- USD (USDIndex 96.35) holds Monday’s gains (95.40), Stocks closed lower (Nasdaq worst performer -1.39%) & Yields drop (10yr 1.422%). Major FX pairs sideways into FED. Omicron news weighed, first death in UK, WHO – this variant “very high risk” but data on severity limited, & another study shows 2-dose vaccines don’t lower antibodies.
- US Yields 10yr traded down to 1.416% up to 1.4216 now.
- Equities – USA500 -43.00 (-0.91%) at 4668 – USA500.F trades higher at 4878.
- USOil – lost over $2.00 under $70.50 – now recovered $71.00 & trades at 71.20.
- Gold spiked to $1790, sank to $1782, now struggles at $1788.
- FX markets – EURUSD 1.1270, USDJPY 113.70, Cable back down to 1.3200 from 1.3275 yesterday.
Overnight – JPY Industrial production, much better than expected, AUD business confidence better than expected, GBP data dump also better than expected (Earnings 4.9% vs 4.6% & 5.9% last time, Claims down nearly 50k vs 15K last time & expectations of -31k & Unemployment unchanged at 4.2%).
European Open – March 10yr Bund future down -0.6 bp at 174.62, slightly underperforming vs Treasury futures. Yields remain at low levels though as markets keep a wary eye on omicron developments while waiting for this week’s round of CB meetings. FOMC kicks off its 2-day session today, with an announcement due tomorrow. DAX & FTSE 100 futures up 0.1% & 0.3% respectively. Sentiment stabilising after virus restrictions.
Central banks will have a difficult task trying to balance inflation concerns & virus nerves though the FOMC it seems remains on course to speed up tapering. ECB still looks dovish by comparison, even if it is set to confirm the timely end of PEPP on Thursday, which is keeping a lid on EUR. BOE is also expected to push back the flagged rate hike into 2022 as virus restrictions are tightening & Cable has dropped to test 1.3200. This morning’s jobs news adds to BOE Hawks.
Today – IEA OMR, EZ Industrial Production, US PPI.
Biggest FX Mover @ (07:30 GMT) AUDCAD (-0.23%) slip after 5-day rally from under 0.9000 to 0.9135.
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Stuart Cowell
Head Market Analyst
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