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FXStreet reports that Danske Bank analysts noted that against their expectation of a rate cut, the Bank of England (BoE) announced the Bank Rate remains unchanged at 0.75% (vote count 7-2 unchanged.

"Overall, we think today's decision was a dovish hold. The BoE repeated that 'policy may need to reinforce the expected recovery in UK GDP growth ', definitely keeping the door open for a rate cut later this year. BoE governor Mark Carney said that it is important for hard data to follow the soft survey indicators and it was written in the minutes that the BoE will 'monitor closely the extent to which these early indications of an improved outlook are sustained '."

"As we have a more pessimistic view on the UK economic outlook, we expect the Bank of England to cut the Bank Rate by 25bp later this year, probably in May. Historically, the Bank of England has been reluctant to make policy changes at interim meetings. We do not think that the rebound in business optimism is robust. We recognize that short-term Brexit uncertainty has fallen significantly, as we now know that the UK is leaving the EU tomorrow, Friday 31 January."

"Looking at the Bank of England's economic projections, they are based on a rate cut to 0.50% (they are based on market pricing ahead of the policy meeting). Still, CPI inflation is not expected to reach 2% before Q4 21 and GDP growth will remain below 1.5% until 2022. To be precise, the BoE expects Q1 GDP growth to rebound to 0.2% q/q. Even if we are wrong about the prospect of a rate cut, a rate hike is far away based on these projections. We think the current market pricing is fine at the moment."

• Saudi Arabia has opened discussions on moving up the OPEC+ meeting from March to early February because of a sharp drop in crude oil prices
• No final decision has been made
• Not all OPEC members are on board yet
• Iran could oppose the move
• Russia not keen on the idea

FXStreet reports that commenting on the US Bureau of Economic Analysis's Gross Domestic Product (GDP) report for the fourth quarter of 2019, Nathan Janzen, Senior Economist at RBC that "the US economy continued to grow at a solid rate in Q4 last year, despite still significant US-China trade disruptions over the period."

"Business investment edged lower for a third straight quarter - the longest such streak since 2009 - with the industrial sector continuing to feel the pinch from the US-China trade war. But consumer spending increased at a still relatively solid 1.8% pace (although that is down from a 3.1% increase in Q3) and residential investment growth picked up to its strongest pace in 2 years."

"Most of a large add to growth from net trade came from an almost 9% drop in imports, which is not exactly positive for the domestic demand backdrop. But some of the volatility in trade flows was probably related to shifting imports around US-China tariff hikes (both implemented and threatened). The boost from net trade in Q4 won't likely be repeated, but neither will an offsetting sharp slowing in the pace of inventory accumulation."

"We don't expect the Fed to cut interest rates further in 2020 and capacity pressures (eg. the already low unemployment rate) are making it more difficult for the economy to grow at an 'above-trend' rate. But easing trade tensions with the signing of the US-China phase 1 deal earlier this month have also reduced go-forward downside risks for the industrial sector. We continue to expect respectable if unspectacular growth in the economy's long-run trend growth rate at around 2%."

FXStreet reports that Morten Lund, an analyst at Nordea Markets, notes after Thursday's highly anticipated BoE decision that, while the Bank's governor Carney did not deliver a cut on his final meeting, the door is still open for a cut in March. 

“The MPC said that the reason for being on hold was that the Committee wants to see just how pronounced the post-election macro rebound really is. For example, the composite PMI increased by 3.1 index points in January – the fifth largest ever monthly increase. The wait-and-see approach is fully in line with the BoE’s reaction function post-Brexit.”

“Although the argument to make a precautionary cut was overruled, the uncertainties related to both the “BoJo bouncing” macro outlook as well as the phase-2 Brexit negotiations meant that it was a dovish hold. The door is thus still open for a cut in March (around 8 bp cut is priced in). At this time, the new Governor Andrew Bailey will be in place.”

“Overall, our base case is that the BoE will be on hold throughout 2020, but maintain its dovish bias until there is more clarity about the macroeconomic development after the December election. The market reacted by sending gilt yields and the sterling higher. However, due to the dovish hold, the decision did not spur a big rally, in line with our expectations. A rate cut in March is not out of the question.”

