Draghi calls on Germany to be patient over rates

The relatively flat performance surprisingly follows on the heels of a policy meeting announcement from the European Central Bank and a trio of better than expected United States economic reports.

He will argue that “recent developments vindicate the policy decisions taken on December 8” and brush aside calls to end monetary easing sooner, Valli continued. Housing surged in December, spiking 11% in the last month of 2016 to 1.23 million, capping the best year since 2007.

A rise in euro zone bond yields has lagged the rise in U.S. Treasury yields.

The key difference between the December and January meetings, is the economic backdrop.

The euro dropped under $1.06 after the comments, but the shared currency was recently buying $1.0633, compared with $1.0630 late Wednesday in NY.

Figures for December showed inflation in the single currency area stood at 1.1 percent on average and at 1.7 percent in its largest member economy, Germany.

– We then moved over to EUR/JPY which has been remarkably resilient considering the ECB’s past two meetings’ insertion of dovishness into the equation. This lack of high quality bonds could seriously impact the ECB’s ability to extend its APP programme through to the end of this year.

Sterling rose 0.3% against the US Dollar yesterday, steadying above the 1.23 level after a volatile few days following Theresa May’s heavily scrutinised Brexit speech.

Overall, aside from the European Central Bank meeting later today the focus is likely to shift to Trump’s inauguration on Friday.

David Lamb, head of dealing at FEXCO Corporate Payments, said: “In Berlin, Mario Draghi’s unwavering dovishness will go down about as well as Donald Trump’s hints of tariffs on German cars”.

The FX market could see the most volatility in the next 24 hours.

The recovery still relies heavily on European Central Bank stimulus and markets could become more volatile as the US Federal Reserve gradually raises rates, underscoring diverging policy paths between Europe and the US. That said, we expect Trump to start delivering on at least some of his policy pledges, ranging from comprehensive tax reform and deregulation to the erection of trade barriers against selected countries in Q1.

The 19-nation currency spiked up to 1.4169 against the loonie, its strongest since December 30.

GBP came off the 1.2400 level this week having failed at a tough resistance level.

But the European Central Bank president said he was heartened by fourth quarter economic activity surveys from 2016 pointing to a recovery.