Dollar Under Pressure; Euro Steadies Before ECB

U.S. Treasury Secretary Steven Mnuchin expanded on his remarks about the dollar from a day earlier, saying he isn’t concerned about short-term fluctuations and there are economic pros and cons to where the exchange rate now is. As the currency slipped, the euro held steady before the central bank decision and after data showed improving business confidence in Germany. Stocks in the region were mixed following declines in Asia, where Japanese shares fell as the yen traded at the strongest since September.

The MSCI Emerging Markets Currency Index hit the highest on record, while dollar weakness also boosted commodities. Bloomberg’s index of raw materials is at the highest since October 2015, and gold traded at about the strongest in more than a year, Bloomberg reported.

Mnuchin’s endorsement of a weaker dollar as a help to U.S. trade on Wednesday heaped more pressure on an already sliding greenback, although White House Press Secretary Sarah Sanders appeared to soften his comments later. Eyes now turn to the ECB, where traders will be looking for further clues on its plans to roll back stimulus, and its officials’ thoughts on a strengthening single currency.

Terminal users can read real-time analysis of the ECB meeting in our TOPLive blog.

Investors are also increasingly worried about the future of global trade as President Donald Trump pushes his protectionist agenda. Commerce Secretary Wilbur Ross suggested at Davos that the U.S. could enact more levies.

Elsewhere, the Brazilian real strengthened the most in eight months and the MSCI Emerging Markets Index climbed for a 10th day.

Here’s what to watch out for this week:

• Earnings season is in full swing: Intel, LVMH Moet Hennessy Louis Vuitton, Starbucks and Hyundai Motor all come this week.
• Barring any last minute changes in Washington, Trump will join world leaders and senior executives in Davos for the annual World Economic Forum.
• The European Central Bank announces its rate decision on Thursday.
• The U.K. House of Lords is considering Prime Minister Theresa May’s Brexit bill this week.

These are the main moves in markets:

Stocks

• The Stoxx Europe 600 Index climbed 0.1 percent as of 11:08 a.m. London time.
• Futures on the S&P 500 Index gained 0.2 percent, reaching the highest on record with its fifth consecutive advance.
• The MSCI Asia Pacific Index dipped 0.3 percent and the largest decrease in almost six weeks.
• The U.K.’s FTSE 100 Index rose 0.1 percent.
• The MSCI Emerging Market Index rose 0.1 percent with its 10th straight advance.

Currencies

• The Bloomberg Dollar Spot Index declined 0.2 percent to the lowest in more than three years.
• The euro rose 0.1 percent to $1.2419, the strongest in more than three years.
• The British pound increased 0.2 percent to $1.4268, the strongest in 19 months.
• The Japanese yen jumped 0.2 percent to 109.02 per dollar, the strongest in almost 20 weeks.
• South Africa’s rand decreased 0.1 percent to 11.8715 per dollar.
• The MSCI Emerging Markets Currency Index climbed 0.7 percent to the highest on record with the largest increase in more than 10 months.

Bonds

• The yield on 10-year Treasuries decreased less than one basis point to 2.64 percent.
• Germany’s 10-year yield rose less than one basis point to 0.59 percent, the highest in more than six months.
• Britain’s 10-year yield increased one basis point to 1.413 percent, the highest in about a year.

Commodities

• West Texas Intermediate crude climbed 0.6 percent to $66.03 a barrel, the highest in more than two years.
• Gold rose 0.1 percent to $1,359.86 an ounce, reaching the highest in almost 18 months on its fifth consecutive advance.