Asian stocks resume ascent on support from U.S. earnings optimism

Ceria Alfonso
Enero 13, 2018

The dollar stayed in the doldrums after USA wholesale prices dipped in December from November, reinforcing investors' expectations that inflation will remain low.

The rate of credit growth to non-financial businesses across the whole eurozone picked up to 3.1 percent year-on-year in November, a regular European Central Bank survey recently showed.

Yet, "with that in mind, the near term trend for EUR/USD is higher and not lower as all of this is speculation until we actually hear from the Draghi", says Lien. He noted trading is cautious ahead of the USA consumer price index data later in the global trading day. That left it around the same levels it was trading at before the report.

The EUR/USD rallied because investors interpreted the minutes as hawkish since they could be signaling that the European Central Bank will wind down its 2.55 trillion Euro ($3.07 trillion) bond purchase scheme this year if Europe's economy continues to grow.

The ECB's December 2017 meeting showed that the ECB must reconsider its policy in early 2018, and gradually adjust its language to reflect improved growth prospects.

GBP/USD - still finding support at the 1.3500 area so far this year but needs to push beyond the highs of last year at 1.3660.

It added to those gains on Friday, rising 0.8 percent to as high as $1.2137, its strongest since December 31, 2014, after Merkel's conservatives and the Social Democrats agreed to a blueprint for formal coalition negotiations, raising prospects of an end to months of political uncertainty in Europe's biggest economy. Yet it still suggested consumer spending had made a sizeable contribution to economic growth for the fourth quarter as a whole, after a disappointing third quarter.

DailyFX US AM Digest US Dollar at Three Year Low versus the Euro
Asian stocks resume ascent on support from U.S. earnings optimism

European shares dipped on Thursday as a bond market sell-off and a stronger euro took the steam out of the breakneck New Year rally in equities.

The pan-European Stoxx 600 Index was down by 0.53%, London's FTSE 100 Index was up by 0.14%, after dropping to 0.01% earlier in trading, Frankfurt's DAX was 0.95% lower and Paris' CAC-40 was 0.43% lower at the time of writing. Dow Jones, S&P 500 and Nasdaq futures were up 0.1 to 0.4 percent.

The dollar has been struggling to gain traction in the opening days of 2018 after losing around 10 percent against a basket of currencies previous year as economic growth elsewhere, notably in Europe, overtook the United States. The energy sector led the gains as oil prices rose to three-year highs while interest rate sensitive sectors, such as utilities and real estate companies, underperformed. China is the largest foreign creditor to the USA government, playing a significant role in the Treasury market.

Gold prices on Thursday approached a four-month high set on the previous day after minutes of a European Central Bank meeting showed a more aggressive tone and boosted the euro against the US dollar.

The U.S. currency is still down more than 1 percent against the yen this week after markets bet the Bank of Japan (BoJ) could start to tighten monetary policy faster than expected.

Among other precious metals, spot silver was up 0.2pc at $16.97 an ounce from a two week low of $16.86 on Wednesday. Brent's settlement still represents a three-year closing high.

"The minutes didn't contain any new policy hints from what we didn't know before".

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