- USD (USDIndex 96.50) held onto gains as US stocks fell over 1% again, Yields also dipped. Oil posted 2-week lows before recovering and GOLD could not hold $1800.
- Risk-off, shaken off so far today as Asian markets rally. Biden’s $1.75tn build back better bill still being resisted by Manchin but signs are more positive. Nikkei +1.79% and European & Futures rise over 1%. OMICRON – still weighs, NZ delays opening borders, UK no new measures now but cannot rule out lockdowns (probably after Christmas) – 73% of all cases in US were Omicron last week, and first death confirmed.
- Turkish Lira recovered +23% yesterday and another +11% today – Erdogan promised to back/guarantee local savings in LIRA (up to $1.5 billion local USD savings converted to LIRA on Monday night). Some speculators in USDTRY over 15.00 no-doubt burnt but this does not change the fundamentals of the Turkish economy and 20%+ inflation-rate. Move in USDTRY off lows today at 13.60.
- US Yields 10yr traded down to 1.419% now 1.43% lifted as market sentiment improved and save haven flows were reversed.
- Equities – USA500 -52 (-1.14%) at 4568 Dow & Nasdaq -1.23% – USA500.F trades up at 4593. Nike & Micron beat earnings significantly, Movers; PFE +2.6%, MRNA -6.25%
- USOil – slumped to $65.88 yesterday bounced to $69.00 now as sentiment lifts
- Gold – Could not hold the key $1800 handle yesterday & tested 1788 again, now up at 1790.
- FX markets – EURUSD 1.1275 from a test of 1.1300, USDJPY 113.72, Cable tested down to 1.3173, recovered to 1.3215 after no new restrictions announced.
Overnight – RBA Minutes – confirmed worries over Covid-19, Inflation and “Committed to maintaining highly supportive monetary conditions.”
European Open – The March 10-year Bund future is down -33 ticks, underperforming versus Treasuries, which are also in the red. DAX and FTSE 100 are up 1.2%, and a 1.2% rise in the NASDAQ future is leading US markets higher, after a broad rebound across Asian markets. Omicron and the associated comeback of restrictions remain in focus, but the general feeling is that developments will dent, but not derail the recovery.
Today – German GfK Consumer Sentiment, EZ Consumer Confidence (Flash).
Biggest FX Mover @ (07:30 GMT) NZDJPY (+0.31%) Bounced from 76.00 lows yesterday to 76.40 now. MAs now aligned higher, MACD signal line & histogram moving higher but still under 0 line since early Friday, RSI 52 & rising, Stochs OB zone. H1 ATR 0.125 Daily ATR 0.714.
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Stuart Cowell
Head Market Analyst
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