James Smith, a Developed Markets economist at ING, notes that the Bank of England (BoE) opted against cutting interest rates at its latest meeting and the key question now for markets is whether this meeting closes the door to a rate cut at future meetings.

"Looking at the vote split, many investors may be questioning what all the fuss was about over the past few weeks. While two MPC members again voted for an immediate rate cut, the other two ‘external’ voters that had been mulling easing – Silvana Tenreyro and Jan Vlieghe - opted to keep rates on hold this time."

"Interestingly, the Bank has also removed the long-standing guidance that future rate hikes would be “limited and gradual”. While the debate over tightening is clearly some way off, this may nevertheless be taken as mildly hawkish by some in the market."

"Having said all of that, the lingering question of policy easing is unlikely to go away just yet. It all really hinges on whether the economy sees a Brexit bounce. If you look at the sentiment data, the answer appears to be tentative ‘yes’. From the PMIs to the Bank’s own surveys, optimism has reportedly increased and activity is showing signs of moving up a gear after December’s election.

And this appears to have been a key factor behind the BoE’s decision to keep rates on hold this month.

However, there are good reasons to be sceptical about the potential for a sharp turnaround in economic activity. Firstly, the sentiment data has given false indications at political turning points in the past – most notably after the Brexit referendum in 2016.

Secondly, and more importantly, there’s a risk that business optimism starts falling again as the reality of UK-EU trade negotiations hits. With an extension to the post-Brexit transition period looking unlikely, negotiations will have to move fast to generate a bare-bones free-trade agreement this year."

U.S. stock-index futures fell on Thursday, as investors assessed U.S. Q4 GDP data, earnings reports from several big companies as well as the impact of the fast-spreading coronavirus on the global economy.

Global Stocks:

(company / ticker / price / change ($/%) / volume)

Int'l Paper (IP) reported Q4 FY 2019 earnings of $1.09 per share (versus $1.65 per share in Q4 FY 2018), beating analysts' consensus estimate of $1.03 per share.

The company's quarterly revenues amounted to $5.498 bln (-7.6% y/y), missing analysts' consensus estimate of $5.603 bln.

IP fell to $42.80 (-1.31%) in pre-market trading.

The data from the Labor Department revealed on Thursday the number of applications for unemployment benefits fell slightly last week, indicating the labor market remains very robust.

According to the report, the initial claims for unemployment benefits decreased by 7,000 to a seasonally adjusted 216,000 for the week ended January 25.

Economists had expected 215,000 new claims last week.

Claims for the prior week were revised upwardly to 223,000 from the initial estimate of 211,000.

Meanwhile, the four-week moving average of claims dropped by 1,750 to 214,500 last week.

The Commerce Department released on Thursday its "advance" estimate for the U.S. gross domestic product (GDP) for the fourth quarter of 2019, which revealed the U.S. economy grew as expected in the reviewed period.

According to the estimate, the U.S. real GDP increased at an annual rate of 2.1 percent q-o-q last quarter, the same pace as in the third quarter.

Economists had expected GDP to boost by 2.1 percent.

According to the report, the gain in real GDP in the fourth quarter reflected positive contributions from personal consumption expenditures (PCE), federal government spending, state and local government spending, residential fixed investment, and exports, that were partly offset by negative contributions from private inventory investment and nonresidential fixed investment. Imports, which are a subtraction in the calculation of GDP, fell.

At the same time, the real GDP growth in the fourth quarter was the same as that in the third as a downturn in imports, an acceleration in government spending, and a smaller drop in nonresidential investment were offset by a larger decline in private inventory investment and a slowdown in PCE.

The report also revealed U.S. GDP grew 2.3 percent in 2019 y-o-y in 2019, compared with an increase of 2.9 percent in 2018.

The gain in real GDP in 2019 reflected positive contributions from PCE, nonresidential fixed investment, federal government spending, state and local government spending, and private inventory investment that were partly offset by negative contributions from residential fixed investment. Meanwhile, the deceleration in real GDP in 2019, compared to 2018, primarily reflected decelerations in nonresidential fixed investment and PCE and a downturn in exports, which were partly offset by accelerations in both state and local and federal government spending.

