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Dollar Exhibits Strength Against Peers

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The U.S. dollar gained against most major currencies on Thursday amid continued optimism about growth in the world’s largest economy.

The outbreak of the coronavirus in China and the European Central Bank’s decision to hold its key rates and asset purchasing program unchanged supported dollar’s rise.

The dollar index started off on a subdued note, but gained in strength and rose to 97.80 in late morning trades before paring some gains subsequently. Still, at 97.67, the index was up 0.15% around late afternoon.

The Euro dropped to $1.1037 after the ECB held its key interest rates, asset purchases and forward guidance unchanged and announced the launch of a review of its monetary policy strategy.

The bank said that risks surrounding the euro area growth outlook remain tilted to the downside.

In her post meeting press conference, Lagarde said, “The review will have to do with how we deliver, how we measure, how we communicate when it comes to decision making, publication, outreach.”

“We cannot operate as we did back in 2003, which doesn’t mean to say that we have to change this, that and the other, but we have to look comprehensively at the effectiveness of our monetary policy,” she added.

The dollar is up by about 0.15% against Pound Sterling, at $1.3123.

The yen was in demand on safe-haven appeal amid mounting worries about the impact of the coronavirus. The yen, which strengthened to 109.27 a dollar, was trading at 109.47 a dollar late afternoon.

The dollar was up against Swiss franc at 0.9692 and marginally down against the loonie at 1.3127.

Against the Aussie, the dollar was little changed with the pair trading at 1.3127.

In U.S. economic news, data from the Labor Department showed first-time claims for U.S. unemployment benefits rose to 211,000, an increase of 6,000 from the previous week’s revised level of 205,000.

Economists had expected jobless claims to climb to 215,000 from the 204,000 originally reported for the previous week.

The Conference Board released a report showing a slightly bigger than expected decrease by its index of leading U.S. economic indicators.

The Conference Board said its leading economic index fell by 0.3% in December after inching up by a revised 0.1% in November

Economists had expected the leading economic index to dip by 0.2% compared to the unchanged reading originally reported for the previous month.

Traders were also tracking news about the coronavirus outbreak in China that has spread from Wuhan to several Chinese provinces.

According to reports, deaths from the virus rose to 17 on Wednesday, with nearly 600 cases confirmed. Market participants remain worried about the contagion as the week-long Lunar New Year holidays starts on Friday, when millions of Chinese travel domestically and abroad.

The World Health Organization said today that it is still too early to declare the outbreak a Public Health Emergency of International Concern has somewhat eased worries about the virus a bit.

“Make no mistake, this is an emergency in China. But it has not yet become a global health emergency,” said WHO Director-General Tedros Adhanom Ghebreyesus.

“At this time, there is no evidence of human-to-human transmission outside China, but that doesn’t mean it won’t happen,” Tedros said.

The material has been provided by InstaForex Company – www.instaforex.com

New Zealand Consumer Price Data Due On Friday

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New Zealand will on Friday see Q4 numbers for consumer prices, highlighting a modest day for Asia-Pacific economic activity.

Inflation is tipped to have added 0.4 percent on quarter and 1.8 percent on year after rising 0.7 on quarter and 1.5 percent on year in the three months prior.

New Zealand will also release December data for credit card spending; in November, spending was up 1.6 percent on month and 4.5 percent on year.

Japan also will see inflation figures for December, with forecasts suggesting an increase of 0.7 percent on year for both overall and core CPI – up in both cases from 0.5 percent in November.

Japan also will see preliminary January results for the manufacturing PMI from Nikkei and the services and composite indexes from Jibun. In November, the manufacturing index had a score of 48.4, while the services index came in at 49.4 for a composite score of 48.6.

Singapore will provide December numbers for producer prices and industrial production. In November, producer prices were down 0.9 percent on month and 4.9 percent on year, while industrial production sank 9.4 percent on month and 9.3 percent on year.

Finally, the markets in South Korea, Taiwan and China are closed on Friday for the Lunar New Year.

The material has been provided by InstaForex Company – www.instaforex.com

Treasuries Pull Back Off Best Levels But Still Close Higher

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Treasuries gave back some ground after an early move to the upside but managed to end the day firmly in positive territory.

Bond prices moved notably higher in early trading before pulling back in the afternoon. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 2.9 basis points to 1.740 percent.

The ten-year yield climbed off its intraday low of 1.715 percent but still ended the session at its lowest closing level in well over a month.

