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ECB's Draghi Expected to Push Back on Euro Strength

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It’s ECB day, Mnuchin not backing down on dollar comments, and Mueller probe is moving at a fast pace. Here are some of the things people in markets are talking about today.

ECB decision

The European Central Bank will announce its latest monetary-policy decision at 7:45 a.m. Eastern Time today, followed by a press conference at 8:30 a.m. With no economist surveyed by Bloomberg expecting a change in rates at the meeting, investors will be on the lookout for any hint of a change in the bank’s forward guidance. President Mario Draghi will almost certainly be questioned about the ever-strengthening euro against the dollar, and how much stimulus is needed with the region’s economy on a firmer footing

Weak dollar

Treasury Secretary Steven Mnuchin isn’t backing down from his comments yesterday when he said that a weak dollar is good for trade, adding this morning that he is not concerned where the currency is trading in the short term. Some analysts are less concerned about Mnuchin’s comments, with Brown Brothers Harriman & Co. strategist Marc Chandler saying that decisions made in the 1980s “de-weaponized” foreign-exchange markets by allowing currencies to trade freely. The Treasury secretary also said that he is considering a trip to China later this year for discussions on how to shrink America’s trade deficit with that country.

Mueller probe

Special Counsel Robert Mueller is almost done with the part of his investigation concerning whether President Donald Trump obstructed justice, according to current and former U.S. officials. Mueller is expected to schedule an interview with Trump in the coming weeks, with the president yesterday saying he is “looking forward to it,” adding that he would take the questions under oath. Meanwhile, Trump has arrived in Davos today for the annual World Economic Forum meeting. 

Markets mixed

Overnight, the MSCI Asia Pacific Index declined 0.4 percent, with Japan’s Topix index closing 0.9 percent lower as the yen’s rally against the dollar put pressure on exporters. In Europe, the Stoxx 600 Index was unchanged at 5:45 a.m. as investors awaited the outcome of today’s ECB meeting. S&P 500 futures gained 0.2 percent, the 10-year Treasury yield was at 2.647 percent, and gold was higher.  

Three-year high

A barrel of West Texas Intermediate was trading at $66.06 at 5:45 a.m. as the commodity extended its recent rally on a record stretch of declines in U.S. stockpiles. The rising price of oil has output from the U.S. forecast to hit more than 10 million barrels a day for the first time since Richard Nixon was in the White House. It’s not just American production likely to increase over the medium term: more than two-thirds of oil executives expect increased capital spending in 2018, according to survey by Norwegian consultants.

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