Euro jumps after European Central Bank minutes; stocks gain with energy

Joanna Estrada
January 13, 2018

Bond yields rose sharply on Thursday after the accounts of the latest European Central Bank meeting showed policymakers were preparing for a change in their message to reflect an improved economic outlook for the euro zone.

The coalition news sent the euro surging above $1.21 against the dollar for the first time since January 2015.

Crude oil futures continued to march higher.

"Our target for USA 10-year treasuries is 2.8 - and we might afford up to 3 per cent - but going beyond that it's becoming an alert signal", said Amundi's Defend. Brent crude, the global standard, lost 14 cents to $69.12 per barrel.

A lull in noteworthy European economic data will see investors looking ahead as December's US CPI and retail sales figures cross the wires.

Later, the market will be keeping a close eye on the U.S. consumer price index (CPI) and retail sales releases, which may have some bearing on the dollar.

Vivendi SA shares (VIV.FR) fell 1.1%, with the French media group saying it foresees 2017 growth of 20% to 25% (http://www.marketwatch.com/story/vivendi-confirms-it-expects-20-25-earnings-growth-2018-01-12) in earnings before interest, taxes and amortization. The strength comes as a major relief since household spending has been a weak spot in the economy as consumers struggle with sluggish wage growth and record debt levels.

The euro zoomed up to $1.2037 from $1.1949 late Wednesday in NY.

Bonds recovered somewhat this morning after Chinese officials backtracked on suggestions that the state planned to slow its purchases of U.S. Treasurys. Japan's Nikkei, however, dropped for a third day, shedding 0.2 per cent for the day and 0.3 per cent for the week.

The yield on the benchmark 10-year Treasury note fell to 2.531 percent at 2:33 p.m. ET, while the yield on the 30-year Treasury bond fell to 2.862 percent.

US gold futures for February delivery settled up $3.20, or 0.2 percent, at $1,322.50 per ounce.

Spot gold was up 0.5 percent at $1,322.74 an ounce by 1:37 p.m. EST (1837 GMT) after touching $1,326.56 on Wednesday, the highest since September 15.

But growth is into its fifth year, employment is at a record high and convergence between the 19-member currency bloc's core and periphery has restarted, all pointing to unabated growth and a declining need for central bank help.

Brent crude futures were little changed for day at $69.28 a barrel after hitting $70.05 a barrel during the previous session, its highest level since November 2014.

USA economic news-flow has notably deteriorated relative to consensus forecasts in recent weeks, hinting that analysts' models may be overly optimistic and opening the door for further downside surprises.

Other reports by Click Lancashire

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