US dollar made 2-week highs on Thursday due to optimism over the US growth outlook.
Risk appetite held firm on Thursday as reduced Middle East tensions boosted confidence and the global equities index posted record highs.
The dollar made net gains to 2-week highs during Thursday as optimism over the US growth outlook and lack of confidence in other main currencies provided further support.
Demand for defensive assets remained weaker, but the yen and Swiss franc were resilient. Sterling dipped sharply after comments from Bank of England Governor Carney were seen as dovish before recovering some ground on positive business surveys.
Precious metals rallied from intra-day lows, although underlying demand remained weaker given solid risk conditions. Oil prices also rallied from intra-day lows, but reduced global risk premiums still eroded support.
There were no significant Euro-zone developments ahead of the New York open with the Euro unable to regain ground. ECB member Villeroy stated that the inflation target must be asymmetric as there is less chance of meeting the target if it is seen as a ceiling. If economic stability is confirmed, however, a stabilisation of monetary policy should follow.
US jobless claims declined to 214,000 in the latest week from 223,000 previously, although continuing claims increased.
A senior Iranian Guards commander stated that Iran will take harsher revenge soon after the latest missile attacks. Overall risk appetite held firm, however, with markets still optimistic that further military strikes would be avoided in the short term.
President Trump stated that the second-phase trade deal with China would start straight away, although he may wait until after the election to conclude it. China expressed major reservations over the timetable, but markets tended to focus on the phase-one deal.
Bank of England Governor Carney stated that the bank’s forecast of a rebound in the UK economy this year was not assured. He also commented that there was a debate within the Monetary Policy Committee (MPC) on the merits of a near-term stimulus to reinforce the anticipated recovery in growth and inflation.
The UK House of Commons approved the Brexit Withdrawal Agreement, in line with expectations and there was very little impact or media attention. Sterling did recover some ground later in the US session. Business surveys indicated a strong recovery in company confidence and an increase in employment while risk reversals also indicated reduced demand for Sterling puts. GBP/USD recovered to the 1.3080 area while GBP/EUR traded above 1.1780.
Economic Calendar
| Expected | Previous | ||
|---|---|---|---|
| 06:45 | CHF Unemployment Rate s.a.(DEC, 2019) | 2.30% | 2.30% |
| 06:45 | CHF Unemployment Rate n.s.a.(DEC, 2019) | 2.40% | 2.30% |
| 07:45 | Industrial Output MM(NOV, 2019) | 0.20% | 0.40% |
| 09:00 | Industrial Output MM SA(NOV, 2019) | 0.10% | -0.30% |
| 09:00 | Industrial Output YY WDA(NOV, 2019) | - | -2.40% |
| 09:30 | BoE MPC Member Silvana Tenreyro Speech | - | - |
| 13:30 | USD Average Hourly Earnings (M/M)(DEC, 2019) | 0.30% | 0.20% |
| 13:30 | USD Average Hourly Earnings (Y/Y)(DEC, 2019) | 3.10% | 3.10% |
| 13:30 | USD Non-farm Payrolls(M/M)(DEC, 2019) | 165K | 266K |
| 13:30 | USD Private Nonfarm Payrolls (DEC, 2019) | 155K | 254K |
| 13:30 | United States Unemployment Rate(M/M)(DEC, 2019) | 3.50% | 3.50% |
| 13:30 | CAD Employment Change (M/M)(DEC, 2019) | 20.0K | -71.2K |
| 13:30 | CAD Full Employment Change(DEC, 2019) | - | -38.4K |
| 13:30 | CAD Unemployment Rate (M/M)(DEC, 2019) | 5.80% | 5.90% |
| 21:30 | AUD AiG Performance of Service Index(DEC) | - | 53.7 |