Germany's Federal Statistical Office reported on Thursday the country's consumer price index (CPI) is expected to decrease 0.6 m-o-m in January 2020 after gaining 0.5 percent m-o-m in the previous month.

On the y-o-y basis, Germany's inflation rate is seen to rise 1.71 percent this month, following a 1.5 percent advance in December 2019. That would be the highest level since July 2019.

Economists had predicted inflation would fall 0.6 percent m-o-m and would increase 1.7 percent y-o-y in January.

According to the report, food price growth accelerated to 2.3 percent y-o-y in January from 2.1 percent y-o-y in December, while energy prices surged 3.4 percent y-o-y, following a drop of 0.1 percent y-o-y in the previous month. Services costs rose 1.5 percent y-o-y in January after a 1.8 percent y-o-y climb in December.

Meanwhile, the harmonized index of consumer prices for Germany (HICP), which is calculated for European purposes, is expected to decrease 0.8 percent m-o-m but grow 1.6 percent y-o-y.

DuPont (DD) reported Q4 FY 2019 earnings of $0.95 per share (versus $1.43 per share in Q4 FY 2018), in line with analysts' consensus estimate of $0.95 per share.

The company's quarterly revenues amounted to $5.204 bln (-4.6% y/y), roughly in line with analysts' consensus estimate of $5.236 bln.

The company also issued downside guidance for Q1 FY 2020 and the full fiscal year, projecting EPS of a respective $0.70-0.74 (versus analysts' consensus estimate of $1.01) and of $3.70-3.90 (versus analysts' consensus estimate of $4.14).

DD fell to $55.50 (-3.80%) in pre-market trading.

Verizon (VZ) reported Q4 FY 2019 earnings of $1.13 per share (versus $1.12 per share in Q4 FY 2018), missing analysts' consensus estimate of $1.15 per share.

The company's quarterly revenues amounted to $34.775 bln (+1.4% y/y), roughly in line with analysts' consensus estimate of $34.624 bln.

The company also issued upside guidance for FY 2020, projecting EPS of +2-4%, implying $4.91-5.00, versus analysts' consensus estimate of $4.89.

VZ fell to $59.10 (-0.72%) in pre-market trading.

Coca-Cola (KO) reported Q4 FY 2019 earnings of $0.44 per share (versus $0.43 per share in Q4 FY 2018), in line with analysts' consensus estimate of $0.44 per share.

The company's quarterly revenues amounted to $9.100 bln (+28.2% y/y), beating analysts' consensus estimate of $8.878 bln.

The company also issued in-line guidance for FY 2020, projecting EPS of $2.25 versus analysts' consensus estimate of $2.26.

KO rose to $57.70 (+1.21%) in pre-market trading.

• UK recovery appears to be on track
• It is early days, less a case of 'so far, so good', than 'so far, good enough'
• It is important for hard data to follow through
• Global growth is picking up, caution is warranted
• Coronavirus is a reminder on the need to stay vigilant
• Recovery in UK growth and inflation are not yet assured
• Monetary policy may need to reinforce expected recovery in UK growth if more positive signs not sustained
• If economy recovers as forecast, some modest tightening may be needed."
• Domestic price inflation appears to be muted
• Core inflation has slowed
• Margin of slack has been greater than previously estimated
• UK entering a decade of potentially profound structural change
• New trade arrangement with EU will bring adjustment costs for UK

GBP strengthened against its major rivals in the European session on Thursday as market participants assessed the outcomes of the Bank of England's (BoE) first monetary policy meeting this year. The members of the BoE's Monetary Policy Committee (MPC) voted by a majority of 7-2 to keep Bank Rate at 0.75 percent and unanimously to maintain an asset-purchase program at GBP 435 bln.

In its policy statement, the BoE noted that the UK's economy had picked up since December's election, and the near-term uncertainties facing businesses and households had receded.

The Bank also said that its "policy may need to reinforce the expected recovery in UK GDP growth should the more positive signals from recent indicators of global and domestic activity not be sustained or should indicators of domestic prices remain relatively weak" but added that "if the economy recovered broadly in line with its latest projections, some modest tightening of policy may be needed".

The Bank of England (BoE) announced its Monetary Policy Committee (MPC) voted by a majority of 7-2 to maintain Bank Rate at 0.75 percent at its January meeting.