Treasuries initially benefited from their appeal as a safe haven amid lingering concerns about the impact of the Chinese coronavirus.

Despite efforts to contain the outbreak, deaths from the new coronavirus have risen to 17, with nearly 600 cases confirmed worldwide.

However, treasuries pulled back off their best levels after the World Health Organization said it is still too early to declare the outbreak a Public Health Emergency of International Concern.

“Make no mistake, this is an emergency in China. But it has not yet become a global health emergency,” said WHO Director-General Tedros Adhanom Ghebreyesus.

The WHO noted an emergency committee stands ready to be reconvened to reconsider formally declaring the situation a PHEIC.

“At this time, there is no evidence of human-to-human transmission outside China, but that doesn’t mean it won’t happen,” Tedros said.

In U.S. economic news, the Labor Department released a report showing a modest increase in first-time claims for U.S. unemployment benefits in the week ended January 18th.

The report said initial jobless claims rose to 211,000, an increase of 6,000 from the previous week’s revised level of 205,000.

Economists had expected jobless claims to climb to 215,000 from the 204,000 originally reported for the previous week.

Meanwhile, a separate report from the Conference Board showed a slightly bigger than expected decrease by its index of leading U.S. economic indicators.

The Conference Board said its leading economic index fell by 0.3 percent in December after inching up by a revised 0.1 percent in November

Economists had expected the leading economic index to dip by 0.2 percent compared to the unchanged reading originally reported for the previous month.

Amid a quiet day on the U.S. economic front, trading on Friday may be impacted by the latest news regarding the coronavirus outbreak.

The material has been provided by InstaForex Company – www.instaforex.com

Crude Oil Futures Settle At 8-week Low

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Crude oil prices declined sharply on Thursday, as concerns over the outlook for energy demand following the outbreak of the coronavirus in China outweighed data showing a drop in U.S. crude stockpiles.

West Texas Intermediate Crude Oil futures for March ended down $1.15, or about 2%, at $55.59 a barrel, the lowest settlement in about eight weeks.

At one stage, WTI crude futures were down at $54.77 a barrel, the lowest price in about 11 months.

Brent crude futures declined $1.20, or 1.9%, to $62.00 a barrel around later afternoon.

Data released by the Energy Information Administration (EIA) showed crude oil inventories in the U.S. fell by 405,000 in the week ended January 17.

Gasoline inventories were up 1.75 million barrels, significantly higher than an expected increase of about 1 million barrels, while distillate stockpiles declined by about 1.2 million barrels, against forecasts for a 3 million barrels increase.

The American Petroleum Institute said late on Tuesday that U.S. crude supplies rose by 1.6 million barrels for the week ended Jan. 17, against expectations of a drop.

Traders weighed the impact of the new coronavirus outbreak in China that has spread from Wuhan to several Chinese provinces, on energy demand.

According to reports, deaths from the virus rose to 17 on Wednesday, with nearly 600 cases confirmed. Market participants remain worried about the contagion as the week-long Lunar New Year holidays starts on Friday, when millions of Chinese travel domestically and abroad.

The material has been provided by InstaForex Company – www.instaforex.com

Gold Futures Settle At Over 2-week High

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Gold prices climbed higher on Thursday on safe-haven appeal after global stock markets drifted lower amid mounting worries about the impact of the coronavirus outbreak in China.

Gold prices advanced despite a fairly steady dollar. The dollar index rose to 97.72, gaining about 0.2%.

Gold futures for February ended up $8.70, or about 0.6%, at $1,565.40 an ounce, the highest settlement since January 7.

On Wednesday, gold futures for February ended down $1.20, or 0.08%, at $1,556.70 an ounce.

Silver futures for March ended marginally up at $17.839 an ounce, while Copper futures for March settled at $2.7260 per pound, down $0.0390 from previous close.

Traders continued to keep an eye on the new coronavirus outbreak in China that has spread from Wuhan to several Chinese provinces.

According to reports, deaths from the virus rose to 17 on Wednesday, with nearly 600 cases confirmed. Market participants remain worried about the contagion as the week-long Lunar New Year holidays starts on Friday, when millions of Chinese travel domestically and abroad.

In U.S. economic news, data from the Labor Department showed first-time claims for U.S. unemployment benefits rose to 211,000, an increase of 6,000 from the previous week’s revised level of 205,000.

Economists had expected jobless claims to climb to 215,000 from the 204,000 originally reported for the previous week.

