Market News Today
USD consolidates at lows, Equities finished flat (TWTR +13%). China, Japan and South Korea closed for start of Lunar New Year. US Inflation disappointed, taking the steam from the “buy everything” rally of the last few days. Biden spoke of concern about China’s “coercive and unfair economic practices” & human rights, ahead of speaking with Xi. Powell spoke of the significant bond purchasing programme continuing until Inflation rises significantly. Lagarde talked of not the time to slow down fiscal support & a digital EURO within 4 yrs. Oil slips a tad, Gold also consolidates and 10yr yields dipped to 1.12%. Overnight German Wholesale Inflation spiked to 2.1% from 0.6%, AstraZeneca Q4 sales beat estimates.
Narrow ranges have been prevailing in overall languid trading conditions. Singapore will be off tomorrow, and the lunar new year holiday will start tomorrow in Hong Kong. Despite these absentees, global stock markets have remained buoyant, if directionally unambitious. The dollar bloc currencies correspondingly have been firm while remaining below their respective Wednesday highs. The dollar itself settled above the lows that it saw yesterday. This left EURUSD making time in the lower 1.2100s, below Wednesday’s 10-day peak at 1.2145. USDJPY settled slightly to the north of the 104.50 level, above yesterday’s 13-day low at 104.41. Cable consolidated recent gains below yesterday’s 34-month peak at 1.3866.
Ahead, we anticipate that the dollar will continue to weaken, assuming that the reflation trade sustains on the back of the sharp drop on new positive Covid tests, which is being seen globally, vaccination optimism, and overall good corporate earnings reports, alongside stimulus and the prospect for a pent-up consumer spending spree in developed economies.
Today – US initial/continued jobless claims, OPEC & IEA MOMR, ECB’s de Guindos and Earnings from 185 US cos. including PepsiCo and Walt Disney.
Biggest (FX) Mover @ (07:30 GMT) AUDUSD (+0.38%) Rallied from S1 at 0.7713 earlier, testing R1 now at 0.7750, yesterday’s high 0.7755. Faster MAs aligned and trending higher, RSI 61 & rising, MACD histogram & signal line aligned higher and breaking over 0 line, Stochs OB zone from earlier this morning. H1 ATR 0.0008, Daily ATR 0.0058
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Stuart Cowell
Head Market Analyst
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