The U.S. dollar traded mixed to lower against the most major currencies after the weaker-than-expected U.S. retail sales. The U.S. retail sales unexpectedly dropped 0.9% in December, missing expectations for a 0.2% increase, after a 0.4% gain in November. November's figure was revised down from a 0.7% rise.

Retail sales excluding automobiles fell 1.0% in December, missing forecasts for a 0.1% gain, after a 0.1% gain in November. November's figure was revised down from a 0.5% increase.

The decline was driven by gasoline station sales.

The U.S. business inventories rose by 0.2% in November, in line with expectations, after a 0.2% gain in October.

The euro traded higher against the U.S. dollar, recovering its losses after the ruling of European Court of Justice (ECJ) on Wednesday. The ECJ said that Outright Monetary Transactions (OMT) bond-buying programme was legitimate and in line with monetary policy. The opinion was non-binding. A final decision is expected in the next six months.

The OMT programme was has been announced in September 2012. The programme allows the ECB to purchase government bonds of Eurozone members if they request help. The OMT programme has never been used.

The opinion by the ECJ probably paved the way for the launch of bond-buying programme by the European Central Bank.

The European Central Bank President Mario Draghi in an interview to the German newspaper Die Zeit released on January 14, 2015 that "all members of the Governing Council of the ECB are determined to fulfil our mandate". He added that the ECB's options were limited.

Industrial production in the Eurozone rose 0.2% in November, exceeding expectations for a flat reading, after a 0.3% rise in October. October's figure was revised up from a 0.1 increase.

On a yearly basis, Eurozone's industrial production fell 0.4% in November, beating expectations for a 0.9% drop, after a 0.8% gain in October. October's figure was revised up from a 0.7 increase.

The British pound traded higher against the U.S. dollar in the absence of any major economic reports from the U.K.

The New Zealand dollar traded higher against the U.S. dollar in the absence of any major economic reports from New Zealand. In the overnight trading session, the kiwi traded mixed against the greenback. Falling oil prices weigh on the kiwi.

The Australian dollar traded higher against the U.S. dollar. In the overnight trading session, the Aussie traded lower against the greenback in the absence of any major economic reports from Australia. Falling oil prices weigh on the Aussie.

The Japanese yen traded mixed against the U.S. dollar. In the overnight trading session, the yen traded higher against the greenback due to risk aversion.

Japan's preliminary machine tool orders fell to 33.8% in December from 36.6% in November.

The Philadelphia Fed President Charles Plosser said on Wednesday that the Fed should hike its interest rate sooner rather than later as the U.S. economy has improved considerably.

Plosser believes that inflation will increase toward the Fed's 2% target as oil prices begin to recover.

He also said that the Fed has never been able to control longer-term rates.

Italian President Giorgio Napolitano resigned on Wednesday. This decision added to concerns over political stability in Italy.

Italy's Prime Minister Matteo Renzi has a difficult task of finding a successor.

The president's role in Italy is mainly ceremonial, but he can choose a prime minister and dissolve parliament.

The U.S. Commerce Department released the business inventories data on Wednesday. The U.S. business inventories rose by 0.2% in November, in line with expectations, after a 0.2% gain in October.

Business sales declined 0.2% in November.

Retail inventories excluding autos climbed 0.1% in November.

The business inventories/sales ratio was 1.31 months in November. The business inventories /sales ratio is a measure of how long it would take to clear shelves.

The U.S. Commerce Department released the retail sales data on Wednesday. The U.S. retail sales unexpectedly dropped 0.9% in December, missing expectations for a 0.2% increase, after a 0.4% gain in November. November's figure was revised down from a 0.7% rise.

Retail sales excluding automobiles fell 1.0% in December, missing forecasts for a 0.1% gain, after a 0.1% gain in November. November's figure was revised down from a 0.5% increase.

The decline was driven by gasoline station sales. Gasoline station sales plunged 6.5% in December.

Sales at clothing retailers decreased 0.3%, while sales at electronics and appliance stores fell 1.6% in December.

For all of 2014, retail sales increased at an annual rate of 4%.

