June, reflecting an ongoing expansion in the private sector's business activity at an accelerating pace. Meanwhile, Reserve Bank of Australia (RBA) Governor Michele Bullock reiterated that a measured and a gradual approach to monetary easing is appropriate. After rising more than 0.7% on Wednesday, AUD/USD preserves its bullish momentum early Thursday and trades at its highest level since November above 0.6600.

Jibun Bank Manufacturing PMI in Japan declined to 48.8 in July and came in below the market expectation of 50.2. On a positive note, Jibun Bank Services PMI rose to 53.5 from 51.7 in this period. USD/JPY stays under bearish pressure and trades near 146.00 in the European morning, losing more than 0.3% on the day.

The ECB is widely anticipated to leave key rates unchanged after the July meeting. ECB President Christine Lagarde will speak on the policy outlook in a pres conference starting at 12:45 GMT. EUR/USD stays in a consolidation phase above 1.1750 after registering moderate gains on Wednesday.

GBP/USD holds steady above 1.3550 after closing the previous three days decisively higher.

USD/CAD fluctuates in a tight channel at around 1.3600 in the European session on Thursday and loses about 1% on a weekly basis. Later in the day, Statistics Canada will release Retail Sales data for May.

Gold struggled to find demand and staged a deep correction on Wednesday as risk flows dominated the markets. XAU/USD continues to stretch lower after losing more than 1% on Wednesday and trades below $3,380.