The MPC also voted unanimously to maintain the corporate bond purchases at £10 billion and UK government bond purchases at £435 billion.

In its statement, the BoE notes:

• UK GDP growth slowed last year, reflecting weaker global growth and elevated Brexit uncertainties
• Output is expected to have been flat in 2019 Q4
• CPI inflation fell to 1.3% in December and core CPI inflation declined to 1.4%
• Unemployment rate has remained low and stable, and employment growth has picked up
• Most recent indicators suggest that global growth has stabilized, reflecting the partial easing of trade tensions and the significant loosening of monetary policy by many central banks over the past year
• Global business confidence and other manufacturing indicators have generally picked up. Domestically, near-term uncertainties facing businesses and households have receded
• Housing market indicators have strengthened and consumer confidence has increased slightly
• MPC will monitor closely the extent to which these early indications of an improved outlook are sustained and follow through to the hard data on domestic activity in coming months
• UK GDP growth is projected to pick up a little in early 2020
• CPI inflation is projected to remain below the MPC's 2% target throughout this year and much of 2021
• Monetary policy will be set to ensure a sustainable return of inflation to the 2% target
• Policy may need to reinforce the expected recovery in UK GDP growth should the more positive signals from recent indicators of global and domestic activity not be sustained or should indicators of domestic prices remain relatively weak
  
• If the economy recovers broadly in line with the MPC's latest projections, some modest tightening of policy may be needed to maintain inflation sustainably at the target

Francesco Pesole, an FX Strategist at ING, believes that a data-packed day should offer investors some distraction from the Chinese virus story, which will, however, continue to drive most market movements. 

"On the FX front, commodity currencies appear quite fragile, especially the Australian dollar, due to the combination with idiosyncratic downside risks. The Federal Reserve's message yesterday was – as expected – broadly unchanged, although markets detected an openness to future rate adjustments (which briefly dampened US rates and USD) from Fed Chair Jerome Powell’s press conference. Turning to today’s US calendar, ING economists expect fourth quarter growth to inch lower to 2.0%, slightly below consensus (2.1%). The implications for the dollar should, however, be limited, as the notion of domestic economic resilience seems hard to dent for now. Fears related to the coronavirus may continue to put a floor under the USD today, thanks to sustained safe-haven flows."

Tesla (TSLA) reported Q4 FY 2019 earnings of $2.14 per share (versus $1.93 per share in Q4 FY 2018), beating analysts' consensus estimate of $0.61 per share.

The company's quarterly revenues amounted to $7.384 bln (+2.2% y/y), beating analysts' consensus estimate of $7.054 bln.

The company also projects that the vehicle deliveries should comfortably exceed 500,000 units in FY 2020 (versus analysts' consensus estimate of near 475,000) due to ramp of production of Model 3 in Shanghai and Model Y in Fremont.

TSLA rose to $641.04 (+10.34%) in pre-market trading.

FXStreet reports that analysts at Rabobank offered a brief overview of the potential economic impact of the coronavirus that has been plaguing China since late 2019.

“During the SARS outbreak China experienced a sharp dip in economic activity. Our calculations show that monthly growth dropped from roughly 10% (y-o-y) early 2003 to 6.6% at the peak of the SARS crisis. However, the economy rebounded quite quickly after the outbreak was contained, making up for previous losses. This underlines that the SARS epidemic did not have any negative impact on production capacity.”

“The question now is whether the current epidemic will result in (only) temporary limited economic effects. Based on the SARS experience and on the information we have right now, we think that a temporary impact of around 1-2% on GDP is a reasonable estimate. If this is largely offset by higher growth in the second half of 2020 the overall impact on annual GDP growth could still be relatively limited (to a few tenths of a percentage point).”

“What happens beyond the first quarter depends on the severity of the virus outbreak, the Chinese government’s ability to contain it, and government stimulus to make up for the economic damage.”

Microsoft (MSFT) reported Q2 FY 2020 earnings of $1.51 per share (versus $1.10 per share in Q2 FY 2019), beating analysts' consensus estimate of $1.27 per share.

The company's quarterly revenues amounted to $36.906 bln (+13.7% y/y), beating analysts' consensus estimate of $35.683 bln.

