European Central Bank minutes show optimism - EUR/USD breaks above 1.20

Pound to euro exchange rate

GETTY RATE The Euro rose almost a cent after the ECB said it could change its policy

In US data on Thursday, the December producer price index fell 0.1%, against an expected increase of 0.2%, while unemployment claims rose to 261,000 this week, marking the fourth consecutive weekly increase and a more-than-three-month high.

Crude oil prices are in a corrective mode today, with front-month WTI futures down 0.6% at $63.41, extending the retreat from yesterday's 37-month high at $64.75. The British pound strengthened against the greenback on Thursday as British pound was dragged higher by stronger euro after minutes of a European Central Bank meeting showed a more aggressive tone, boosting the euro against the USA dollar.

USA gold futures for February delivery settled up $3.20, or 0.2 percent, at $1,322.50 per ounce.

Wall Street futures pointed to a modest rise after NY had suffered its first down day of the year on Wednesday.

Reflecting on how Eurozone data will affect the exchange rate, John added: "The Eurozone's increasingly brisk growth rate, the European Central Bank is still deeply concern about inflation and the stubbornly low pace of wage rises".

The US dollar plunged during the European morning Wednesday, following a Bloomberg report that China is considering to slow or halt its purchases of US Treasuries.

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The Dow Jones Industrial Average rose 228.46 points, or 0.89 percent, to 25,803.19, the S&P 500 gained 18.68 points, or 0.67 percent, to 2,786.24, and the Nasdaq Composite added 49.29 points, or 0.68 percent, to 7,261.06. The declining appeal of United States bonds, relative to other assets, and the trade tensions between the two nations were cited as the main reasons for this consideration, according to the report.

The euro zone recovery is a few years behind the USA, of course.

HSBC shares rose 3.28% to £791.40.

French and Spanish Consumer Price Index (CPI) data from December is due for publication on Friday but Euro traders are more likely to wait for next week's German and Eurozone inflation stats before making any moves on the shared currency. But with the world economy set to enjoy its strongest year since 2011, factories struggling to keep up with demand, and inflation expectations steadily rising, central banks have the room to withdraw support and normalize rates. But one of its key weaknesses involves the particularities of the euro's design: unlike every other successful single currency, the ECB stands by itself at the European level, without the broader societal and political institutions needed to give currencies a solid and durable foundation. The RSI, which has also been moving sideways close to the 50 neutral-perceived level throughout this period, is supporting this view.

As with the Eurozone figures, expectations are for a decline in US inflation, so the US Dollar could close weekly trading down against the Euro. The failure to overcome the highs of past year at 1.2095, could be a catalyst for further declines towards 1.1600.

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