Market Roundup
• US Dec New Home Sales-Units, 0.625M, 0.679M forecast, 0.733M previous, 0.689 revised.
• US Dec New Home Sales Chg MM, -9.3%, -7.9% forecast, 17.5% previous, 15.0% revised.
• US Dec Build Permits R Numb MM, 1.300M, 1.302M previous.
• US Dec Build Permits R Chg MM, -0.2%, -0.1% previous.
• US w/e Intial Jobless Claims, 233k, 240k forecast, 220k previous, 216k revised.
• US w/e Jobless Claims 4-Wk Avg, 240.00k, 244.50k previous 243.50k revised.
• US w/e Continued Jobless Claims, 1.937M, 1.925M forecast, 1.952M previous, 1.965M revised.
• US Jan KC Fed Manufacturing, 16, 21 previous, 16 revised.
• US Jan KC Fed Composite Index, 16, 14 previous, 13 revised.
• Trump takes his 'America First' policies to Davos 'globalists'.
• Trump says he wants 'strong dollar' –CNBC.
• U.S. President Trump talks up dollar in Davos.
• ECB hits out at Washington for talking down the dollar.
• Spooked by euro rise, ECB policymakers split on next move – sources.
• EU signals some flexibility on Brexit transition.
• Britain's Hammond calls for a very modest Brexit divorce.
• CA Nov Retail Sales MM, 0.2%, 0.7% forecast, 1.5% previous, 1.6% revised.
• CA Nov Retail Sales Ex-Autos MM, 1.6%, 0.8% forecast, 0.8% previous.
• Merkel's bloc rules out immigration concessions on eve of talks with SPD.
• NAFTA negotiations grind on, little sign of quick breakthrough.
Looking Ahead - Economic Data (GMT)
• 23:30 Japan Dec CPI, Core Nationwide YY, 0.9% forecast, 0.9% previous
• 23:30 Japan Dec CPI, Overall Nationwide, 0.6% previous
• 23:30 Japan Jan CPI Core Tokyo YY, 0.8% forecast, 0.8% previous
Looking Ahead - Events, Other Releases (GMT)
• Jan 25 23:50 Bank of Japan releases the minutes of its Dec. 20-21 monetary policy meeting - Tokyo
• Jan 26 16:00 Mark Carney of the Bank of England joins Christine Lagarde of the IMF and Haruhiko Kuroda, governor of the Bank of Japan, for a panel discussion at the World Economic Forum - Davos
• Jan 26 10:00 ECB executive board member Benoit Coeure participates in a televised session on "The end of easy money" at the World Economic Forum - Davos
• Jan 26 15:30 Bundesbank Vice President Claudia Buch speaks at the Imperial College - London
• Jan 26 08:00 Riksbank executive board meeting - Stockholm
Currency Summaries
EUR/USD is likely to find support at 1.2300 levels and currently trading at 1.2395 levels. The pair has made session high at 1.2538 and hit lows at 1.2388 levels. Euro rose to hit 3-year high against the dollar on Thursday after European Central Bank President Mario Draghi said economic data pointed to "solid and broad" growth with inflation likely to rise in the medium term but pared earlier gains after President Donald Trump said he wants a strong dollar. The U.S. currency regained losses against a basket of major currencies after Trump told CNBC in an interview in Davos, Switzerland that he wants to see a strong dollar. The U.S. dollar index was last up 0.17 percent against a basket of major currencies, after dropping as low as 88.438, its lowest since December 2014. The euro jumped about 1 percent to $1.2536, its highest since mid-December 2014, before paring gains to trade up 0.12 percent against the dollar. Draghi warned that the surge in the euro was a source of uncertainty and said the ECB might have to review strategy if U.S. comments on the benefits of a weak dollar lead to a change in monetary conditions. Some market participants had been expecting Draghi to take a firmer stance addressing the euro's potentially damaging surge against the dollar.
GBP/USD is supported in the range of 1.4175 levels and currently trading at 1.4140 levels. It reached session high at 1.4341 and dropped to session low at 1.4241 levels. The Sterling initially rose against the dollar on Thursday but reversed most of the ground as profit-taking prompted some traders to rein in their long positions. Sterling initially rose above the $1.43 for the first time since the June 2016's EU referendum as optimism around Brexit and growing expectations of an interest rate increase later this year encouraged investors to add to long positions. The pound rallied more than half a percent against the dollar to a high of $1.4346 before stabilising around the $1.43 line. It is on track for its best month against the dollar in almost nine years, with a 6 percent climb so far in January. The euro also slipped below 87 pence for the first time since June 2017 E and the Bank of England's trade-weighted sterling index touched its highest since June 30, 2016.Until now much of sterling's appreciation against the dollar has been attributed to broad weakness in the U.S. currency, but it has become clear this week that investors have become more bullish on the pound independently.