The Conference Board released a report showing a slightly bigger than expected decrease by its index of leading U.S. economic indicators.

The Conference Board said its leading economic index fell by 0.3% in December after inching up by a revised 0.1% in November

Economists had expected the leading economic index to dip by 0.2% compared to the unchanged reading originally reported for the previous month.

The material has been provided by InstaForex Company – www.instaforex.com

Treasury Announces Details Of Two-Five, Five-Year And Seven-Year Note Auctions

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The Treasury Department has revealed the details of this month’s auctions of two-year, five-year, and seven-year notes.

The Treasury said Thursday it plans to sell $40 billion worth of two-year notes, $41 billion worth of five-year notes and $32 billion worth of seven-year notes.

The results of the two-year and five-year note auctions will be announced next Monday, while the results of the seven-year note auction will be announced next Tuesday.

Last month, the Treasury also sold $40 billion worth of two-year notes, $41 billion worth of five-year notes and $32 billion worth of seven-year notes.

The two-year auction attracted below average demand, while the five-year and seven-year note auctions attracted above average demand.

The material has been provided by InstaForex Company – www.instaforex.com

Euro Declines As Lagarde Cautions On Manufacturing Weakness In Euro Area

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The euro lost ground against its major trading partners in the European session on Thursday, after European Central President Christine Lagarde struck a cautious tone on the euro area economy, saying that inflation remained subdued and the weakness in the manufacturing sector posed a drag on growth momentum.

In her press conference in Frankfurt, Lagarde said that recent data were in line with the baseline scenario of ongoing, but moderate, growth of the euro area economy. The weakness in the manufacturing sector remained a drag on euro area growth momentum.

Considering subdued inflation outlook, monetary policy would remain highly accommodative for a prolonged period of time to support underlying inflation pressures and headline inflation developments over the medium term, Lagarde told.

The risks surrounding the euro area growth outlook, related to geopolitical factors, rising protectionism and vulnerabilities in emerging markets, remained tilted to the downside, although they have become less pronounced as some of the uncertainty surrounding international trade is receding, she added.

The ECB retained the main refinancing rate at its record low 0 percent and the deposit rate at -0.50 percent after the latest Governing Council meeting.

The marginal lending facility rate was kept unchanged at 0.25 percent.

The bank also retained its forward guidance on both interest rates and asset purchases.

The euro exhibited mixed performance against its major counterparts in the Asian session. While it held steady against the pound and the franc, it fell against the yen and the greenback.

The euro was down by 0.4 percent at a 1-1/2-month low of 1.1065 against the greenback, pulling away from a 2-day high of 1.1109 set at 8:30 am ET. At Wednesday’s close, the pair was worth 1.1093. The euro is seen facing support around the 1.08 region.

Extending early slide, the euro slipped 0.6 percent to a 2-week low of 121.12 against the yen. The pair was quoted at 121.84 at Wednesday’s close. Next immediate support for the euro is seen around the 118.00 level.

Data from the Ministry of Economy, Trade and Industry showed that Japan’s all industry activity rose in November after falling in the previous month.

The all industry activity index rose 0.9 percent month-on-month in November, after a 4.8 percent fall in October. In September, industry activity increased 1.9 percent. Economists had expected a 0.4 percent rise for November.

The euro declined to 1.0710 against the franc, its lowest since April 2017. The pair had closed Wednesday’s deals at 1.0737. Should the euro falls further, it is likely to test support around the 1.04 region.

The single currency was 0.2 percent lower at 0.8436 versus the pound, easing off from a high of 0.8457 it recorded at 8:30 am ET. The euro-pound pair had ended yesterday’s trading session at 0.8441. The euro is likely to challenge support around the 0.83 level.

The EUR/CAD pair lost 0.4 percent to 1.4554, following an advance to over a 3-week high of 1.4614 at 8:30 am ET. The euro was trading at 1.4571 a loonie at yesterday’s close. Further decline in the euro may face support around the 1.44 area.

Having climbed to a 1-week high of 1.6840 against the kiwi at 7:15 pm ET, the euro reversed direction, falling to a 6-day low of 1.6748. At yesterday’s trading close, the pair was quoted at 1.6826. The euro may face support around the 1.66 region, if it falls again.

The euro depreciated to a 3-day low of 1.6119 against the aussie, reversing from a high of 1.6224 set at 7:15 pm ET. The euro-aussie pair was worth 1.6207 at Wednesday’s close. Continuation of the euro’s downtrend may lead it to a support around the 1.60 region.