The company also issued in-line guidance for Q3 FY 2020, projecting) revenues of $34.1-34.9 bln versus analysts' consensus estimate of $34.15 bln.

MSFT rose to $173.50 (+3.25%) in pre-market trading.

Facebook (FB) reported Q4 FY 2019 earnings of $2.56 per share (versus $2.38 per share in Q4 FY 2018), missing analysts' consensus estimate of $2.58 per share.

The company's quarterly revenues amounted to $21.082 bln (+24.6% y/y), roughly in line with analysts' consensus estimate of $20.897 bln.

FB fell to $207.01 (-7.27%) in pre-market trading.

FXStreet reports that USD/JPY remains under pressure and a move to the 108.40 region remains on the cards for the time being, noted FX Strategists at UOB Group.

24-hour view: "USD traded between 108.96 and 109.26 yesterday, narrower than our expected sideway-trading range of 108.70/109.25. We continue to view the current movement as part of a sideway-trading phase and expect USD to trade between 108.80 and 109.25."

Next 1-3 weeks: "USD traded in a relatively quiet manner yesterday (29 Jan) as it eased off after testing the short-term 109.25 resistance. The price action offers no fresh clues and we continue to hold the same view form Tuesday (28 Jan, spot at 108.95) wherein USD is still under pressure and "could weaken further to 108.40". Only a move above 109.50 (no change in 'strong resistance' level) would indicate the current weakness has stabilized."

FXStreet reports that according to analysts at Rabobank, the extent of any GBP rally on a unchanged policy decision from the Bank of England today could be tempered by a couple of factors. Firstly, the Bank could drop a heavy hint that a rate cut could follow in May. Secondly, the news surrounding Brexit is also likely to be back in the headlines in the coming weeks.

"The fact that UK CPI inflation is running at just 1.3% y/y, well below the BoE's 2.0% y/y inflation target, provides a very strong argument in favour of BoE rate cut either today or in in the months ahead. Weak UK GDP growth in the 3 months to November (+0.1% 3m/3m) and a shockingly poor performance of the retail sector in December add weight to this view. That said, forward-looking January PMI data were better than expected and the pick-up in activity in the housing sector is suggestive of a post-election Boris bounce. The MPC may therefore decide to wait a little longer to assess the impact and the extent of a calmer political backdrop on confidence. That said, political risk may be on the brink of returning."

"The 80 seat majority won by Johnson in the UK election in December ensured that his EU Withdrawal Bill would pass through parliament. Yesterday, the EU parliament voted in favour of ratifying the Withdrawal Agreement which further clears the way towards the UK exiting the EU tomorrow night. That said, the relief in the market that political uncertainty has died back could be tested if the forthcoming talks between the EU and the UK on their future arrangements prove to be difficult."

"We see risk that any GBP rally today could be short-lived and expect that GBP/USD will be trading below the 1.30 level on both a 3 and 6 month view."

European Commission said, in January 2020, the Economic Sentiment Indicator (ESI) increased markedly in the euro area (by 1.5 points to 102.8) and the EU (by 1.9 points to 101.3). Economists had expected an increase to 101.8 in the euro area.

Improved euro-area sentiment resulted from marked increases in confidence in the industry and construction sectors. Confidence among consumers and in the services sector remained (virtually) unchanged, while retailers were somewhat less confident. The strong increase in industry confidence (+2.0) resulted from managers' more optimistic views on all three components, i.e. production expectations, the stocks of finished products and, to a lesser extent, the current level of overall order books. Broadly flat developments in services confidence (-0.3) resulted from a worsened assessment of past demand which was mitigated by virtually unchanged views on the past business situation and expected demand. The stability in consumer confidence (± 0.0) reflected households' broadly stable assessments of both their past and future financial situation and a slight increase in their intentions to make major purchases, which was offset by a decrease in their expectations about the general economic situation. Lower retail trade confidence (−0.8) reflected a sharp drop in managers' assessment of both the present and future business situation, which was partly offset by an improvement in retailers' views on the adequacy of the volume of stocks. The marked rise in construction confidence (+1.2) was fuelled by managers' improved assessment of the level of order books, while their employment expectations remained virtually unchanged. Finally, financial services confidence (not included in the ESI) increased noticeably (+4.2), reflecting strong improvements in managers' appraisals of past demand and their assessment of the past business situation and, to a lesser extent, their demand expectations.

