Kantox currency update: euro surges after hawkish ECB minutes
The euro appreciated sharply on Thursday, boosted by the hawkish tone of the minutes of the last ECB meeting. The monetary policy committee hinted to a further reduction of its bonds purchasing program, which increases the expectations of an interest rate hike in the second half of the year.
EUR/USD approaching 3-month highs at 1.2090. The euro extended its recovery from week lows around 1.1915, fuelled by the hawkish ECB minutes to reach levels near key resistance area right below 1.2100. At London market opening times, the EUR/USD is trading at 1.2065.
GBP/USD pares losses and returns above 1.3500. The pound found support on Thursday at 1.3460, after two days of decline, and bounced up, favoured by broad-based dollar weakness, returning to the range of the previous two weeks, between 1.3500 and 1.3600. At London market opening times, the GBP/USD is trading at 1.3550.
USD/JPY testing support at 111.00. The dollar has lost about 2% against the yen this week, reaching levels right above 4-month lows at 110.80, weighed by the unexpected tapering announcement by the BoJ, and recent market rumours about China’s decision of reducing purchases of U.S. Treasuries. At London market opening times, the USD/JPY is trading at 111.80.
In the Calendar Today
At 13:30 GMT we will be attentive to the release of U.S. Consumer Prices Index figures. The core inflation is expected to have ticked up, approaching the Fed’s 2% target of price stability. The dollar would need a strong CPI print to reverse its negative trend.
At the same time, U.S Census Bureau will release the U.S. retail sales are expected to have slowed from the previous month. Consumption is one of the main contributors of U.S. GDP and, in that sense, a poor reading on retail sales tends to be bearish for the dollar.
13:30 GMT U.S: Consumer Prices Index (YoY) (Dec)
Previous: 2.2 % Expected: 2.1%
13:30 GMT U.S: Retail sales (MoM) (Dec)
Previous: 0.8 % Expected: 0.4%