By Natsuko Waki
LONDON Feb 6 The euro fell against the dollar
and world stocks kept their gains on Thursday as investors
looked to see if the European Central Bank would hint at
possible future monetary easing after holding interest rates
Relative calm in vulnerable emerging markets such as Turkey
and South Africa also supported risk assets.
Euro zone interest rate futures slipped across the curve
after the ECB left its main interest rate unchanged at 0.25
percent, holding off from fresh policy action to combat the
threat of deflation.
Investors are awaiting a 1330 GMT news conference by ECB
President Mario Draghi, who some expect will sound dovish given
a surprise fall in inflation last month.
"Unless the economic outlook transforms very quickly, it
(the ECB) won't be able to resist the pressure for very long,"
said Jonathan Loynes, chief European economist at Capital
"We expect strong hints from Mario Draghi in the press
conference that more action is on the way very soon. We still
think a small cut in interest rates, with a negative deposit
rate, is the most likely next step."
The euro fell a third of a percent to $1.3495, having
been broadly steady before the rate decision.
One-year one-year EONIA forward rates
slipped after the ECB's announcement, while Bund futures
hit a session low of 143.68, down 39 ticks on the day.
Euribor futures fell across the 2014-2016 strip.
A fall in Euribor futures means investors are paring rate
cut expectations. However, prices still suggest the market
expects further ECB easing ahead.
The MSCI world equity index rose 0.4
percent, while European stocks were up 1 percent. U.S.
stock futures were pointing to a firmer start on Wall
Relative calm in the capital-hungry emerging markets of
Turkey, South Africa and India also lifted developing stocks,
after a rout that drove safe-haven bids to U.S. Treasuries and
Emerging stocks rebounded 0.7 percent from this
week's five-month lows while the Turkish lira and South
African rand held above recent troughs.
The banking sector is in the spotlight after Credit Suisse
missed expectations with a marginal uptick in
fourth-quarter net profit, and its shares were down more than 2
The dollar rose 0.1 percent against a basket of major
Investors are looking for Friday's highly anticipated U.S.
jobs report to show solid growth after encouraging
private-sector jobs numbers on Wednesday.
Economists surveyed by Reuters expect Friday's data will
show that employers added 185,000 jobs in January.
U.S. crude oil rose 1 percent to $98.421 a barrel.