Euro rebounds after a brief fall at Draghi's press conference: Jan 20, 2017

Market Review - 19/01/2017  22:20GMT 

Euro rebounds after a brief fall at Draghi's press conference

The single currency dropped across the board on Thursday after the European Central Bank left its monetary policy unchanged and as President Draghi downplayed a recent rise in EU inflation and added that risks to the regions growth remained on the downside. 

ECB's Draghi said 'underlying inflationary pressures subdued; will look thru changes in HICP if transient; to preserve very substantial degree of accommodation; will use all instruments in mandate if necessary; data point to somewhat stronger growth in Q4; expects expansion to firm further; global recovery somewhat stronger; euro area growth dampened by sluggish reforms; no signs of convincing upward trend in underlying inflation; headline CPI likely to pick up further in near term; still a high class problem to worry about outperformance.' 

Earlier in the day, euro traded with a firm bias in Asia on overnight comments from Fed Chair Janet Yellen and gained to 1.0671 in European morning and then briefly to session high at 1.0677 at New York open. However, the single currency swiftly pared its gains and tumbled to an intra-day low at 1.0589 in New York on comments from Draghi. However, euro later rebounded strongly on broad-based usd retreated and headed back to 1.0669 near the close. 

Versus the Japanese yen, the greenback gained to 114.89 at Asian open on Yellen's comments late on Wednesday and gained to 114.97 in early European morning. Dollar found renewed buying at 114.40 and rallied to an intra-day high at 115.61 in New York due partly to the release of upbeat U.S. data. Later, dollar pared intra-day gain and retreated to 114.68. 

On the data front, the Department of Labor said initial jobless claims in the week ending January 14 fell by 15,000 to 234,000 from the previous week’s total of 249,000. Analysts expected jobless claims to rise by 5,000 to 254,000 last week. 

In addition, the U.S. Commerce Department said housing starts increased by 11.3% to 1.226 million units last month, beating expectations for a rise to 1.200 million units. 

Despite edging lower to 1.2252 at Asian open on dollar's overnight strength, the British pound pared its losses and rebounded to 1.2291 in Asia, then rallied to an intra-day high at 1.2341 in Europe on cross-buying of sterling especially vs euro. Later, cable retreated to 1.2278 in New York morning on dollar's strength post release of U.S. data, price ratcheted back to 1.2343 in tandem with euro at the close.  

In other news, British PM May said 'Britain must face up to period of momentous change, tough negotiations with EU; in Britain's national interest that EU shud succeed; wants bold n ambitious trade agreement between UK n EU; already started discussions on future trade ties with New Zealand, Australia, India.' 

Data to be released on Friday: 

Australia new home sales, China GDP, Germany PPI, UK retail sales and Canada CPI. Inauguration of Donald Trump as 45th President of the U.S. at 17:00GMT,