• European Central Bank reaffirms outlook
  • Fed speeches dominate week’s schedule
  • Draghi cautious, euro drops
  • Goldman Sachs calls for euro/dollar parity in 2017

The European Central Bank (ECB) this morning has reaffirmed it will reduce its asset purchases from 80 billion euros to 60 billion per month starting in April. In another expected non-event, interest rates were left unchanged.

Mario Draghi, President of the ECB, was cautious in his press conference following the statement. While he affirmed that risks to the Eurozone are not currently pressing, he did make it clear that the economy still requires a considerable amount of stimulus. Draghi’s comments were rather dovish (not overtly optimistic), which was surprising given his comments in December in which he seriously downplayed deflation concerns.

The American economy strutted its stuff today, as both housing starts and initial jobless claims numbers were very strong. Unemployment claims this week unexpectedly fell by 15,000 this week; a very heartening and surprising development given how low unemployment already is. Markets will now be watching closely as Donald J. Trump is inaugurated as President of the United States of America tomorrow.

At the World Economic Forum in Davos, British dignitaries are issuing statements abounding with optimism. Prime Minister Theresa May made her view of the post-Brexit U.K. clear, saying it will “step up to a role as the strongest and most forceful advocate for free markets and free trade anywhere in the world.” Philip Hammond, the Chancellor of the Exchequer, stated that the “Fog of Brexit is starting to clear.”

EURUSD:  Euro has reversed its earlier gains due to a dovish Mario Draghi and strong USD data, and is now down against the dollar on the day.

GBPUSD:  Sterling has continued its recent trend of gaining against the U.S. dollar. Comments by British leaders continue to show bold optimism in the face of fears swirling around Brexit.

AUDUSD:  Aussie dollar is up against the USD as a risk-off attitude seems to be pervasive in markets this morning. Employment numbers came in surprisingly strong for December Down Under, adding to this attitude.

USDCAD:   U.S. dollar is up against CAD today, as strong U.S. data outweighs an increase in oil prices today.