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01.12.2018 / 07:34

European Central Bank Meeting Minutes in December

The euro popped higher and defended its gains on Thursday following minutes from the European Central Bank’s December meeting, which were interpreted as bullish, thereby reversing an earlier rebound in the U.S. dollar. Minutes from the ECB’s December meeting revealed that policy makers see reason to revisit their monetary policy stance by early this year. The minutes also showed that inflation continued to be a concern, although wage dynamics in the eurozone gave central bankers some comfort. The ECB report helped to send the euro higher against greenback. The central bank’s minutes indicated that it planned to continue limiting asset purchases until September, with the option to extend at that point. The ECB next meets on Jan. 25.

In the U.S., weaker-than-expected December inflation data from the producer-price index presented another hurdle to the dollar and interest-rate expectations. The PPI fell 0.1% in the last month of 2017, compared with consensus expectations of a 0.2% increase. On the year however, it rose 2.6% in its biggest increase since 2011. Aside from PPI data, jobless claims for the week ending Jan. 6 jumped to a near four-month high at 261,000, versus consensus estimates of 248,000. The U.S. ran a $23 billion budget deficit in December, down $4 billion versus the same period in 2016. The buck, which had been under pressure on Wednesday following reports that China would slow or halt its purchases of U.S. Treasurys, rose earlier in the Thursday session after a Chinese regulatory authority said the report was false.

The ICE U.S. Dollar Index which measures the buck against a basket of six rivals, fell 0.6% to 91.824, snapping back after posting its first loss in four days on Wednesday. Meanwhile, the WSJ Dollar Index which gauges the greenback against a basket of 16 currencies, slipping 0.5% to 85.38. The euro rose to $1.2044 from $1.1949 late Wednesday in New York. The British pound also benefiting from the resurfaced dollar weakness, changed hands at $1.3534, down from $1.3508 on Wednesday. Against the Japanese yen, the U.S. currency bought ¥111.07 compared with ¥111.43 on Wednesday. The greenback had appreciated against the Canadian dollar following a report that Canada is increasingly convinced the U.S. will pull out of the North American Free Trade Agreement. A dollar bought C$1.2524 on Thursday, compared with C$1.2547 late Wednesday.