The US dollar continues its strong rally while Chinese economic data remains weak

Thursday, January 09, 2014

China’s producer prices fell 1.4% in December y/y, showing its 22nd straight drop, and consumer-price gains fell behind estimates at 2.5%. Asian equity markets retreated sharply with the Nikkei Index falling more than 240 points, down -1.5%.

The US dollar has continued its strong rally, with the USD index holding strong at 7-week high around 81.0 area, having risen for a second consecutive session after a robust US ADP employment report spread optimism about the US economic prospects. The Fed minutes from December’s FOMC meeting were broadly in line with expectations. Members were concerned over diminishing benefits of the QE programme, showing potential for a sooner than later end of QE if the economic data remains strong.

European equity markets started the day on the negative side, as investors remain cautious ahead of the releases of crucial economic data, including rates decisions from Bank of England and ECB, UK trade balance figures as well as US Challenger layoffs and weekly jobless claims.

Energy: Crude oil prices retreated more than $1 on Wednesday to reach its lowest level in six weeks, following a bearish EIA oil inventories report, which showed a large build in crude stockpiles. The large build in oil inventories comes just ahead of oil refiners entering maintenance season.

 

USD Index - 10 Day Chart

DOLLAR INDEX 10-Day

China's PPI y/y

China PPI YoY

Events for today

0930

UK

Nov

Trade Balance & Non EU

1000

EZ

Dec

Bus. Climate & Con. Sentiment

1200

UK

Jan

BOE rate

1230

US

Dec

Challenger Layoffs

1245

EZ

Jan

ECB Rate

1330

US

w/e

Jobless Claims

1530

US

w/e

EIA Nat Gas

All times UK Local Time

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