According to the report from Eurostat, the euro area (EA19) seasonally-adjusted unemployment rate was 7.4% in December 2019, down from 7.5% in November 2019 and from 7.8% in December 2018. This is the lowest rate recorded in the euro area since May 2008. The EU28 unemployment rate was 6.2% in December 2019, down from 6.3% in November 2019 and from 6.6% in December 2018. This is the lowest rate recorded in the EU28 since the start of the EU monthly unemployment series in January 2000.

Eurostat estimates that 15.475 million men and women in the EU28, of whom 12.251 million in the euro area, were unemployed in December 2019. Compared with November 2019, the number of persons unemployed decreased by 80 000 in the EU28 and by 34 000 in the euro area. Compared with December 2018, unemployment fell by 747 000 in the EU28 and by 592 000 in the euro area. Member States

In December 2019, 3.155 million young persons (under 25) were unemployed in the EU28, of whom 2.213 million were in the euro area. Compared with December 2018, youth unemployment decreased by 143 000 in the EU28 and by 129 000 in the euro area. In December 2019, the youth unemployment rate was 14.1% in the EU28 and 15.3% in the euro area, compared with 14.6% and 16.2% respectively in December 2018.

FXStreet reports the Deutsche Bank Economists offer their insights on what to expect from the Bank of England (BOE) base rate decision due later on Thursday at 1200 GMT.

"Moving on, and next up in the central bank queue today is the BoE, in what should hopefully be a more interesting decision and is also Governor Carney's last MPC meeting at the helm. The market is pricing in a 46% chance of a cut, though at one stage earlier this month we were pricing in just over a 70% chance before last week's better than expected PMIs.

Our economists expect a dovish meeting today with a 25bp cut, and believe that the case for a cut is strong. For one, there are clear signs of excess capacity in the economy.

UK growth has been below potential for nearly two years and recent survey data continue to point to weaker growth. Importantly, inflation remains below the Bank's 2% mandate (CPI came in at a 3-year low of 1.3% in December), with core CPI and services inflation relatively weak in spite of elevated unit labor costs. In addition, Brexit uncertainty is here to stay."

According to the report from Italian National Institute of Statistics (ISTAT), in December 2019, in comparison with the previous month, employment decreased, inactivity rose and the number of unemployed slightly grew while the unemployment rate remained unchanged.

The estimate of employed people decreased (-0.3%, -75 thousand); the employment rate went down to 59.2% (-0.1 percentage points).

The fall of employment concerned both men and women. A rise is observed among 15-24 aged people (+6 thousand), people aged 25-49 decreased (-79 thousand), while people over 50 remained stable.

The number of unemployed persons slightly grew (+0.1%, +2 thousand in the last month); the increase was the result of a growth among men (+2.2%, +28 thousand) and a decrease for women (-2.2%, -27 thousand), and involved people under 50. The unemployment rate remained stable at 9.8%, as also the youth rate, unchanged at 28.9%.

In the fourth quarter 2019, in comparison with the previous one, a slight increase of employment is registered (+0.1%, +13 thousand) and it concerned only women.

Compared with December 2018, employment increased by 0.6% (+136 thousand). The growth concerned both men and women, and all age groups, with the exception of people aged 35-49.

On a yearly basis, the rise of employment was accompanied by a fall of unemployed persons (-5.3%, -143 thousand) and inactive people aged 15-64 (-0.9%, -115 thousand).

Federal Employment Agency said that during the winter break, unemployment rose from December to January by 198,000 to 2,426,000. Adjusted for seasonal influences, a slight decrease of 2,000 is calculated for January compared to the previous month. Compared to the previous year, the number of unemployed has increased by 20,000. The unemployment rate rises by 0.4 percentage points to 5.3 percent. Compared to January last year, it has not changed. The unemployment rate determined by the Federal Statistical Office in accordance with the ILO employment concept amounted to 3.2 percent in December.

Underemployment, which also takes into account changes in labour market policy and short-term incapacity for work, remained unchanged in seasonally adjusted terms compared to the previous month. Total underemployment in January 2020 was 3,325,000 people. That was 30,000 more than a year ago.

