• The euro rallied against the greenback on Thursday after the European Central Bank said it could revisit its communication stance in early 2018, boosting expectations that policymakers are preparing to reduce their vast monetary stimulus program.
The euro EUR= was up 0.77 percent to $1.2037, on pace for its biggest single-day percentage gain against the greenback in about two months.
The dollar index .DXY, which measures the greenback against six rival currencies, was down 0.5 percent at 91.869, after falling to a nearly one-week low of 91.787.
The greenback extended losses after data showed U.S. producer prices fell for the first time in nearly 1-1/2 years in December amid declining costs for services.
Weak inflation at the producer level could add to concerns that the factors restraining inflation could become more persistent and result in the Federal Reserve being more cautious about raising interest rates this year.
• Initial claims for state unemployment benefits increased 11,000 to a seasonally adjusted 261,000 for the week ended Jan. 6, the highest level since late September, the Labor Department said on Thursday. Claims have now risen for four straight weeks.
Last week marked the 149th straight week that claims remained below the 300,000 threshold, which is associated with a strong labor market. That is the longest such stretch since 1970, when the labor market was much smaller.
• One of the Federal Reserve’s most influential members on Thursday offered a point-by-point critique of U.S. President Donald Trump’s sweeping tax cuts, warning they put the country on an unsustainable fiscal path that will imperil the economy’s stability down the road.
New York Fed President William Dudley, a key architect of the U.S. central bank’s decade-long response to the financial crisis, said the new cuts to corporate and individual taxes will provide a short-term boost but leave the economy more vulnerable in the years to come. Not only could the bill eventually hurt U.S. creditworthiness, it is unlikely to bring about spending since corporations and the rich benefit the most, he said.
• The U.S. Senate Banking Committee will hold a second vote on Jan 17 over the Trump administration’s nomination of Fed Governor Jerome Powell to lead the Federal Reserve, the committee’s calendar showed on Thursday.
The committee already backed Powell to head the U.S. central bank in a Dec 5 vote, but a second vote is required because the full Senate failed to approve Powell before the end of 2017.
If the panel backs Powell again as expected, his nomination will be sent back to the Senate floor for final approval.
• Canada is talking tough with the United States, stressing its determination to push back against what it says are unfair trade practices ahead of crucial talks to revamp the tri-nation North American Free Trade Agreement.
U.S., Canadian and Mexican officials meet this month for the sixth and penultimate round of talks to update NAFTA, which President Donald Trump has threatened to abandon unless major changes are made.
• Steven Mnuchin, the U.S. treasury secretary, said on Thursday that he expects the United States to renegotiate the North American Free Trade Agreement (NAFTA) with Canada and Mexico or to pull out of the deal.
“Ambassador (Robert) Lighthizer is doing an amazing job renegotiating NAFTA, and we expect that will be renegotiated or we’ll pull out,” Mnuchin told journalists.
U.S. President Donald Trump said on Thursday he would be “a little bit flexible” on his threat to withdraw from the North American Free Trade Agreement because Mexico is facing a presidential election later this year.
Trump also said Mexico can pay for a border wall between the two countries “indirectly” through changes to the trade deal.
• U.S. President Donald Trump said on Thursday he “probably” has a very good relationship with North Korean leader Kim Jong Un, a change in tone for Trump after exchanging insults with Kim over Pyongyang’s nuclear and missile programs.
• Talks between North and South Korea ahead of next month’s Winter Olympics have eased fears of war over Pyongyang’s development of nuclear missiles capable of hitting the United States - at least for now.
But North Korean leader Kim Jong Un has shown no sign of willingness to give in to U.S. demands and negotiate away a weapons program he sees as vital to his survival, so any reduction in tensions could prove shortlived.
• Chinese President Xi Jinping on Thursday welcomed recent progress in inter-Korean talks during a telephone call with South Korean President Moon Jae-in, the South’s Blue House said in a statement.
At Tuesday’s talks, North Korea said it would attend the Winter Olympics in the South next month, and both sides agreed to resolve problems through dialogue and revive military consultations to avoid accidental conflict.
• U.S. Treasury Secretary Steve Mnuchin said on Thursday that he expected U.S. President Donald Trump to impose new sanctions on Iran.
Trump faces a Friday deadline on whether to waive sanctions on Iran as part of the 2015 nuclear deal. A U.S. official said on Wednesday that if Trump waived those sanctions, the administration would impose new, targeted measures against Iranian businesses and people.
• German President Frank-Walter Steinmeier on Thursday reminded would-be coalition partners about the high stakes involved - and their responsibility for Europe - as negotiators worked through a tough final evening of talks about forming a new government.
German Chancellor Angela Merkel said her conservatives still had high hurdles to clear in Thursday’s talks on whether to launch formal negotiations about a new coalition with the Social Democrats (SPD), who are pressing for accelerated integration of European Union states.
• Brent crude prices hit $70 a barrel on signs of tightening crude stocks but settled off that level on Thursday, while a jump in energy shares helped lift U.S. stocks.
Brent crude futures settled 6 cents higher at $69.26, after hitting $70.05 during the session, its highest level since November 2014. Brent’s settlement still represents a three-year closing high.
Brent has gained 5 percent since the beginning of the year, picking up from its late-year surge. U.S. crude settled at $63.80, up 23 cents, the highest since December 2014.
Reference: Reuters
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