“According to some recent survey indicators, there are tentative signs of stabilization of economic activity at low levels”
– Mario Draghi, the ECB president
The European Central Bank kept its benchmark rate at record low of 1 per cent on Thursday, a move widely expected by economists, and noted a “significant, if not substantial,” decrease in interest rates across markets.
“The retail sales [data] suggests that spending isn’t really picking up any momentum”
– Sean Incremona, economist at 4Cast Ltd
U.S. month on month retail sales grew less than expected in December and jobless claims rose sharply, signalling the economic recovery remains shaky. Total retail sales rose 0.1 per cent after increasing 0.4 per cent in November, said the Census Bureau on Thursday. Economists expected sales to advance 0.3 per cent.
“There isn’t very much that’s performing well in the UK economy”
– Philip Shaw, chief economist at Investec
U.K. industrial output decreased 0.6% in November, said the Office for National Statistics on Wednesday, intensifying worries over the strength of the economy.
CHF
“Bond sales in Italy and France, because the countries have more problems, will offer more of a guide for the market”
– Arnaud Scarpaci, a fund manager at Agilis Gestion SA
Swiss stocks closed slightly higher on Thursday after Spain sold 9.98 billion euros of government bonds maturing in 2015 and 2016 and Italy sold 12 billion euros of Treasury bills, pushing yields low er.
JPY
“A strong yen is weighing on Japan’s stocks, especially export-related shares”
– Takeru Ogihara, chief strategist at Mizuho Trust & Banking Co.
Japanese stocks dropped on Thursday, snapping two days of gains, as German economic data and weaker exporters added to worries the global economy is under strain.
“Any good news for the euro zone could be a trigger for traders to cover their short positions”
– Mizuho Financial Group Inc. (based on Bloomberg)
Even though the current rally may extend up to 1.2933, the long-term outlook remains negative for the pair. As soon as bullish momentum weakens near one of the resistances, EUR/USD will dip down 1.2530/88 while en route to 1.2083.
“We would be cautious of extending short positions in the euro crosses”
– Credit Suisse (based on WSJ)
After climbing as high as 98.98, the currency pair is likely to be repelled, as ahead lies a formidable resistance at 100.77. Within the period of three months EUR/JPY is expected to drop below 97.90 and 95.90/40, down to 94.92.
“Rallies in sterling/dollar still provide an opportunity to short at better levels”
– London-based trader (based on Reuters)
GBP/USD has managed to stabilise ahead of 1.5272, although a sustained rally is unlikely, since 55 day ma situated at 1.5673 presently caps the pair from above, while subsequent level is at 1.5704.
“The data are not strong enough, or uniform enough, to assert that momentum for growth [of US economy] is building”
– Charles Evans, Chicago Fed President (based on Reuters)
USD/JPY is crawling upwards, although its advancement may be hampered by resistances located at 77.89, 78.63 (200 day ma), 79.67 (55 week ma) and 80.00. Dips should be halted by supports at 76.60 and 76.22.
“We continue to view the [US] labor market as gradually gaining momentum”
– Barclays Capital (based on Reuters)
USD/CHF has penetrated the initial support at 0.9450 and is now moving in the direction of 0.9383 with the possibility of dropping as low as 0.9337/17. However, the latter level should be enough to withstand the downward pressure.
Retailers, weak U.S. data weigh on Europe markets
Most European stock markets fell Thursday, as the retail sector came under heavy selling pressure after Tesco PLC announced disappointing holiday trading sales, while well-received debt sales in Spain and Italy boosted banking shares.
Retail Sales Post Gain of 0.1% as Holiday Buying Fades
America’s retailers enjoyed a record 2011 and their first $400 billion sales months ever. But the final month of the year was a dud.
Japanese Prime Minister Noda reshuffles cabinet posts
Japanese Prime Minister Yoshihiko Noda has reshuffled his cabinet, replacing five members including two ministers responsible for a series of gaffes.