EUR/USD: $1.1750(E296mn), $1.1755(E205mn), $1.1835-40(E560mn)

USD/JPY: Y118.15($480mn), Y118.75($650mn)

AUD/USD: $0.8250(A$413mn)

NZD/USD: $0.7750($242mn), $0.7765(NZ$422mn)

USD/CAD: C$1.1900($215mn)

Eurostat released industrial output data for the Eurozone on Wednesday. Industrial production in the Eurozone rose 0.2% in November, exceeding expectations for a flat reading, after a 0.3% rise in October. October's figure was revised up from a 0.1 increase.

The increase was driven by higher production of durable consumer goods. The production of durable consumer goods rose 1.9%, non-durable consumer goods gained 0.5% and intermediate goods increased 0.3% in November, while capital goods declined by 0.2% and energy by 0.9%.

That could be signs falling oil prices may lead to higher household demand for other goods and services.

On a yearly basis, Eurozone's industrial production fell 0.4% in November, beating expectations for a 0.9% drop, after a 0.8% gain in October. October's figure was revised up from a 0.7 increase.

The decline was driven by falling oil prices. The production of energy dropped 4.8%, capital goods declined 0.9% and intermediate goods fell 0.6% in November, while durable consumer goods increased 0.4% and non-durable consumer goods rose by 3.2%.

EUR/USD

Offers $1.1850-60, $1.1820/25

Bids $1.1700, $1.1600

GBP/USD

Offers $1.5400/05, $1.5250

Bids $1.5145/40, $1.5105/00

AUD/USD

Offers $0.8250, $0.8200, $0.8150

Bids $0.8100, $0.8060/50, $0.8020, $0.8000, $0.7950

EUR/JPY

Offers Y139.50, Y139.00, Y138.50

Bids Y137.00, Y136.50, Y136.20, Y136.00

USD/JPY

Offers Y118.00, Y117.50

Bids Y116.50, Y116.00, Y115.50

EUR/GBP

Offers stg0.7900, stg0.7880/85, stg0.7850/55

Bids stg0.7720, stg0.7700, stg0.7680

Economic calendar (GMT0):

(Time/ Region/ Event/ Period/ Previous/ Forecast/ Actual)

06:00 Japan Prelim Machine Tool Orders, y/y December +36.6% +33.8%

07:45 France CPI, m/m December -0.2% 0.0% +0.1%

07:45 France CPI, y/y December +0.3% -0.1% +0.1%

09:30 Eurozone European Court of Justice Ruling for OMT

10:00 Eurozone Industrial production, (MoM) November +0.3% Revised From +0.1% 0.0% +0.2%

10:00 Eurozone Industrial Production (YoY) November +0.8% Revised From +0.7% -0.9% -0.4%

The U.S. dollar traded mixed against the most major currencies ahead of the U.S. economic data. The U.S. retail sales are expected to rise 0.2% in December, after a 0.7% increase in November.

Retail sales excluding automobiles are expected to climbs 0.1% in December, after a 0.5% rise in November.

The U.S. business inventories are expected to rise 0.2% in November, after a 0.2% gain in October.

The greenback remained supported by falling oil prices.

The euro declined against the U.S. dollar after the ruling of European Court of Justice (ECJ) on Wednesday. The ECJ said that Outright Monetary Transactions (OMT) bond-buying programme was legitimate and in line with monetary policy. The opinion was non-binding. A final decision is expected in the next six months.

The OMT programme was has been announced in September 2012. The programme allows the ECB to purchase government bonds of Eurozone members if they request help. The OMT programme has never been used.

The opinion by the ECJ probably paved the way for the launch of bond-buying programme by the European Central Bank.

The European Central Bank President Mario Draghi in an interview to the German newspaper Die Zeit released on January 14, 2015 that "all members of the Governing Council of the ECB are determined to fulfil our mandate". He added that the ECB's options were limited.

Industrial production in the Eurozone rose 0.2% in November, exceeding expectations for a flat reading, after a 0.3% rise in October. October's figure was revised up from a 0.1 increase.

On a yearly basis, Eurozone's industrial production fell 0.4% in November, beating expectations for a 0.9% drop, after a 0.8% gain in October. October's figure was revised up from a 0.7 increase.

The British pound traded higher against the U.S. dollar in the absence of any major economic reports from the U.K.

