European currencies continued to make it rain during the New York session, leaving the dollar unable to climb out of its rut. News of Carillion’s collapse dominated the financial headlines but barely weighed on the British currency.
- U.S. banks closed on Martin Luther King Day
- New Zealand NZIER business confidence index down from +5 to -12
Commodities tick higher
Precious metals and crude oil chalked up a few more wins as the day went by, likely buoyed by dollar weakness.
- Gold is up to $1,341.40 per troy ounce (+0.49%)
- Silver is up to $17.375 per troy ounce (+1.37%)
- WTI crude oil is up to $64.72 per barrel (+0.65%)
- Brent crude oil is up to $70.21 per barrel (+0.41%)
Analysts remarked that the pickup in crude oil, even with rising output from the U.S. and Canada, was mostly due to expectations of tighter global supply due to the cuts from OPEC and Russia.
Apart from that, pipeline disruptions stemming from geopolitical tensions in Iran, Venezuela, Libya, and Nigeria are also foreseen to keep a lid on production.
Remarks from ECB’s Hansson
Despite the downbeat performance of European equities and the jitters from the collapse of Britain’s Carillion, the euro was able to leave its peers eating dust when another ECB official dropped tightening hints.
ECB Governing Council member Ardo Hansson remarked that the central bank might end its bond purchase program by September, stoking expectations that a rate hike might be in the cards soon after. He said:
“There are certainly good reasons to reduce the importance of the net purchases in our communication soon — also with a view to a potential end to these purchases.”
Hansson went on to say that if growth and inflation continue to evolve in line with the ECB’s projections, it would “certainly be conceivable and also appropriate to end the purchases after September.”
Furthermore, Hansson assured that the euro’s appreciation doesn’t pose a threat to their inflation outlook and that he supports a timely and gradual exit from easing.
Major Market Mover(s):
The Greenback remained on the losers’ bench for the rest of the day as banks were closed for the holiday and a bit of risk-taking took hold.
GBP/USD resumed its climb from 1.3743 to a high of 1.3820, USD/JPY slid from 110.56 to a low of 110.32, USD/CHF is down to .9631, and AUD/USD surged to a high of .7979.
The euro moved mostly sideways to the dollar and pound but was still able to catch a few pips against its peers before bulls booked some profits.
EUR/JPY edged back up to 135.70, EUR/CAD rose to a high of 1.5278 before retreating to 1.5210, and EUR/NZD climbed to a high of 1.6858 then pulled back to 1.6761.
The Loonie was able to pocket some gains to the dollar, with analysts attributing the gains to expectations of a BOC hike, but was still left eating dust by the rest of its rivals.
AUD/CAD is up to a high of .9909, NZD/CAD ticked up to a high of .9081, GBP/CAD rose from 1.7076 to a high of 1.7165, and CAD/CHF popped up to a high of .7766 then slipped back to .7748.
Watch Out For:
- 12:30 am GMT: Australia new motor vehicle sales (0.1% previous)
- 4:30 am GMT: Japanese tertiary industry activity index (0.4% expected, 0.3% previous)