Here are the latest developments in global markets:
- FOREX: The dollar index deviated below ten-day highs reached earlier in the day, but remained 0.12% up on the day, last seen at 90.07. Yesterday, the FOMC meeting minutes spurred hopes that the Fed will hike rates four times this year, giving some lift to the dollar. Dollar/yen was struggling to gain ground, trading at 107.23 (-0.44%) as the weakness in stock markets continued to falter on the pair, with investors looking for safer assets. Pound/dollar extended losses towards 1.3817 following a downward revision in the second estimate of UK GDP growth, while euro/dollar managed to rebound to 1.2288 (+0.07%) despite February’s German Ifo business climate index dropping to the lowest level seen since September. Aussie/dollar and kiwi/dollar moved higher to 0.7825 (+0.25%) and to 0.7332 (+0.20%) respectively, while dollar/loonie inched down to 1.2682 (-0.13%).
- STOCKS: The majority of the stocks traded in Europe opened lower on Thursday pressed by speculation that the Fed could raise interest rates faster than expected. Disappointing GDP growth revisions in the UK and a weaker German Ifo business confidence index added further pressure to the markets, while upbeat earnings releases failed to provide support. The pan-European STOXX 600 and the blue-chip Euro STOXX 50 were down by 0.55% and 0.62% respectively at 1100 GMT, with all sectors being in the red except healthcare and utilities. The German DAX 30 dropped by 0.62%, the French CAC 40 declined by 0.29%, while the British FTSE 100 tumbled by 0.86%. The Spanish IBEX 35 was up by 0.22% driven by gains in Telecommunications after Spain’s Telefonica expressed its optimism on revenues and profitability this year. US stock futures were mixed.
- COMMODITIES: Oil prices held weak during early European trading as a surprise decline in US crude inventories was unable to offset the weigh arising from a rising dollar. WTI crude was down by 0.66% at 61.28/barrel and Brent slipped by 0.44% to $65.13/barrel. In precious metals, gold was flat at $1323.30/ounce.
Day ahead: ECB meeting minutes in focus; Canadian & New Zealand retail sales eyed; Japan reports on inflation
The calendar will be relatively busy in the remaining of the day with the US, Canada, New Zealand and Japan, reporting on economic figures, while the European Central Bank (ECB) is scheduled to release minutes regarding its latest policy meeting on January 25.
The ECB is expected to submit its accounts of its January meeting at 1230 GMT, with investors looking for clues on whether central bankers have discussed any plans on the quantitative easing program after the program expires in September 2018. Unless the ECB alters its policy language or uses strong statements on the exchange rate, the minutes are less likely to cause substantial moves on the euro in contrast to the December’s accounts which lifted the common currency after the ECB signaled a hawkish shift to its communication stance in early 2018.
In the US, the Department of Labor will publish readings on initial jobless claims for the week ending February 16. The number of people applying for unemployment benefits for the first time is forecasted to rise by 230,000 as in the preceding week, holding below the threshold of 300,000 which is associated with a healthy labor market.
Staying in the US, the Energy Information Administration (EIA) will give its weekly updates on US oil inventories at 1600 GMT. Analysts believe that US crude oil inventories have grown at a slower pace of 1.795 million barrels in the week ending February 16 compared to 1.841 seen in the previous week. Stocks of refined products such as gasoline and distillates are said to decline.
Elsewhere, growth in Canadian retail sales might hold steady in December, with analysts projecting the measure to expand by November’s pace of 0.2% month-on-month, whereas the core measure which excludes automobiles is seen weaker at 0.3%, far below the previous mark of 1.6%. New Zealand will also report on retail sales at 2135 GMT.
In Japan, figures on consumer prices will be available at 2330 GMT but the core CPI could continue undershooting the BoJ’s target of 2.0%.
Regarding today’s public appearances, the New York Fed President William Dudley – a permanent FOMC voting member – will be participating in an economic briefing on the impact of hurricanes Irma and Maria in Puerto Rico and the Virgin Islands at 1500 GMT. Atlanta’s Fed President Raphael Bostic – a voting FOMC member in 2018 – will be speaking on Banking at 1710 GMT, while the Dallas Fed President Robert Kaplan – a non-voting FOMC member in 2018 – will be participating in a Q&A session on NAFTA at 2030 GMT.
The British Prime Minister and the Cabinet will gather at Chequers today to discuss on Brexit and limit any differences between them ahead of May’s crucial speech in front of EU ministers next week.