The Bank of Canada Governor Stephen Poloz said today that falling oil prices are negative for the Canadian economy.

He added that falling oil prices reduce Canada's income, "and investment and employment in the energy sector are already being cut".

The Bank of Japan (BoJ) released its interest rate decision on Wednesday. The BoJ kept its monetary policy unchanged. The central bank will expand its monetary base at an annual pace of 80 trillion yen.

The BoJ cut its inflation forecast for the year to March 2016 to 1.0%, down from a previous estimate of 1.7%. Growth forecast for 2016 was raised from 2.1% to 2.2%.

The BoJ Governor Haruhiko Kuroda said at the press conference that consumer inflation will slow due to lower oil prices. He noted that the time when the BoJ will reach 2% inflation may vary as oil prices are very volatile.

Kuroda also said that consumption is firm and the economy is recovering moderately.

He reiterated that the central bank will adjust its monetary policy without hesitation if needed.

The U.S. dollar traded mixed to higher against the most major currencies despite the mixed housing market data from the U.S. Housing starts in the U.S. rose 4.4% to 1.089 million annualized rate in December from a 1.043 million pace in November, beating expectations for a decrease to 1.040 million. November's figure was revised up from 1.028 million units.

Building permits in the U.S. decreased 1.9% to 1.032 million annualized rate in December from a 1.05 million pace in November, missing expectations for a rise to 1.054 million units. Permits figures have been above a 1 million-unit pace since July 2014.

The euro traded mixed against the U.S. dollar in the absence of any major economic reports from the Eurozone. Investors are awaiting the European Central Bank's monetary policy meeting tomorrow.

European Central Bank (ECB) officials said on Wednesday that the ECB Executive Board has proposed to purchase 50 billion euros in assets a month through the end of 2016.

The British pound traded mixed against the U.S. dollar. In the morning trading session, the pound declined against the greenback as Bank of England's (BoE) last meeting minutes weighed on the pound.

The U.K. unemployment rate declined to 5.8% in the September to November quarter from 6.0% in the previous three months to August, beating expectations for a decline to 5.9%.

The claimant count decreased by 29,700 people in December, exceeding expectations for a drop of 24,200 people, after a decrease of 29,600 people in November. November's figure was revised from a decline of 26,900.

Average weekly earnings, excluding bonuses, climbed by 1.8% in the September to November period, missing expectations for a 1.9% increase, up from a 1.6% rise in the previous three months.

Average weekly earnings, including bonuses, rose by 1.7% in the September to November period, in line with expectations, after a 1.4% increase in the previous three months.

The Bank of England released its last meeting minutes. All members voted to keep the central bank's monetary policy unchanged. During the five previous months, two members, Ian McCafferty and Martin Weale, voted to raise interest rates to 0.75% from 0.5%.

The Canadian dollar dropped against the U.S. dollar as the Bank of Canada cut its interest rate. The BoC lowered its interest rate to 0.75% from 1.0% today. The BoC's interest rate had been at 1.0% since September 2010.

The central bank said that it responded to falling oil prices which will be negative for growth and inflation.

The BoC also cut it growth forecasts. Canada's economy is expected to grow by 1.5% in the first half of 2015, down from its previous estimate of 2.4%. The growth for 2015 was lowered to 2.1% from 2.4%.

Inflation is expected to be below the BoC' target range of 1 to 3% for most of 2015.

The New Zealand dollar declined against the U.S. dollar. In the overnight trading session, the kiwi traded lower against the greenback after the weaker-than-expected consumer inflation data from New Zealand. New Zealand's consumer price inflation fell 0.2% in the fourth quarter, missing expectations for a flat reading, after a 0.3% gain in the third quarter.

On a yearly basis, the consumer price index in New Zealand rose 0.8% in the fourth quarter, missing forecasts of a 0.9% gain, after a 1.0% increase in the third quarter.

That could mean that the Reserve Bank of New Zealand will leave its interest rate on hold for a longer period.

The Australian dollar declined against the U.S. dollar. In the overnight trading session, the Aussie rose against the greenback after the solid consumer sentiment index from Australia. The Westpac Banking Corporation's consumer sentiment index for Australia increased 2.4% in January, after a 5.7% drop in December.