The demand for new workers continues to decline significantly compared to the previous year, but is still at a high level. In January, 668,000 jobs were registered at BA, 90,000 fewer than a year ago. On a seasonally adjusted basis, the number of jobs reported to BA decreased by 1,000

"Economic weakness continues to leave its mark on the labour market. Overall, however, it was also robust at the beginning of the year. Unemployment and underemployment rose in January - but mainly for seasonal reasons.", said Detlef Scheele, CEO of the federal employment agency (BA), at the monthly press conference.

FXStreet reports that analysts at Danske Bank outlined Thursday's important releases and offered a brief overview of the key event risk - the highly anticipated BoE monetary policy decision.

"Today's highlight will be the Bank of England's (BoE) monetary policy announcement at 13:00 CET. Despite a few economic data releases that came out stronger than expected, we still expect the BoE to cut the Bank Rate by 25bp, a view we have held since November. Despite slightly stronger data, the economy remains weak overall due to high uncertainty on Brexit. However, it is likely to be a close call, which is also reflected in market pricing, as investors are pricing a 45% probability of a cut, leaving some upside in EUR/GBP if we are right in our call."

"In Europe we get a range of interesting data releases on the state of the labour market in end-2019 as well as the final string of leading indicators for January with the Commission's economic confidence indicator. Employment growth has slowed recently, but in light of the dynamic service sector, we do not expect to see a marked deterioration in the European labour market. German inflation figures for January meanwhile are expected to show another increase in the headline rate driven by energy prices."

"Later in the day, we expect US GDP figures to reveal decent growth of around 2% in Q4 19, with consumer spending remaining the key driver of growth."

According to the latest quarterly Gold Demand Trends from World Gold Council (WGC), gold demand fell 1% in 2019 as a huge rise in investment flows into ETFs and similar products was matched by the price-driven slump in consumer demand.

Global demand in H2 was down 10% on the same period of 2018 as y-o-y losses in Q4 compounded those from Q3, notably in jewellery demand and retail bar and coin investment.

Central bank demand also slowed in the second half - down 38% in contrast with H1's 65% increase. But this was partly due to the sheer scale of buying in the preceding few quarters and annual purchases nevertheless reached a remarkable 650.3t - the second highest level for 50 years.

ETF investment inflows bucked the general trend. Investment in these products held up strongly throughout the first nine months of the year, reaching a crescendo of 256.3t in Q3. Momentum then subsided in Q4, with inflows slowing to 26.8t (-76% y-o-y). Technology saw modest declines throughout the year, although electronics demand staged a minor recovery in Q4.

The annual supply of gold increased 2% to 4,776.1t. This growth came purely from recycling and hedging, as mine production slipped 1% to 3,436.7t.

KOF Economic Research Agency said that Economic Barometer rises in January. After already taking a step upwards in December, it is now back to its long-​term average value. The barometer did not reach this level throughout 2019. The Swiss economy can free itself somewhat from its shackles.

The KOF Economic Barometer rises by 3.9 points in January, from 96.2 in December (revised from 96.4) to 100.1 points. Economists had expected an increase to 97.0.

Together with the rise in December, it has thus climbed by 7.6 points within two months. The indicator bundle for manufacturing is no longer as unfavourable as before and the prospects for other services have improved. In addition, the changes in the indicators for foreign demand, accommodation and food service activities, financial and insurance services and construction are slightly positive. The private consumption prospects are practically unchanged.

In the goods producing sectors (manufacturing and construction), the indicators for production and production capacities are more favourable than at the end of 2019. In addition, personnel planning is no longer dampening the barometer as much as in the previous month. By contrast, the development is slightly muted by the indicators for the competitive position.

Within manufacturing, indicators for almost all industries are recovering. This improvement is particularly noticeable in machinery, in other manufacturing industries and in the chemicals, pharmaceuticals and plastics industry. By contrast, the electrical industry and the metal industry cannot entirely keep pace.

CNBC reports that White House trade advisor Peter Navarro pushed back against the idea that the U.S. would remove tariffs on Chinese imports if the deadly coronavirus begins to weigh on China's economy.

