Dollar sell-off continues as Sterling, Euro race to fresh multi-year highs

After the International Monetary Fund raised growth forecasts and the global elite in Davos heaped praise on the economy's brighter prospects, the European Central Bank president is giving his own vote of support by saying that an interest-rate increase this year is very unlikely. It's now around 0.7375, still higher than it was 2 days ago.

The single currency spiked up to near a 2-year high of 1.5404 against the loonie and a new 3-week high of 1.6985 against the kiwi, from its early lows of 1.5268 and 1.6809, respectively.

The euro zone STOXX index fell 0.4 percent after hitting a one-week low, after the single currency spiked higher following remarks from Draghi who said the European Central Bank did not target foreign exchange rates.

Preliminary data from the Chain Store Association showed that Japan's supermarket sales recovered in December.

US Dollar (.DXY) Index at 89.069 fell further after US Treasury Secretary Mnuchin said from Davos that the US likes a weak USD since it helps in trade.

Political worries are still likely to remain the key influence on the US Dollar over the coming days, especially if the Trump administration continues to ramp up its protectionist approach to trade.

While a decision to keep policy on hold was in line with consensus expectations, some had envisaged a tweak in the ECB's language after policymakers signalled in minutes of the December meeting that a revision to guidance could be needed in "early" 2018.

Ripple, Bitcoin and Ethereum - Cryptocurrencies Edged High on Thursday
Bitcoin should be seen like a high risk asset, and you should never store money that you can not afford to lose with Bitcoin. Bitcoin's price could drop as low as $5,000, David Garrity, chief executive officer at GVA Research LLC, has warned.

Thursday will be a relatively busy day for FX markets as several economies are expected to release economic figures, while eyes will be mainly focused in the Eurozone where the European Central Bank will meet to decide on monetary policy. He was speaking after this week said he welcomed a weak dollar because it was good for U.

Draghi did say that there was a very low likelihood that the ECB would raise rates this year, although that didn't stop European bond yields rising after his press conference.

The Japanese yen rose 0.3 percent to 108.85 per dollar.

However, if United Kingdom growth disappoints and US growth beats expectations, GBP/USD could potentially rebound from its recent highs, particularly with many analysts still calling the US Dollar oversold.

The report said new home sales plunged by 9.3% to an annual rate of 625,000 in December after surging up by 15% to a revised rate of 689,000 in November. Traders are further net-short than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger EURUSD-bullish contrarian trading bias.

Changes in broker ratings were the main driver behind individual moves on the FTSE, as analysts mulled over recent company updates. 3M will also benefit from the changes to the USA tax system, and it now expects the effective rate to fall to 20%-22%, down from 26%-27%.


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