Data from the Australian Bureau of Statistics showed that Australia jobless rate came in at a seasonally adjusted 5.1 percent in December.

That beat forecasts for 5.2 percent, which would have been unchanged from the November reading.

The material has been provided by InstaForex Company – www.instaforex.com

*U.S. Crude Oil Inventories Dip By 0.4 Million Barrels In Week Ended 1/17

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U.S. Crude Oil Inventories Dip By 0.4 Million Barrels In Week Ended 1/17

The material has been provided by InstaForex Company – www.instaforex.com

Lagarde Launches Broad Review Of ECB Policy Strategy

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European Central Bank President Christine Lagarde on Thursday launched a broad review of the bank’s monetary policy strategy, which she said will cover “a whole host of issues” ranging from the inflation target to the impact of climate change.

“The review will have to do with how we deliver, how we measure, how we communicate when it comes to decision making, publication, outreach,” Lagarde told reporters in Frankfurt.

A review of the ECB’s monetary policy strategy was last undertaken in 2003.

“We cannot operate as we did back in 2003, which doesn’t mean to say that we have to change this, that and the other, but we have to look comprehensively at the effectiveness of our monetary policy,” Lagarde said.

The process is expected to conclude at the end of the year.

Policymakers will listen to expectations and concerns of the people, the ECB chief said.

The ECB chases inflation of “below, but close to 2 percent”, but price growth has kept away from this target for years.

The central bank, under Lagarde’s predecessor Mario Draghi, took several extraordinary steps such as asset purchases to achieve price stability and support the euro area economy.

The latest of such stimulus measures announced in September attracted severe criticism from some fellow policymakers.

At the end of October, Draghi stepped down as the only ECB chief thus far who did not raise interest rates during the eight-year tenure.

Eurozone interest rates were raised last in July 2011 by 25 basis points.

The Governing Council left the key interest rates, asset purchases and forward guidance unchanged earlier on Thursday.

The main refi rate is at a record low zero percent, and the deposit rate is at -0.50 percent after it was cut by 10 basis points in September 2019. The marginal lending facility rate is at 0.25 percent.

The strategy review will look at the potential side effects of low interest rates, Lagarde said.

As ECB policymakers are likely to remain busy with the strategic review this year, markets are now expecting any change to interest rates, mostly probably a cut, only in 2021.

Lagarde took several questions on climate change during her post-decision press conference and said that various ECB departments are working on embedding climate change in risk assessment, models, and forecasts.

“This is work in progress,” she said. “Environment and sustainability is very prominent in our strategy review.”

“Climate change is a threat that his hardly measured and taken into account by actors,” Lagarde added.

Acknowledging concerns that whether climate change is a matter to be debated by central banks, Lagarde said, “I’m also aware of the danger of doing nothing. Failing to try is already failing.”

Quizzed on the Brexit set to happen at the end of January, the ECB President said there were good reasons to believe banks are “well prepared” for the event.

Further, Lagarde said the Phase One trade deal reached between the US and China has helped to ease the trade tensions, but its impact on the euro area economy is yet to be assessed.

Risks to the Eurozone growth outlook remain tilted to the downside, but are now less pronounced as some global trade tensions have eased, she said in the introductory statement.

The material has been provided by InstaForex Company – www.instaforex.com

U.S. Leading Economic Index Drops More Than Expected In December

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Reflecting large negative contributions from rising unemployment insurance claims and a drop in housing permits, the Conference Board released a report on Thursday showing a slightly bigger than expected decrease by its index of leading U.S. economic indicators.

The Conference Board said its leading economic index fell by 0.3 percent in December after inching up by a revised 0.1 percent in November

Economists had expected the leading economic index to dip by 0.2 percent compared to the unchanged reading originally reported for the previous month.

Ataman Ozyildirim, Senior Director of Economic Research at The Conference Board, noted the leading index has now declined in four out of the last five months.

“Its six-month growth rate turned slightly more negative in the final quarter of 2019, with the manufacturing indicators pointing to continued weakness in the sector,” Ozyildirim said.

He added, “However, financial conditions and consumers’ outlook for the economy remain positive, which should support growth of about 2 percent through early 2020.”

The report said the coincident economic index crept up by 0.1 percent in December after rising by 0.3 percent in November.

Meanwhile, the Conference Board said the lagging economic index edged down by 0.1 percent in December after climbing by 0.4 percent in the previous month.

The material has been provided by InstaForex Company – www.instaforex.com

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