- The USD Index has climbed to 105.39 but is off its 200-DMA following the stronger than expected data, including the ISM services and Factory orders reports that also showed still elevated price levels. The less hawkish Fed views & uncertainty over rate path add a ceiling on USD. Treasury yields extended higher, Stocks under pressure as data add to the impacts from Friday’s jobs report to reinforce the FOMC’s view that it will have to maintain a more restrictive policy stance for some time.
- The curve inversion deepened to -80 bps, the deepest since 1981.The belly of the curve continues to lead the weakness in Treasuries with the 3-year yield up 15 bps to 4.129%. The 10-year is 11.7 bps higher at 3.603%.
- AUD – ranging at 0.6720-0.6735 following 25 bp hike from RBA and a prediction of further hikes ahead.
- EUR – pullback to 1.0484 from 1.0590 yesterday. German manufacturing orders stronger than expected but failed to boost EUR.
- JPY – jumped to 137.30.
- GBP – dipped to 1.2160 from 1.2345.
- Stocks – US100 closed with a -1.93% decline, with the US500 off -1.79% and the US30 -1.40% in the red. The declines saw the US500 drop back below 4,000, with the US30 under 34,000.
- USOil – The January WTI crude slipped -3.8% to $76.93 on concerns Fed tightening will weaken demand. There was little impact as the EU price cap went into effect.
- Gold – reverted to $1770 from $1809 highs, as the USD backed up from early lows amid US data releases. Bullion failed to close above $1800.
Today – US Goods & Services Trade Balance and Canadian Ivey PMI.
Biggest FX Mover @ (07:30 GMT) AUDJPY (+0.69%) turned above 200-DMA. MAs flattened indicating the end of the uptrend, MACD signal line is at 0, RSI 62.00 & falling, H1 ATR 0.178, Daily ATR 0.998.
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Andria Pichidi
Market Analyst
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