The Japanese yen traded slightly lower against the U.S. dollar. In the overnight trading session, the yen traded climbed against the greenback after the Bank of Japan (BoJ) kept its monetary policy unchanged. The BoJ cut its inflation forecast to 1.0%, down from a previous estimate of 1.7%. Growth forecast for 2016 was raised from 2.1% to 2.2%.

The BoJ Governor Haruhiko Kuroda said at the press conference that consumer inflation will slow due to lower oil prices. He noted that the time when the BoJ will reach 2% inflation may vary as oil prices are very volatile. Kuroda also said that consumption is firm and the economy is recovering moderately.

The Bank of Canada (BoC) released its interest decision on Wednesday. The BoC lowered its interest rate to 0.75% from 1.0%. That was the first interest rate reduction since April 2009.

The BoC's interest rate had been at 1.0% since September 2010.

The central bank said that it responded to falling oil prices which will be negative for growth and inflation. Crude oil prices dropped more than 55% since last June.

"The oil price shock increases both downside risks to the inflation profile and financial stability risks", the central bank noted.

The BoC also cut it growth forecasts. Canada's economy is expected to grow by 1.5% in the first half of 2015, down from its previous estimate of 2.4%. The growth for 2015 was lowered to 2.1% from 2.4%.

The central bank expects to reach full capacity to the end of 2016.

Inflation is expected to be below the BoC' target range of 1 to 3% for most of 2015.

The U.S. Commerce Department released the housing market data on Wednesday. Housing starts in the U.S. rose 4.4% to 1.089 million annualized rate in December from a 1.043 million pace in November, beating expectations for a decrease to 1.040 million. November's figure was revised up from 1.028 million units.

Building permits in the U.S. decreased 1.9% to 1.032 million annualized rate in December from a 1.05 million pace in November, missing expectations for a rise to 1.054 million units. Permits figures have been above a 1 million-unit pace since July 2014.

Starts of single-family homes jumped 7.2% to 728,000 units in December, the highest level since March 2008. Building permits for single-family homes rose 4.5% in December, the highest level since January 2008.

Starts of multifamily buildings declined 0.8% in December. Permits for multi-family housing dropped 11%.8.

European Central Bank (ECB) officials said on Wednesday that the ECB Executive Board has proposed to purchase 50 billion euros in assets a month through the end of 2016.

The ECB' interest rate decision will be released tomorrow. Investors expect that the central bank will announce its bond-buying programme.

Statistics Canada released wholesale sales figures on Wednesday. Wholesale sales declined 0.3% in November, missing expectations for a 0.2% gain, after a 0.1% rise in October. That was the first decrease in 2014.

The decline was driven by lower sales of machinery and equipment. Sales of machinery and equipment dropped 2.8% in November.

EUR/USD: $1.1500(E847mn), $1.1600(E1.4bn), $1.1650(E849mn), $1.1700(E2bn)

USD/JPY: Y118.00($1.12bn)

EUR/JPY: Y143.35(E2.2bn)

GBP/USD: $1.5000(stg266mn)

EUR/GBP: Stg0.7700(E338mn)

USD/CHF: Chf0.9150($500mn)

AUD/USD: $0.8000(A$750mn), $0.8210(A$817mn)

NZD/USD: $0.7600(NZ$319mn), $0.7850(NZ$301mn)

USD/CAD: C$1.2000($540mn)

Economic calendar (GMT0):

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

03:00 Japan BoJ Interest Rate Decision 0.10% 0.10% 0.10%

03:00 Japan Bank of Japan Monetary Base Target 275 275

03:00 Japan BoJ Monetary Policy Statement

04:30 Japan All Industry Activity Index, m/m November -0.1% +0.1% +0.1%

06:30 Japan BOJ Press Conference

09:00 Switzerland World Economic Forum Annual Meetings

09:30 United Kingdom Average Earnings, 3m/y November +1.4% +1.7% +1.7%

09:30 United Kingdom Average earnings ex bonuses, 3 m/y November +1.6% +1.9% +1.8%

09:30 United Kingdom Claimant count December -29.6 -24.2 -29.7

09:30 United Kingdom Claimant Count Rate December 2.7% 2.6%

09:30 United Kingdom ILO Unemployment Rate November 6.0% 5.9% 5.8%

09:30 United Kingdom Bank of England Minutes

10:00 Switzerland Credit Suisse ZEW Survey (Expectations) January -4.9 -10.8

The U.S. dollar traded mixed against the most major currencies ahead of the housing market data from the U.S. Housing starts in the U.S. are expected to rise to 1.040 million units in December from 1.028 million units in November.

