· Major currencies mostly stuck to tight ranges on Thursday as traders focused their attention on the European Central Bank’s (ECB) policy review later in the day, while the Australian and Canadian dollars struggled near two-month lows.
The yen and the Swiss franc edged up as investors sought shelter in the safe-haven assets amid signs of tension between the United States and North Korea and renewed fears of a slowdown in global growth.
The ECB is expected to cut growth forecasts and is likely to provide its strongest signal yet that stimulus is coming in the form of more cheap long-term bank loans to fight an economic slowdown.
The euro trod water on Thursday at $1.1307, about 1.0 percent below a one-month high hit on Thursday last week.
· “The market has already been pricing in that the economic growth in the euro zone isn’t good,” said Yukio Ishizuki, senior currency strategist at Daiwa Securities in Tokyo.
“Though I think there is a likelihood there may be a chance to their (ECB’s) forward guidance, that also has been already priced to some extent,” he said.
The yen rose one tenth of a percent to 111.65 yen per dollar, while the Swiss franc was also up 0.1 percent, at 1.0043 francs per dollar.
The dollar index, which measures the greenback against a basket of six key rivals, was steady at 96.852.
· Euro Eyeing ECB Rate Decision, Commentary and Eurozone GDP
The Euro may break below a key support at 1.1305 if commentary from the ECB signals greater pessimism over Eurozone growth. Officials are expected to keep rates on hold while the Continent wrestles with slower growth in key Eurozone economies and unprecedented political fragmentation. Significant moves in the Euro will not likely stem from the actual rate decision but from the comments that will follow.
Eurozone GDP is scheduled to be released a few hours before the ECB announcement which may make Euro traders jittery. Preliminary forecasts show seasonally-adjusted year-on-year growth at 1.2 percent. With Italy in a technical recession and German growth showing stagnation, the possibility of overperforming GDP does not appear very likely.
· The OECD cut forecasts again for the global economy in 2019 and 2020, following on from previous downgrades in November, as it warned that trade disputes and uncertainty over Brexit would hit world commerce and businesses.
The Organization for Economic Co-Operation & Development forecast in its interim outlook report that the world economy would grow 3.3percent in 2019 and 3.4 percent in 2020.
Those forecasts represented cuts of 0.2 percentage points for 2019 and 0.1 percentage points for 2020, compared to the OECD’s last set of forecasts in November.
· China’s decision to increase its budget deficit ratio to 2.8 percent this year from 2.6 percent in 2018 is appropriate for the economy, and leaves room for policymakers to maneuver, Finance Minister Liu Kun said on Thursday.
But a proactive fiscal policy does not mean China will open the floodgates for stimulus, Liu said at a news conference on the sidelines of the annual parliamentary meeting in Beijing, reiterating past government pledges of restraint.
· Oil prices crept up on Thursday amid ongoing OPEC-led supply cuts and U.S. sanctions against exporters Venezuela and Iran, but gains were capped by record U.S. crude output and rising commercial fuel inventories.
Brent crude futures were at $66.12 per barrel at 0757 GMT, up 13 cents, or 0.2 percent, from their last close.
U.S. West Texas Intermediate (WTI) crude oil futures were at $56.24 per barrel, up 2 cents.
Reference: Reuters, CNBC
Thai
Eng