The USD/JPY currency pair dropped at 115.72, its lowest since December 14th, after the market rushed to sell the greenback following the release of FOMC Minutes. The new leitmotif of the US Central Bank is showing that uncertainty.
US data came mixed in the hints for the Non-Farm Payrolls. ADP had a significant slowdown in job gains in December: 153K against 215K in November in the private sector. Another worry came from the ISM Non-Manufacturing PMI. The services sector is the largest in the US, and the top figure was a beat. The employment component fell by 4.4 points , a worrying sign for the Non-Farm Payrolls.
Investors began 2017 in a confident mood after solid manufacturing activity data in Europe and China.
Banking stocks jumped almost 3 percent. Shares of the newly mergedBPM bankin Italy were at the top of the European index, up by more than 9.8 percent in afternoon trade.
French consumer prices increased 0.8 percent year-on-year, driven essentially by an increase in energy prices. French inflation reached its highest level since May 2014. Inflation across the eurozone is expected to edge up this year on the fading effect of last year’s energy price falls. Forecasts from the ECB show average inflation will fall short of the ECB’s target of just below 2 per cent in 2019 at 1.7 per cent.
extended its recovery and rose on Thursday for the fourth consecutive session, as the dollar and U.S. bond yields declined following weaker than expected economic data. Spot gold hit $1,150.26 an ounce, its highest since December 14, and was up 1.1 percent at $1,155.54. U.S. gold futures rose 1.3 percent to $1,156.60 an ounce.
However, growing market expectations of further rate-hike action by the US Federal Reserve in 2017 may limit any near-term sharp appreciation for the Gold.
Gold fell more than 8 percent in November as U.S. Treasury yields rose after Donald Trump's election led to speculation his commitment to infrastructure spending would spur growth.
The euro dropped by one percent to $1.0406 on Thursday. This is the lowest level against the dollar since early 2003.
Federal Reserve officials raised interest rates for the first time this year and forecast a steeper path for borrowing costs in 2017. According to the Federal Reserve officials, inflation expectations have increased “considerably” and the labor market is tightening.
Consumer spending is “rising moderately”, job gains have been solid and business investment “has remained soft,” the Fed said. New projections show central bankers expect three quarter-point rate increases in 2017, up from the two seen in the previous forecasts in September.
U.S. equities traded higher on Tuesday, as investors kept an eye on Federal Reserve’s monetary policy nextmeeting.
The Dow also hit a new intraday high after Tuesday's open, briefly rising more than 100 points, with IBM contributing the most gains. Some analysts think that Dow will rise soon above 20,000. The S&P 500 also hit a new intraday record, rising 0.4 percent, with information technology gaining 1.3 percent to lead all sectors higher.
The Nasdaq composite outperformed, advancing 0.9 percent to a new all-time high. Speculation that fiscal easing in the U.S. will drive growth is pushing investors into stocks. With the market assigning 100 percent odds to a Fed rate hike Wednesday, investors see a two-in-three chance of additional tightening by June next year.
Oil rose by as much as 6.5 percent on Monday to an 18-month high. OPEC and some of its rivals reached their first deal since 2001 to reduce output to try to tackle global oversupply and boost prices.
U.S. crude futures were up $1.75, or 3.4 percent, at $53.25 a barrel. They earlier touched $54.51, also a high going back to July 2015.
Producers from outside OPEC agreed to reduce output by 558,000 bpd, short of the target of 600,000 bpd but still the largest contribution by non-OPEC ever. "The observation of the OPEC-11 and non-OPEC 11 production cuts is required to sustainably support - oil prices to our 1H17 WTI price forecast of $55 a barrel " Goldman Sachs said.
According to Barclays, there are too many moving parts for OPEC's new policy to be sustainable in the long term.
The EUR/USD currency pair was exposed to extreme levels of volatility on Thursday. The ECB has said that it will extend its QE programme out to December next year. From April to December asset purchases will be EUR 60 bn per month, EUR 20bn less than the current monthly purchases.
The reduction to EUR 60 bn from April 2017 untill the end of the year could spark fears of a taper potentially sabotaging growth and pressuring the ECB to take further actions.
Britain's top share index rose for a third session, as investors snapped up bank and mining stocks. The British FTSE 100 Index was up 1.8 percent to 6,902.23 points at its close, its highest closing level since November. European stocks closed higher in this afternoon. Investors shifted their focus to the European Central Bank's (ECB) upcoming meeting. They expect further monetary stimulus to be announced.
Financials contributed 47 points to the rise, supported by gains in euro zone lenders. Another bad day for italian banks. They continued to rally off of lows hit after the Italian prime minister Matteo Renzi said he would resign after the rejection of his reforms in a referendum.
The Oil prices continue to increase until 51.82 (Crude Oil) and 54.55 (Brent Oil).
On Wednesday in Vienna, the Organization of the Petroleum Exporting Countries (OPEC) reached a deal to cut their oil production by 1.2 million barrels per day in order to raise global prices. Saudi Arabia will take the brunt of this cut. Under the deal, OPEC nations will bring Oil production volume down to 32.5 million barrels per day, with Saudi Arabia, Iraq, UAE, and Kuwait making the biggest cuts.
The U.S. dollar reached its highest level against a basket of major currencies for almost 14 years. Donald Trump's election victory drove debt yields higher on expectations of more fiscal spending, price growth and a faster pace of monetary tightening.
The dollar index, which measures the greenback against a basket of six major currencies, was last up 0.8 percent at 101.690.DXY. The dollar was also helped by yesterday’s data. The U.S. third quarter GDP revised up and November consumer confidence come in stronger than expected.
The Bank of Japan's decision in September to target zero percent yields for longer-dated debt has played into a broader sense. The yen's rally may now be done after a series of failures to break past 100 yen per dollar.