EUR/USD: the currency pair fell to $1.1726

GBP/USD: the currency pair traded mixed

USD/JPY: the currency pair declined to Y116.53

The most important news that are expected (GMT0):

13:30 U.S. Retail sales December +0.7% +0.2%

13:30 U.S. Retail sales excluding auto December +0.5% +0.1%

13:30 U.S. Import Price Index December -1.5% -2.7%

15:00 U.S. Business inventories November +0.2% +0.2%

19:00 U.S. Fed's Beige Book

The World Bank cut its global economic growth forecast for 2015 and 2016 on Tuesday. This decision was driven by disappointing economic outlook in the Eurozone, Japan and some major emerging economies.

The World Bank expects that the global economy would grow 3% in 2015, down from its June forecast of 3.4%. The global growth will reach 3.3% in 2016, down from a June forecast of 3.5%. The global economy is expected to grow 3.2% in 2017.

China's economy is expected to expand 7.1% in 2015 (7.4% in 2014), 7% in 2016 and 6.9% in 2017.

Growth in the U.S. is expected to accelerate to 3.2% in 2015, 3.0% and 2.4% in 2016 and 2017, respectively. In the Eurozone, the economy is expected to grow 1.1% in 2015, 1.6% in 2016-17. In Japan, growth will increase to 1.2% in 2015 and 1.6% in 2016.

EUR/USD: $1.1750(E296mn), $1.1755(E205mn), $1.1835-40(E560mn)

USD/JPY: Y118.15($480mn), Y118.75($650mn)

AUD/USD: $0.8250(A$413mn)

NZD/USD: $0.7750($242mn), $0.7765(NZ$422mn)

USD/CAD: C$1.1900($215mn)

According Advocate General Pedro Cruz Villalon of the EU Court of justice in Luxembourg the ECB's Outright Monetary Transactions program is "in principle" in line with European law backing Mario Draghi who said that the ECB is determined to fulfill its mandate and is ready to buy government bonds to revive Eurozone's inflation. The news led to a sell off of the euro versus the greenback, trading at nine-year lows.

REUTERS

Draghi says ECB needs expansive monetary policy: paper

(Reuters) - European Central Bank President Mario Draghi said a loose monetary policy is needed to achieve price stability in the euro zone and the Governing Council is determined to deliver this.

With euro zone consumer prices turning negative in December for the first time in five years, there are growing doubts among policymakers whether the ECB's stimulus implemented so far will enough to prevent the euro zone from slipping into deflation.

To achieve the ECB's medium-term inflation target of below but close to 2 percent, the ECB must "keep interest rates low and work towards an expansive monetary policy that accompanies growth," Draghi told Die Zeit in an in advanced release of an interview to be published on Thursday.

Source: http://www.reuters.com/article/2015/01/14/us-ecb-policy-draghi-idUSKBN0KN0N720150114

BLOOMBERG

Norway to Tackle Oil Slump Via Krone Buffer, Government Says

Norway is embracing a slump in the krone that Finance MinisterSiv Jensen says will act as a buffer to protect western Europe's biggest oil exporter from plunging crude prices.

A weaker currency, together with monetary policy measures, will be a first line of defense around the economy before the government considers additional measures, Jensen said yesterday in an interview following a speech in Oslo.

A weaker krone "is one of the cushions that we have," she said. Once the full effect of the exchange rate has been felt, then "we are willing, and able, to put other measures forward," she said.

Source: http://www.bloomberg.com/news/2015-01-14/norway-to-tackle-oil-slump-via-krone-buffer-government-says-1-.html

BLOOMBERG

Canadian Dollar Falls to C$1.20 First Time Since 2009 on Crude

Canada's dollar weakened past C$1.20 per greenback for the first time since April 2009 on concern a continued slump in crude oil, the nation's biggest export, will damp economic growth.

Less than two weeks into the year, the currency has already lost more than 3 percent against its U.S. counterpart as speculation a global oversupply of crude that's already cut the commodity's price by more than half since June will drive it down further. Bank of Canada Governor Stephen Poloz, who will release new economic forecasts next week, said in December the slide in oil will cut about a third of a percentage point from growth this year.

