Euro jumps after ECB minutes; stocks gain with energy


The euro jumped a cent, and was trading at $1.2039 at 3:20 pm in Frankfurt.

But critics say that the scheme has run its course and in a period of above trend growth, artificially low borrowing costs risk more damage than good by inflating asset price bubbles. In the meantime, the Platinum Group Metals continued to move in opposite directions.

The current exchange rate (at time of writing) is slightly higher at €1.12372 to the pound.

Interest rates have remained lower for longer than we might have expected, but it is well to remember that a zero base rate and a central bank pumping money into the economy through purchasing bonds is not the "norm".

Both the euro and bond market borrowing costs shot higher on Thursday as the European Central Bank signalled its 2.5 trillion euro stimulus scheme could be wound down relatively swiftly this year.

"The minutes were music to the ear of euro bulls, bolstering the case for officials to taper stimulus this year, and the notion that the European Central Bank may be on a faster track to an interest rate hike", said Joe Manimbo, senior market analyst at Western Union Business Solutions. The minutes specifically refer to "early 2018".

In Germany, meanwhile, party chiefs and their teams reached an deal in principle to start formal coalition talks that could lead in the coming months to a new government for the biggest European Union economy, negotiators told AFP.

A report released by the Labor Department on Thursday unexpectedly showed a modest decrease in producer prices in the month of December. The measure tends to exhibit greater volatility during the holidays, leading to a muted reaction from the markets. Asian markets were mixed with the Nikkei underperforming as the Yen weakened against the dollar and closing with a loss of -0.24%. The USD did manage to hold steady against most of its other major peer currencies. Wall Street was poised to open higher, with Dow futures and the broader S&P 500 futures up 0.2 percent.

U.S. Treasury yields fell after China disputed a report that its government officials had recommended the country slow or halt its purchases of the U.S. bonds.

Benchmark 10-year notes gained 6/32 in price to yield 2.53 percent, after rising as high as 2.597 on Wednesday, the highest since March 15. Bond yields move inversely to prices. It skidded over 11 percent in the previous session after the government of South Korea, a crucial source of global demand for cryptocurrency, said it was considering a plan to ban cryptocurrency trading.

In commodities, oil prices rose for a sixth day after Russia's oil minister said global crude supplies were "not balanced yet", alleviating market concerns about a wind-down of the OPEC-led deal to reduce production. WTI crude added 25¢ (+0.4%) to $63.80/bbl.

The dollar was also pressured by data on Thursday that showed USA producer prices fell for the first time in almost 1-1/2 years in December, which could temper expectations that inflation will accelerate in 2018.