Euro remains generally soft is Asian session as post ECB weakness continues. The common currency is still in black against Yen, Sterling and Swiss Franc for the week. But it looks vulnerable and could end the week as the weakest one. Yesterday, ECB surprised the market by announcing tapering plan for its bond purchases program. The Governing Council decided to extend the program until December 2017. However, the pace would slow down to 60B euro per month from April 2017, compared with the current 80B euro. Despite disappointing in first sight, the ECB has indeed delivered more than the market had anticipated: 9 months*60B euro = 540B euro vs consensus of 6 months*80B euro = 480b euro. More in ECB Extends QE but Tapers Size.
On the other hand, Dollar is trying to regain some ground even though it's staying in red against commodity currencies for the week. According to a WSJ survey, economists are predicting the federal funds rate to average 1.26% by end of 2017. Back in November, economists expected an average of 1.17%. That would means they are expecting a faster pace of rate hike next year. Currently, fed fund futures are pricing more than 50% chance of another hike by June, after the expected December rate hike. Eyes will turn to next week's FOMC meeting for Fed's latest projections.
In other markets, DJIA extended the record run and gained 65.19 pts, or 0.33% to close at 19614.81 overnight. S&P 500 followed and rose 4.84 pts, or 0.22%, to close at 2246.19, another record. NASDAQ also finally closed at record high of 5417.36, up 23.06 pts, or 0.44%, trying to catch up with the other two indices. Both 10-year and 30-year yields closed higher but stays in recently established range. Gold lost 1170 handle but is staying in tight range. WTI crude oil is staying firm at around 50 as consolidation continues.
On the data front, Japan BSI large manufacturing rose to 7.5 in Q4. Japan M2 rose 4.0% yoy in November. Australia home loans dropped -0.8% in October. China CPI rose to 2.3% yoy in November and PPI also rose to 1.5%. Swiss unemployment, German trade balance, UK trade balance will be featured in European session. US will release U of Michigan consumer sentiment.