Source: http://www.bloomberg.com/news/2015-01-14/canadian-dollar-falls-to-c-1-20-first-time-since-2009-on-crude.html

(Time/ Region/ Event/ Period/ Previous/ Forecast/ Actual

06:00 Japan Prelim Machine Tool Orders, y/y December +36.6% +33.8%

The U.S. dollar traded mixed against its major peers and declined versus the euro, after trading close to a nine-year high yesterday as investors are speculating on new stimulus measures, sovereign quantitative easing, by the ECB to help the lagging euro-zone economy. The upcoming Greek elections and falling oil prices also weigh on the single-currency. The Deutsche Bank revised its forecast for the euro down to USD1.10, UDS1 and 90 cents in the next three years.

The Australian dollar was hit by a plunge of copper prices. Copper futures declined by 6.2%. The aussie dropped the most since January 2^nd amid the weakening demand for the countries commodities.

New Zealand's dollar traded lower further retreating from monthly highs against the greenback reached on January 9^th. Today market participants await data on New Zealand's Food Price Index.

The Japanese yen booked gains against the U.S. dollar amid growing risk aversion for a fourth consecutive day as Japanese stocks declined, oil continued to slump and commodities weakened. Preliminary Machine Tool Orders declined to +33.8% in December from a previous reading of +36.6% in November. Japan's finance Minister Taro Aso called for a drastic fiscal reform to balance budget by 2021. Markets await data on Core Machinery Orders due late in the day at 23:50 GMT.

EUR/USD: the euro traded stronger against the greenback

(time / country / index / period / previous value / forecast)

07:45 France CPI, m/m December -0.2% 0.0%

07:45 France CPI, m/m December +0.3% -0.1%

10:00 Eurozone Industrial production, (MoM) November +0.1% 0.0%

10:00 Eurozone Industrial Production (YoY) November +0.7% -0.9%

10:00 Eurozone European Court of Justice Ruling for ESM and Fiscal Compact

13:30 U.S. Retail sales December +0.7% +0.2%

13:30 U.S. Retail sales excluding auto December +0.5% +0.1%

13:30 U.S. Import Price Index December -1.5% -2.7%

15:00 U.S. Business inventories November +0.2% +0.2%

15:30 U.S. Crude Oil Inventories January -3.1

19:00 U.S. Fed's Beige Book

21:45 New Zealand Food Prices Index, m/m December -0.5%

21:45 New Zealand Food Prices Index, y/y December +0.6%

23:50 Japan Core Machinery Orders November -6.4% +4.8%

23:50 Japan Core Machinery Orders, y/y November -4.9% -5.8%

EUR / USD

Resistance levels (open interest**, contracts)

$1.1993 (1807)

$1.1940 (997)

$1.1888 (264)

Price at time of writing this review: $ 1.1791

Support levels (open interest**, contracts):

$1.1728 (2326)

$1.1699 (2097)

$1.1658 (3702)

Comments:

- Overall open interest on the CALL options with the expiration date February, 6 is 49046 contracts, with the maximum number of contracts with strike price $1,2100 (4700);

- Overall open interest on the PUT options with the expiration date February, 6 is 55710 contracts, with the maximum number of contracts with strike price $1,1700 (6748);

- The ratio of PUT/CALL was 1.14 versus 1.13 from the previous trading day according to data from January, 13

GBP/USD

Resistance levels (open interest**, contracts)

$1.5403 (366)

$1.5306 (379)

$1.5209 (1016)

Price at time of writing this review: $1.5160

Support levels (open interest**, contracts):

$1.5090 (1579)

$1.4993 (1168)

$1.4895 (1495)

Comments:

- Overall open interest on the CALL options with the expiration date February, 6 is 15023 contracts, with the maximum number of contracts with strike price $1,5800 (1108);

- Overall open interest on the PUT options with the expiration date February, 6 is 16791 contracts, with the maximum number of contracts with strike price $1,5100 (1579);

- The ratio of PUT/CALL was 1.12 versus 1.12 from the previous trading day according to data from January, 13

* - The Chicago Mercantile Exchange bulletin (CME) is used for the calculation.

** - Open interest takes into account the total number of option contracts that are open at the moment.

(pare/closed(GMT +2)/change, %)

EUR/USD $1,1772 -0,52%

GBP/USD $1,5159 -0,08%

USD/CHF Chf1,0199 +0,52%

USD/JPY Y117,92 -0,36%

EUR/JPY Y138,84 -0,86%

GBP/JPY Y178,84 -0,39%

AUD/USD $0,8164 +0,11%

NZD/USD $0,7736 -0,58%

USD/CAD C$1,1956 -0,13%