The number of building permits is expected to increase to 1.054 million units in December from1.050 million in November.

The euro traded slightly higher against the U.S. dollar in the absence of any major economic reports from the Eurozone. Investors are awaiting the European Central Bank's monetary policy meeting tomorrow.

The British pound fell against the U.S. dollar despite the better-than-expected labour market data from the U.K. The U.K. unemployment rate declined to 5.8% in the September to November quarter from 6.0% in the previous three months to August, beating expectations for a decline to 5.9%.

The claimant count decreased by 29,700 people in December, exceeding expectations for a drop of 24,200 people, after a decrease of 29,600 people in November. November's figure was revised from a decline of 26,900.

Average weekly earnings, excluding bonuses, climbed by 1.8% in the September to November period, missing expectations for a 1.9% increase, up from a 1.6% rise in the previous three months.

Average weekly earnings, including bonuses, rose by 1.7% in the September to November period, in line with expectations, after a 1.4% increase in the previous three months.

The Bank of England (BoE) released its last meeting minutes. All members voted to keep the central bank's monetary policy unchanged. During the five previous months, two members, Ian McCafferty and Martin Weale, voted to raise interest rates to 0.75% from 0.5%.

The Canadian dollar traded mixed against the U.S. dollar ahead of the Bank of Canada's interest rate decision. Analysts expect interest rate to remain unchanged at 1.0%.

Wholesale sales in Canada are expected to climb 0.2% in November, after a 0.1% rise in October.

EUR/USD: the currency pair rose to $1.1592

GBP/USD: the currency pair decreased to $1.5075

USD/JPY: the currency pair fell to $117.29

The most important news that are expected (GMT0):

13:30 Canada Wholesale Sales, m/m November +0.1% +0.2%

13:30 U.S. Building Permits, mln December 1.050 Revised From 1.035 1.054

13:30 U.S. Housing Starts, mln December 1.028 1.040

15:00 Canada BOC Rate Statement

15:00 Canada Bank of Canada Rate 1.00% 1.00%

15:00 Canada Bank of Canada Monetary Policy Report

16:15 Canada BOC Press Conference

21:30 New Zealand Business NZ PMI December 55.2

EUR/USD

Offers $1.1710, $1.1700, $1.1675, $1.1650

Bids $1.1500/490, $1.1450, $1.1400

GBP/USD

Offers $1.5320, $1.5265, $1.5230/35, $1.5200/10

Bids $1.5055, $1.5030, $1.5000

AUD/USD

Offers $0.8390/00, $0.8350, $0.8300, $0.8250

Bids $0.8155/50, $0.8110/00, $0.8065

EUR/JPY

Offers Y139.00, Y137.90/00, Y137.65

Bids Y135.50, Y135.00, Y134.50

USD/JPY

Offers Y119.95, Y119.00, Y118.85

Bids Y116.90, Y116.50, Y116.20/00, Y115.85

EUR/GBP

Offers stg0.7800, stg0.7745, stg0.7700

Bids stg0.7600, stg0.7500

A survey by the ZEW Institute and Credit Suisse Group showed today that Switzerland's economic sentiment index declined to -10.8 points in January from -4.9 points in December.

A negative reading indicates more respondents expect the economic outlook to worsen than those who expect it to improve.

The decline was driven by the Swiss National Bank's decision to discontinue the 1.20 per euro exchange rate floor.

EUR/USD: $1.1500(E847mn), $1.1600(E1.4bn), $1.1650(E849mn), $1.1700(E2bn)

USD/JPY: Y118.00($1.12bn)

EUR/JPY: Y143.35(E2.2bn)

GBP/USD: $1.5000(stg266mn)

EUR/GBP: Stg0.7700(E338mn)

USD/CHF: Chf0.9150($500mn)

AUD/USD: $0.8000(A$750mn), $0.8210(A$817mn)

NZD/USD: $0.7600(NZ$319mn), $0.7850(NZ$301mn)

USD/CAD: C$1.2000($540mn)

The minutes of Bank of England's latest policy meeting showed that the comitee voted unanimously to keep rates on hold and it's QE program unchanged. All 9 members voted for the interest rate to be kept at 0.5%.

