Euro regains ground ahead of fresh US economic data and the ECB meeting minutes
Wall Street indexes pulled back from record highs overnight as investors weighed whether strong retail sales indicate the lack of urgency around passing the next stimulus bill. The US retail sales grew 5.3% in January from the prior month on a seasonally adjusted basis – the largest monthly increase since June. December’s data was revised lower, to a 1% decline from an initial 0.7% drop. Minutes from the January Fed meeting showed that officials see the economy far from the central bank’s goals. As for the Fed’s asset purchase program and interest rate policy, the minutes indicated little chance for a change anytime soon. As a result, the S&P 500 was down 0.03%, the Dow Jones climbed 0.29%, while the Nasdaq Composite edged 0.58% lower.
Today in Asia, stocks were mostly lower, hit by profit-taking in sectors that have outperformed recently. MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.42%, slightly off an all-time high as some investors remain cautious because new strains of the coronavirus continue to emerge. As such, the Shanghai Composite index gained 0.55% and the S&P/ASX 200 edged 0.1% higher. Japan’s Nikkei 225 lost 0.19%, the Hang Seng in Hong Kong shed 1.58%, and the South Korean Kospi gave up 1.5%.
European equities opened mixed-to-lower on Thursday as investors continue to observe a cautious tone amid fresh corporate earnings. Barclays reported a full-year profit of 1.53 billion pounds for 2020, down 38% from 2019 but outstripping expectations. Credit Suisse reported a net loss of $392.8 million for the fourth quarter of 2020 on the back of higher provisions.
As for currencies, the dollar rose nearly across the board on Wednesday. The US currency proceeded to recovery following the recent sell-off, receiving a boost from the resurgent risk aversion in the global financial markets. AS such, EURUSD plunged to 1.5-week lows around 1.2025. Today, the pair proceeded to recovery and was last seen flirting with the 1.2060 area ahead of fresh economic data out of the US and the ECB meeting minutes due later in the day.
Meanwhile, oil prices continued to derive support from a historic winter storm in Texas. Furthermore, the American Petroleum Institute reported a draw in crude oil inventories of 5.8 million barrels for the week ending February 12 versus -2.4 million barrels expected. The futures exceeded the $65 handle for the first time since January 2020, to set fresh highs around $65.50 during the Asian session. Later today, the EIA weekly report could give the futures an extra boost if another contraction in crude oil inventories is confirmed officially.