USD/CAD is supported at 1.2279 levels and is trading at 1.2372 levels. It has made session high at 1.2343 and lows at 1.2279 levels. The Canadian dollar strengthened against its U.S. counterpart on Thursday as oil prices rose and domestic data showed a smaller-than-expected gain for retail sales. U.S. crude prices were up 1.30 percent at $66.46 a barrel, supported by producer supply curbs, a record-breaking run of declines in U.S. crude inventories and a weaker U.S. dollar. On the data front, Canadian retail sales rose 0.2 percent in November, shy of economists' expectations for 0.7 percent, as higher sales of gasoline and electronics were tempered by a decline in new car purchases. Sales volumes were up 0.3 percent. The greenback recovered losses against a basket of major currencies after Trump told CNBC in an interview in Davos, Switzerland that he wants to see a strong dollar. The Canadian dollar was trading 0.3 percent higher at C$1.2373 to the greenback. The currency's weakest level of the session was C$1.2386, while it touched its strongest since Sept. 22 at C$1.2280.
USD/JPY is supported around 108.00 levels and currently trading at 109.42 levels. It peaked to hit session high at 109.70 and made session lows at 108.45 levels. The U.S. dollar reversed losses against the Japanese yen on Thursday when President Donald Trump said he wanted a "strong dollar," a day after Treasury Secretary Steven Mnuchin said he welcomed a weaker greenback, which moved the currency lower against Japanese yen. The comments came a day after U.S. Treasury Secretary Steven Mnuchin, also in Davos, made a major departure from traditional U.S. currency policy, saying "obviously, a weaker dollar is good for us as it relates to trade and opportunities. On the data front, U.S. new home sales post largest drop in 16 months. Sales of new U.S. single-family homes fell more than expected in December, recording their biggest drop in nearly 1-1/2 years, likely as the boost from the replacement of flood-damaged houses in parts of the South affected by hurricanes faded. Other data on Thursday showed the number of Americans filing for unemployment benefits rose from a 45-year low last week. The jump in jobless claims was, however, less than expected, and the underlying trend remained consistent with a tight labor market that is helping to underpin demand for housing.
Equities Recap
European shares fell on Thursday as remarks from European Central Bank chief Mario Draghi kept the euro running, sending the currency to fresh three-year highs against the dollar.
UK's benchmark FTSE 100 closed down by 0.4 percent, the pan-European FTSEurofirst 300 ended the day down by 0.64 percent, Germany's Dax ended down by 1 percent, France’s CAC finished the day down 0.32 percent.
The Dow Jones Industrial Average and S&P 500 closed at their highest levels ever on Thursday although Wall Street relinquished bigger gains after President Donald Trump said he wants a strong dollar.
Dow Jones closed up by 0.53 percent, S&P 500 ended up 0.07 percent, Nasdaq finished the day down by 0.05 percent.
Treasuries Recap
U.S. Treasury debt prices rose on Thursday, boosted by solid demand for 7-year notes and comments from President Donald Trump saying he wants a strong dollar, contradicting comments by Treasury Secretary Steven Mnuchin a day earlier.
The benchmark U.S. 10-year note yields fell to 2.626 percent, down from Wednesday's 2.654 percent.
U.S. 30-year bond yields also dropped to 2.888 percent , down from 2.937 percent late on Wednesday. The yield on this maturity touched a 3-1/2-month peak the previous session.
Commodities Recap
Gold dropped more than 1 percent on Thursday, retreating after an early rise as the U.S. dollar strengthened when President Donald Trump talked up a stronger greenback.
Spot gold was down 0.8 percent at $1,347.39 by 4:21 p.m. EST (2121 GMT). Its session high of $1,366.07 was the highest since Aug. 3, 2016. On Wednesday it jumped 1.3 percent in the biggest daily gain since August.
Earlier, U.S. gold futures for February had settled up $6.60, or 0.5 percent, at $1,362.90 per ounce.
Oil retreated late on Thursday as the U.S. dollar rebounded from early losses and strengthened, denting support for the latest crude rally, but tight U.S. supplies limited the commodity's decline.
Brent crude, the international oil benchmark settled down 11 cents at $70.42 a barrel. Its session high of $71.28 a barrel was the highest since early December 2014.
U.S. West Texas Intermediate crude futures for March delivery fell 10 cents to settle at $65.51 a barrel. Its session high of $66.66 was also the highest since December 2014.
