• The dollar skidded to a three-year low against its peers on Thursday after caving on comments by U.S. Treasury secretary Steven Mnuchin that he welcomed a weaker currency, while the euro was firm ahead of the European Central Bank’s policy decision.
The dollar index against a basket of six major currencies stretched overnight losses to plumb 89.064, lowest since December 2014.
The single currency extended its overnight rally to $1.2425, up 0.15 percent and going as high as $1.2428, its strongest since December 2014.
The U.S. currency was 0.1 percent lower at 109.105 yen, after sinking 1 percent the previous day to a four-month trough of 108.965.
• U.S. Treasury Secretary Steven Mnuchin welcomed a weaker dollar on Wednesday, sending the greenback reeling and underlining concerns that U.S. President Donald Trump is stepping up his attack on China and other big trading partners as part of his America First agenda.
“Obviously a weaker dollar is good for us as it relates to trade and opportunities,” Mnuchin told a press briefing.
Commerce Secretary Wilbur Ross later told CNBC that his colleague was “not advocating for a weaker dollar”, but he also struck a combative tone.
Asked if he was concerned about sparking a trade war, Ross said: ”Trade war has been in place for quite a little while, the difference is the U.S. troops are now coming to the ramparts.”
On Tuesday, the United States slapped steep import tariffs on washing machines and solar panels, moves billed as a way to protect American jobs. China and South Korea condemned the tariffs, with Seoul set to complain to the World Trade Organization over the “excessive” move.
• The ECB rate decision is due Thursday and anticipation is set high for an event not expected to end with a change in rates
Minutes from the last meeting two weeks ago set speculation alight by suggesting a change in forward guidance was soon at hand
EUR/USD has cleared major technical milestones, but a hawkish ECB transition can solidify the move and stoke broader Euro gains
• Stable job creation, as well as surging business and consumer confidence, has caused many economists to upwardly revise their economic forecasts for several major European economies.
With the euro zone seeing its best economic growth in a decade, the ECB should gradually shift its stance to avoid a more disruptive move later, accounts of the central bank's December meeting showed when published on January 11.
The minutes prompted the euro to surge against the dollar, extending the single currency's rally throughout the opening days of the calendar year. The euro has gained more than 2 percent since the start of 2018 as a broadening recovery bolsters expectations the ECB may be forced to unwind its policy stimulus quicker than forecast.
Euro strength remains one the main challenges the central bank needs to contend with over the coming months, as a stronger currency tends to soften inflation by making exports more expensive and imports cheaper
• The current trade tension between Washington and Beijing should not be a cause for concern, the CEO of a China-focused private equity firm told CNBC.
Although there is no doubt that trade tensions remain between the world's top two economies, the countries will eventually figure out a way to compromise, cooperate and grow, Frank Tang, the co-founder, CEO and managing partner of FountainVest Partners, said at the World Economic Forum annual meeting in Davos, Switzerland.
• Brent oil prices hit $71 per barrel on Thursday for the first time since 2014 as the dollar continued to weaken and crude inventories in the United States fell for a 10th straight week, amid ongoing supply cutbacks by OPEC and top producer Russia.
Brent crude futures, the international benchmark for oil prices, hit a session high of $71.05 per barrel - the highest since early December 2014 -before dipping back to $70.86 by 0801 GMT. That was still up 32 cents, or 0.5 percent from the last close.
U.S. West Texas Intermediate (WTI) crude futures climbed to $66.35 per barrel, also the highest level since early December 2014, before dipping to $66.14. That was still up 0.8 percent from the last settlement.
Reference: Reuters, CNBC, DailyFX
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