Daily Afternoon Report 22.01.2016

The dollar pushed higher against the other major currencies on Friday, as expectations for additional stimulus measures in the euro zone and Japan supported the greenback and as investors eyed upcoming U.S. housing sector data due later in the day.

EUR/USD dropped 0.66% to 1.0802.

The euro remained under pressure after European Central Bank President Mario Draghi said on Thursday that it would be necessary to “review and reconsider” the bank’s monetary policy stance at its next meeting in March, when new economic projections become available.

Adding to those comments on Friday morning, Draghi said the bank has “plenty of instruments” to reach price stability in the euro area.

Earlier Friday, research group Markit said the euro zone composite purchasing managers’ index, which includes manufacturing and service sector activity, ticked down to 53.5 in January from 54.3 in December.

USD/JPY climbed 0.45% to 118.24.

Sentiment on the yen was vulnerable after Bank of Japan Governor Haruhiko Kuroda said on Thursday that he is not thinking of adopting a negative interest rate policy now, signalling that any further monetary easing will likely take the form of an expansion of its current asset-buying program.

Elsewhere, the dollar was lower against the pound, with GBP/USD up 0.72% at 1.4322, off Thursday’s seven-year lows of 1.4078, and was higher against the Swiss franc, with USD/CHF advancing 0.73% to 1.0147.

The U.K. Office for National Statistics reported on Friday that retail sales declined by 1.0% in December, confounding expectations for a 0.3% slip. Year-on-year, retail sales rose 2.6%.

Core retail sales, which exclude auto sales and fuel, fell 0.9% in December, compared to expectations for a 0.3% downtick.

A separate report showed that U.K. public sector net borrowing rose by £6.87 billion in December, less than the expected increase of £10.35 billion.

Meanwhile, the Canadian dollar remained under pressure after oil prices fell below 28$ once again Thursday, but they regained some strength on Friday morning. USD/CAD was down 0.70% at a one-and-a-half week low of 1.4167, pulling away from Wednesday’s 13-year peak of 1.4692.

In Canada, data showed that retail sales rose 1.7% in November, beating expectations for an uptick of 0.2%. Core retail sales, which exclude automobiles, were up 1.1% in November, compared to expectations for a 0.4% gain.

A separate report showed that Canada’s consumer price index slipped 0.5% in December, compared to expectations for a 0.4% downtick. Year-on-year, consumer prices increased by 1.6%.

Core CPI, which excludes the eight most volatile items, fell 0.4% last month, confounding expectations for a 0.3% slip.

The Australian dollar was higher, with AUD/USD up 0.26% at 0.7018, while NZD/USD slid 0.48% to trade at 0.6498.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.37% at 99.51, re-approaching Thursday’s one-and-a-half month highs of 99.89.