FX Highlights

  • Financial markets underwent increased volatility following mixed quarterly results from JP Morgan Chase  and an uptick in US CPI data. Overall risk sentiment seems to be softening as Traders and Investors take defensive positions ahead of additional earnings announcements next week. The Yen also benefited from the migration away from risk, we may be seeing a reversion to the flight to quality trade which dominated markets at the height of the crisis. Central banks are looking for opportunities to tighten monetary policy to counter inflationary risks, which has served as an additional factor in determining price action.
  • JP Morgan Corporate Earnings mixed as EPS beat estimates at .74 cents a share vs. .60 cents a share, but failed to meet expectations on the revenue side at $25.2bln vs. $26.8bln
  • CPI ticks higher by 0.1% vs. 0.2% expected, a rise in inflation may cause increased pressure on Fed to raise rates sooner than expected
  • US consumer sentiment improves to 72.8 from 72.5 in December, this data was dollar supportive
  • Eurozone inflation data came met expectations of 0.30%, following very bearish comments regarding the region’s economy from ECB President Jean-Claude Trichet
  • Treasury prices also rose as the 10yr yield fell 4 bps to 3.71%, in addition the spread between 2’s and 10’s narrowed to 2.80 percentage points from a record high of 2.90 percentage points as noted from Bloomberg
  • US equity markets sank at the open with the Dow weaker by 0.80% and the S&P 500 lower by 0.86%.

Upcoming Events

  • US – Monday, National Holiday in observance of Martin Luther King Jr
  • CAN - No major economic data is due for release today from Canada