Fundamental View
Yesterday we saw muted movement for the majority of the day. Correlations seemed to prevail in the afternoon as we saw US Government Fixed Income make new highs before reverting lower and the SP move lower to test the 2000 handle before returning higher. We saw the German ZEW post expectations at 48.4 against an expected 40. Ultimately we didn’t see too much of a move initially as the majority of players across the globe are awaiting the composition of the ECB’s Quantitative Easing programme. Oil had its second day lower, settling at the previous low around $46.40bbl. This had a correlated effect in equities as we saw a leg lower in stocks before the majority of US bourses found support at technical handles. Gold had another good day as a result of further safe haven flows rising to almost test the $1300 handle. In the end the S&P responded well bouncing in the latter part of the day to finish largely unchanged on the session.
Today's View
This morning's main event was the Bank of England minutes that surprisingly showed a change in voting by the MPC. In the monetary policy meeting two weeks ago all 9 members voted for no change to interest rates. For the last three months the voting has been 7-2 with two members wanting to raise rates. It seems the continued slide in inflation at teh end of 2014 has taken a BoE rate hike completely off the agenda for 2015. Stirling spiked 80 pips lower off the news but has since stabalised. other than this it has been a quiet morning with all eyes on tomorrow's key ECB monetary policy meeting. The Euro has been tracking sideways this week trapped between 1.1650 and 1.1550. QE is priced in at these levels. It is now a matter of waiting to find out the finer details of the expected ECB QE programme: size, composition, timings and whether each nation will be liable for any losses on their own debt or whether the burden will be shared by the union. This afternoon sees Housing Starts and Building Permits released from the US at 13.30 but outside of this we expect a quiet session. We remain with a neutral to bearish view on stocks, EURUSD, Crude oil and a neutral to bullish view on T-Notes.
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Editors’ Picks
AUD/USD remains under pressure above 0.6400
AUD/USD managed to regain some composure and rebounded markedly from Tuesday’s YTD lows in the sub-0.6400 region ahead of the release of the Australian labour market report on Thursday.
EUR/USD faces decent contention around 1.0600
The knee-jerk in the Greenback reignited some buying interest in the risk complex and pushed EUR/USD to three-day highs near 1.0680, rapidly leaving behind the recent yearly low around 1.0600.
Gold eases despite risk-off mood
Gold trades in a relatively tight range near $2,390 in the second half of the day on Wednesday. In the absence of high-tier data releases, investors keep a close eye on headlines surrounding the Iran-Israel conflict.
Ethereum trades around the $3,000 support following a surge in validator queue
Ethereum (ETH) continued a sideways movement on Wednesday as investors seemed to be waiting for an upward or downward price catalyst. Despite the price stagnancy, the ETH validator queue - possibly fueled by the DeFi restaking boom - rose sharply.
Markets stabilize after Powell rules out rate hike, but the signs don’t look good
Markets are volatile right now; however, a relative calm has descended on the market and US. US stocks are down a touch, but the Vix is lower, US Treasury yields are lower, and the dollar is mostly lower vs. its G10 FX counterparts.