Average earnings for November were in line with expectations with a reading of +1.7%. Ex bonuses data showed average earnings rose less than expected by +1.8%, not meeting forecasts of +1.9%.

U.K.'s employment rate dropped to a six year low to 5.8% in November, beating forecasts of 5.9%. The Claimant Count declined by -29,700 compared to expectations of a fall of -24,200.

BLOOMBERG

Is Dollar Next? Investors Reassess After Swiss Shock: Currencies

After Switzerland shocked markets by scrapping its currency cap, investors are beginning to ask whether a policy surprise may be lurking for the dollar, too.

Samson Capital Advisors LLC said the Swiss move, which sent the franc surging as much as 41 percent against the euro last week, was "a good reminder" of the risks of following the herd, just as speculators pushed bets on a dollar rally to a new high. A shock from the Federal Reserve, such as raising interest rates less quickly than investors expect, may derail the greenback after it advanced to the highest in a decade, State Street Global Advisors Inc. warned.

Source: http://www.bloomberg.com/news/2015-01-21/is-dollar-next-investors-reassess-after-swiss-shock-currencies.html

REUTERS

Brent crude oil rises above $48.50, but outlook remains weak

(Reuters) - Oil prices edged up on Wednesday in a further sign of support around current levels, but analysts said the outlook for the next six months remained bleak due to oversupply.

Oil fell as much as 5 percent on Tuesday after the International Monetary Fund cut its 2015 global economic forecast and key producer Iran hinted prices could drop to $25 a barrel without supportive OPEC action.

Prices stabilised on Wednesday, with traders pointing to buying this week whenever benchmark Brent crude LCOc1 dropped towards $48 a barrel.

Source: http://www.reuters.com/article/2015/01/21/us-markets-oil-idUSKBN0KU03F20150121

BLOOMBERG

Draghi Bond Buying More Welcome in East Europe Than Switzerland

Unlike in Switzerland, eastern Europe has reasons to cheer Mario Draghi's bond-buying push.

Policy makers from Poland to Hungary (HUCPIYY) met at a conference in Vienna on Tuesday, two days before the European Central Bank is due to discuss monetary stimulus that may trigger inflows into currencies such as the Swiss franc. For eastern Europe, the move may help keep deflation at bay and economic growth ticking over, trumping the risk of asset bubbles, bankers and analysts said.

ECB bond buying would "clearly be a positive," said Piroska Nagy, an economist at the London-based European Bank for Reconstruction and Development, which has invested to rebuild the region since communism fell. "Monetary easing can have a positive impact on the economies that are linked to the zone conducting this policy."

Source: http://www.bloomberg.com/news/2015-01-19/draghi-bond-buying-more-welcome-in-east-europe-than-switzerland.html

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

03:00 Japan BoJ Interest Rate Decision 0.10% 0.10% 0.10%

03:00 Japan Bank of Japan Monetary Base Target 275 275

03:00 Japan BoJ Monetary Policy Statement

04:30 Japan All Industry Activity Index, m/m November -0.1% +0.1% +0.1%

06:30 Japan BOJ Press Conference

The U.S. dollar traded lower against its major peers during the Asian session. Market participants are looking forward to data on Building permits and Housing Starts.

The Australian dollar traded stronger against the greenback as Asian stocks climbed and China reported better-than-expected economic data - fuelling demand for higher yielding assets. Australia's Westpac Consumer Confidence rose from -5.7% in the previous period to +2.4%.

New Zealand's dollar rebounded against the greenback after declining earlier as Consumer Prices for the fourth quarter went in to negative territory for the first time in 2 years with a reading of -0.2% compared to forecasts of 0.0% and a previous reading of +0.3%. Market participants expect the Reserve Bank to leave benchmark interest rates on hold for a longer period.

The Japanese yen traded higher against the greenback after the Bank of Japan held off on further expanding its massive stimulus program and kept the monetary base target unchanged. The BoJ cut its inflation forecast to 1.0% from 1.7% projected 3 months ago. Growth forecast for 2016 was raised from 2.1% to 2.2%. The All Industry Activity Index was in line with forecasts at +0.1%. At the press conference BOJ Governor Haruhiko Kuroda said consumer inflation will slow due to lower oil prices. The time when the BoJ will reach 2% inflation may vary as oil prices are very volatile. Consumption is firm and the economy is recovering moderately.

