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By xemarketanalysis January 11, 2018 1:50 pm
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    XE Market Analysis: Euro Spikes as ECB Signals Guidance Shift


    • ECB minutes spark speculation over QE program.
    • Chinese authorities deny reports on US debt purchases.
    • USD back under pressure after PPI falls.
    • AUD rallies after strong retail sales.
    • CAD weaker on NAFTA concerns.
    • Oil surges to highest since 2014 as OPEC say output cuts will continue.


    The Euro rallied 1% against the Dollar after the release of the minutes from the ECB's meeting last month signaled they may revise their forward guidance. The minutes said the governing council sees a “continued robust and increasingly self-sustaining economic expansion,” and that they considered a move “early in the coming year” to further reduce the stimulus.


    The Dollar began the Asian trading session recovering the ground it lost on reports that China was considering ending its purchases of US government debt after the Chinese dismissed the story as "fake news". However, it failed to hold on to the gains after data showed producer prices fell for the first time in nearly 1.5 years in December, continuing to point to a benign inflationary environment.


    The Pound is generally higher today, supported by recent economic data that points to a pickup in industrial and manufacturing output, potentially offsetting a cooling in consumer spending due to falling wages. Brexit champion and former UKIP party chair, Nigel Farage, said he is open to a second EU referendum that he is convinced would deliver a second leave vote, putting the issue to bed for a "generation".


    The Euro is higher across the board after the release of the ECB's minutes and stronger-than-expected industrial production data (see highlight).


    The Canadian Dollar is trading lower due to media reports highlighting Canadian officials’ concerns about an imminent U.S. withdrawal announcement on NAFTA. Market expectations for a January rate hike by the BoC have fallen considerably and probabilities of a hike in January have fallen from roughly 90% to 70%, adding to the Loonie's losses. 


    The Australian Dollar jumped to a three-month high after a surprisingly strong reading on retail sales boosted the outlook for consumer spending and economic growth. Retail sales surged 1.2% in November, three times the market forecast and the biggest gain since early 2013. The Oz Dollar ran into resistance just shy of the 79 cents level but is primed for a test of the pivotal 80 cents level with the USD on the back foot. 


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