[محمد السويد]

ECB Report Dovish on Rising Euro and Interest Rates by Jes Black

At 8:30:00 AM US Weekly Jobless Claims (exp 345K, prev 343K) At 10:00:00 AM US Dec Leading Indicators Index (exp 0.20%, prev 0.30%)

The dollar added to this week's steep losses after the highly anticipated January report from the European Central Bank showed little stress over the rising euro. Upon the release the euro broke to new highs adding one cent on the day to 1.2752. Sterling has gained over 6 cents in three days and is nearing in on last week's 11-year peak of 1.8565. Meanwhile the dollar succumbed to renewed selling pressure against the yen, falling to a session low of 106.23 after it failed to maintain above the key 107 level this week. The uncoordinated stance amongst global central bankers and finance ministers has left the impression that more dollar selling will be tolerated. In effect this opens the way for a run at 1.30 in EUR/USD, while US bonds should maintain a firm bid from Asian central banks as they intervene in the currency markets. US stocks should also continue to benefit as artificially low rates and a falling dollar boost profits.

US data today include weekly jobless claims, which are seen rising to 345k, up marginally from last week's 3-year low of 343k

ECB Report Fails to Find Concern in Dollar Decline

The ECB missed a key opportunity today to steer the markets away from aggressive dollar selling. While mentioning the detriments of currency volatility the market was looking for solid signs that the ECB was growing discontent with the appreciation of the euro. Instead the report boosted Eurozone bonds and the euro as the ECB is seen dovish on both its rising currency and the need to raise rates. The market has now removed expectations of a rate hike, but is mixed over the possibility of a rate cut after ECB members this week seemed to dismiss the effectiveness of such a strategy. In sum, today's report was a coup for dollar bears after last week's worries