FX News Today
European Fixed Income Outlook: Asian stock markets moved mostly higher, with Hang Seng and CSI 300 outperforming again, while the Nikkei underperformed and declined -0.24% as the Yen moved higher against the dollar. Oil giants led the way in Hong Kong. 10-year JGB and Treasury yields climbed and recent volatility in bond markets seemed to subside somewhat, although the BoJ and ECB reminding markets this week that central bank support is slowly on the way out, yields are likely to continue to trend higher. UK100 futures are rising in tandem with U.S. futures. The calendar only has second tier data in the form of inflation numbers out of Spain, France and Sweden.
FX Update: The dollar has remained on a softening tack, with the narrow trade-weighted USD index (DXY) extending yesterday’s declines from levels around 92.50 to a 91.75 low today,, which matches the four-month low that was posted on January 2. The greenback has logged fresh lows versus the euro, sterling and Australian dollar, among other currencies, in the early part of the Asia-Pacific session after Fed’s Dudley saying that the case for gradualist approach to tightening monetary policy remains strong, arguing that the pace of rate hikes could be accelerated if need be. EURUSD clocked a five-day peak at 1.2066, with subsequent dips remaining shallow. AUDUSD traded above 0.7900 for the first time since late September, logging a peak of 0.7904. The hawkish-leaning ECB minutes, yesterday, and the BoJ’s QE tapering announcement earlier in the week, have been factors generating a softer dollar theme this week, via EURUSD buying and USDJPY selling, respectively.
Charts of the Day
Main Macro Events Today
- US CPI & Core CPI – Headline CPI is forecast to increase 0.2% in December vs 0.4% , while core is set to rise 0.2% vs 0.1% — leaving core y/y at 1.7%.
- US Retail Sales – December retail sales forecast to rise 0.4% vs 0.8%, while increasing 0.4% ex-auto. Lastly is business inventories that should rise 0.3% in November vs -0.1%.
- German Buba President Weidmann Speech
- Federal Reserve Bank of Boston President Rosengren Speech
Support and Resistance Levels
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