"That's a spin that's coming right out of Wall Street, and it really, I think, it does a disservice to this whole crisis to bring that into the discussion," Navarro said on CNBC.

Navarro was responding to a question whether a tariff rollback was on the table if China was abiding by the terms of the "phase one" trade deal but started to see its economy hurt by the coronavirus.

Companies in China have shut down stores, factories and closed offices as the country works to contain the spread of the virus. Some have warned of severe disruption to supply chains in China, with at least American CEO predicting the impact could last up to six months.

The U.S. and China have been engaging in a long-running trade war in which each side has placed billions of dollars' worth of tariffs on each other's goods. The "phase one" deal was considered the first step in larger negotiations to reach a trade détente.

On the subject of removing tariffs due to the coronavirus, Navarro said, "Let's remember why the tariffs are in place."

"The tariffs are in place because China engages in massive unfair subsidies. They use their state-owned enterprises to put American companies and workers out of business," he said. "And the tariffs also ensure that we come back for phase two."

The US dollar is little changed against the euro and fell against the yen in trading on Thursday, as traders analyzed the results of the meeting of the us Federal reserve system (FRS).

The ICE Dollar index, which shows the value of the US dollar against six major world currencies, rose 0.06% compared to the previous day.

The fed kept the Federal funds rate in the range of 1.5% to 1.75%, the Federal open market Committee (FOMC) said in a statement following the meeting . The FOMC's decision coincided with the forecasts of economists and market participants.

In addition, the fed raised the rate on excess Bank reserves (IOER) to 1.6% from 1.55% and the rate on reverse REPO operations to 1.5% from 1.45%.

The Federal reserve will continue to buy Treasury bills in the second quarter of 2020 and will conduct regular REPO operations until at least the end of April, the Central Bank said in a statement.

Fed Chairman Jerome Powell confirmed on Wednesday that the US economy is in good shape, noting, however, some doubts about its prospects due to the spread of a new coronavirus.

eFXdata reports that CIBC Research discusses its reaction to FOMC policy statement.

"The Fed left interest rates unchanged as expected today, with only minor alterations being made to the statement, suggesting that the Fed is comfortable with how growth in the US economy is unfolding for now.

The only notable change to the statement was the characterization of household spending, which is now seen as rising at a moderate pace rather than strong pace. Despite the recent softer readings on inflation, the Fed sees it as returning to target ahead. The rate on excess reserves was raised to 1.60% from 1.55%, but that does not represent a change in the stance of monetary policy, rather it is just a technical adjustment meant to guide the rate back to the midpoint of the target range. In a separate action, the Fed authorized the open market desk to execute repo operations at least through April, another technical adjustment to ensure that there are enough reserves in the system to prevent a disruption to repo markets," CIBC notes.

"Given that the changes to the statement were minimal, market reaction should remain muted. Attention will now turn to the press conference, with markets awaiting Powell's interpretation of the risks around the economy, including the impacts of recent trade developments and possibly coronavirus," CIBC adds.

EUR/USD

Resistance levels (open interest**, contracts)

$1.1154 (2511)

$1.1110 (2637)

$1.1077 (1391)

Price at time of writing this review: $1.1011

Support levels (open interest**, contracts):

$1.0991 (1920)

$1.0947 (899)

$1.0899 (682)

Comments:

- Overall open interest on the CALL options and PUT options with the expiration date February, 7 is 59513 contracts (according to data from January, 29) with the maximum number of contracts with strike price $1,1350 (4536);

GBP/USD

Resistance levels (open interest**, contracts)

$1.3213 (1225)

$1.3136 (1818)

$1.3082 (1122)

Price at time of writing this review: $1.3014

Support levels (open interest**, contracts):

$1.2987 (1203)

$1.2960 (3252)

$1.2926 (1109)

Comments:

- Overall open interest on the CALL options with the expiration date February, 7 is 24310 contracts, with the maximum number of contracts with strike price $1,3600 (3910);

- Overall open interest on the PUT options with the expiration date February, 7 is 21880 contracts, with the maximum number of contracts with strike price $1,3000 (3252);

- The ratio of PUT/CALL was 0.90 versus 0.90 from the previous trading day according to data from January, 29

* - 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.