EUR/USD: the euro traded lower against the greenback

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

09:00 Switzerland World Economic Forum Annual Meetings

09:30 United Kingdom Average Earnings, 3m/y November +1.4% +1.7%

09:30 United Kingdom Average earnings ex bonuses, 3 m/y November +1.6% +1.9%

09:30 United Kingdom Claimant count December -26.9 -24.2

09:30 United Kingdom Claimant Count Rate December 2.7%

09:30 United Kingdom ILO Unemployment Rate November 6.0% 5.9%

09:30 United Kingdom Bank of England Minutes

10:00 Switzerland Credit Suisse ZEW Survey (Expectations) January -4.9

13:30 Canada Wholesale Sales, m/m November +0.1% +0.2%

13:30 U.S. Building Permits, mln December 1.050 Revised From 1.035 1.054

13:30 U.S. Housing Starts, mln December 1.028 1.040

15:00 Canada BOC Rate Statement

15:00 Canada Bank of Canada Rate 1.00% 1.00%

15:00 Canada Bank of Canada Monetary Policy Report

16:15 Canada BOC Press Conference

21:30 New Zealand Business NZ PMI December 55.2

21:30 U.S. API Crude Oil Inventories January +3.9

EUR / USD

Resistance levels (open interest**, contracts)

$1.1852 (2805)

$1.1751 (926)

$1.1697 (347)

Price at time of writing this review: $1.1583

Support levels (open interest**, contracts):

$1.1488 (1837)

$1.1453 (2305)

$1.1407 (3504)

Comments:

- Overall open interest on the CALL options with the expiration date February, 6 is 59872 contracts, with the maximum number of contracts with strike price $1,2100 (6677);

- Overall open interest on the PUT options with the expiration date February, 6 is 68365 contracts, with the maximum number of contracts with strike price $1,1700 (6777);

- The ratio of PUT/CALL was 1.14 versus 1.18 from the previous trading day according to data from January, 20

GBP/USD

Resistance levels (open interest**, contracts)

$1.5403 (391)

$1.5305 (436)

$1.5209 (941)

Price at time of writing this review: $1.5174

Support levels (open interest**, contracts):

$1.5091 (1605)

$1.4994 (874)

$1.4896 (1355)

Comments:

- Overall open interest on the CALL options with the expiration date February, 6 is 15406 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 16298 contracts, with the maximum number of contracts with strike price $1,5100 (1605);

- The ratio of PUT/CALL was 1.06 versus 1.06 from the previous trading day according to data from January, 20

* - 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 $1,1548 -0,48%

GBP/USD $1,5144 +0,22%

USD/CHF Chf0,8755 -0,46%

USD/JPY Y118,80 +1,05%

EUR/JPY Y137,21 +0,57%

GBP/JPY Y179,9 +1,27%

AUD/USD $0,8170 -0,49%

NZD/USD $0,7638 -1,86%

USD/CAD C$1,2111 +1,42%

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

03:00 Japan BoJ Interest Rate Decision 0.10% 0.10%

03:00 Japan Bank of Japan Monetary Base Target 275

03:00 Japan BoJ Monetary Policy Statement

04:30 Japan All Industry Activity Index, m/m November -0.1% +0.1%

06:30 Japan BOJ Press Conference

09:00 Switzerland World Economic Forum Annual Meetings

09:30 United Kingdom Average Earnings, 3m/y November +1.4% +1.7%

09:30 United Kingdom Average earnings ex bonuses, 3 m/y November +1.6% +1.9%

09:30 United Kingdom Claimant count December -26.9 -24.2

09:30 United Kingdom Claimant Count Rate December 2.7%

09:30 United Kingdom ILO Unemployment Rate November 6.0% 5.9%

09:30 United Kingdom Bank of England Minutes

10:00 Switzerland Credit Suisse ZEW Survey (Expectations) January -4.9

13:30 Canada Wholesale Sales, m/m November +0.1% +0.2%

13:30 U.S. Building Permits, mln December 1.050 Revised From 1.035 1.054

13:30 U.S. Housing Starts, mln December 1.028 1.040

15:00 Canada BOC Rate Statement

15:00 Canada Bank of Canada Rate 1.00% 1.00%

15:00 Canada Bank of Canada Monetary Policy Report

16:15 Canada BOC Press Conference

21:30 New Zealand Business NZ PMI December 55.2

21:30 U.S. API Crude Oil Inventories January +3.9