At 12.14pm (AEDT) on Friday, the currency was trading at 70.05 US cents, up from 68.92 cents on Thursday.
Stock markets in Asia, Europe and the US have bounced after the European Central Bank hinted of more monetary policy easing, while crude oil’s sharp plunge was abated with an overnight rally.At 10.10am (AEDT) on Friday, the benchmark S&P/ASX200 index was up 37.3 points, or 0.77 per cent, at 4,901.3, while the broader All Ordinaries index was up 36.4 points, or 0.74 per cent, at 4,954.0.
On the ASX 24, the share price index was up 21 points at 4,848, with 13,989 contracts traded.
ANZ economists said Australian bonds outperformed US Treasuries overnight despite risk aversion fading after the ECB left interest rates on hold.
“ECB President (Mario) Draghi flagged a potential easing of policy at the next meeting in March,” they said.
“(That drove) a temporary reprieve from extreme pessimism.”
At 8.30am (AEDT) on Friday, the March 2016 10-year bond futures contract was trading at 97.320 (implying a yield of 2.680 per cent), up from 97.305 (2.695 per cent) on Thursday.
The March 2016 three-year bond futures contract was at 98.090 (1.910 per cent), unchanged.
The European Central Bank kept its main rates on hold and Draghi said the central bank would “review and possibly reconsider” its monetary policy as early as March.
Oil prices reversed course to trade up more than five per cent, just shy of $US30 a barrel, after US crude stockpiles did not rise as much as feared.
Locally, no major economic news is expected on Friday.
In equities news, ResMed is slated to post half-year financial results and Santos is expected to release its fourth quarter production report.
NEW YORK – Wall Street has rallied after a hesitant start as oil prices surged towards their biggest gain this year and ECB President Mario Draghi raised hopes of further stimulus.
The European Central Bank kept its main rates on hold and Draghi said the central bank would “review and possibly reconsider” its monetary policy as early as March. Many analysts had not expected a rate cut before June.
The US stock market was bound for a correction as rich valuations were becoming a headwind, Stephen Wood, Chief Market Strategist at Russell Investment Group in New York said, adding that the main drivers of the market remained unchanged.
“We’ve got the same three horsemen: oil, China and the U.S. Federal Reserve driving the markets.”
LONDON – Britain’s top share index has bounced from its lowest in more than three years, after the head of the European Central Bank implied further monetary stimulus was coming.
The gains extended on Thursday after oil prices rebounded.
The ECB will review its monetary policy in March, the central bank’s president, Mario Draghi, said after the bank’s policy meeting on Thursday. Stocks rose on anticipation of further loosening of monetary policy.
“It was always likely that Draghi’s message was going to be dovish today given the turmoil in the markets so far this year,” said Craigh Erlam, a senior market analyst at OANDA.
“That said, I don’t think people anticipated such a blatant and clear warning of a monetary policy response at the next meeting.”
HONG KONG – Asian markets had another bruising day, with China stocks down three per cent after a volatile session, which in turn sent MSCI’s broadest index of Asia-Pacific shares outside Japan to a new four-year low.
Japan’s Nikkei average ended down 2.4 per cent, adding to its 3.7 per cent plunge in the previous session.
Shanghai-based investor director at Nanhai Fund Management Co, David Dai, said fears of a prolonged bear market were, nevertheless, overdone.
“With stocks having fallen so much, much of the risk has been priced in and another free-fall is quite unlikely, although the chance of a sustainable rebound is slim,” he said.
FRANKFURT – Turmoil in financial markets and concerns over China and other emerging markets will prompt a March review of the European Central Bank’s monetary policy, President Mario Draghi says, holding out the prospect of further loosening.
The European Central Bank has left interest rates unchanged as expected, holding them at record lows as it prints money to lift the economy and raise inflation.
WASHINGTON – The number of people seeking unemployment benefits in the US rose last week to the highest level since July, though applications remained at historically low levels.
ENERGY
Oil prices have rebounded, following equities upwards, after a turbulent few days that wiped trillions of dollars off asset values, though it was unclear whether the vigorous selling action had come to an end.
Oil rebounded after falling to a more-than-12-year low the previous day.
“The underlying focus is still on oil because people are looking at the transmission mechanism to the real economy of lower oil prices,” said Gennadiy Goldberg, interest rate strategist, at TD Securities in New York.
“Lower oil prices are maybe great for the consumer, but not unilaterally good for the USeconomy.”
PRECIOUS METALS
Gold has fallen after posting its biggest one-day gain in two weeks the day before, as hints of further stimulus from the European Central Bank hurt the euro and a rebound in global stocks curbed risk aversion.
Turmoil in financial markets and concerns over China and other emerging markets will prompt a March review of the ECB’s monetary policy, President Mario Draghi said after a meeting, holding out the prospect of further loosening.
“After Wednesday’s $US25 per ounce uptick in gold prices fuelled by the global equity market selloff, today gold was dragged lower by profit taking, recovering equity markets, and a stronger US dollar,” said Giovanni Staunovo, commodities analyst at UBS Wealth Management in Zurich.
“Draghi’s dovish remarks seem to have improved risk sentiment somewhat – the yen is lower and gold also a touch lower,” ABN Amro analyst Georgette Boele said.
BASE METALS
Copper and other base metals have rebounded after the head of the European Central Bank raised hopes of more monetary stimulus, prompting investors to buy back bearish positions.
Oil prices and global stocks bounced after ECB President Mario Draghi hinted at additional stimulus measures as early as March as economic risks had grown.
“Some of the late shorts were getting cold feet and others were taking profits. I think this rally could extend,” said a trader, referring to investors who had only recently placed bets that prices would fall.
ASX stocks to watch Friday, January 22
BHP – BHP BILLITON
FMG – FORTESCUE METALS GROUP
RIO – RIO TINTO
Mining company shares will continue to be in focus with the price of iron ore still faltering.
ORG – ORIGIN ENERGY
OSH – OILSEARCH
STO – SANTOS
WPL – WOODSIDE PETROLEUM
Energy companies could have an easier day for once after oil prices rose around 5 per cent in the overnight session.
RMD – RESMED: Resmed is slated to post first half results.
STO – SANTOS: Santos has released its fourth quarter production report.
AAP
