Market update: Stronger equities dampened the safe-havens

Q3 earnings season has gotten off to a strong start, with big banks largely shooting the lights out on revenues and earnings.
Incoming data was constructive as well, with jobless claims coming in at pandemic lows, while the rate of PPI growth slowed. All 11 S&P sectors are higher.
Bulls are in control, both in the bond market and on Wall Street. – Overlooked the hawkish Fed implications from the record strength in PPI and the lowest claims readings since before the pandemic.
Yields declined and Treasuries are in the green on short covering and dip buying, recovering from the recent aggressive selloff. US Treasury yield has lifted 1.8 bp to 1.53%.
China: will loosen restrictions on home loans and boost lending & bank added enough medium term funds to keep liquidity in the system steady.
Equities up. JPN225 managed a 1.6% gain and US futures are also higher, led by a 0.4% rise in the USA100.
Oil lifted above $81.99. – Prices quickly backed up after a larger than expected stock build in the US.
Improved market sentiment, which has lifted global stocks, commodity prices and bond yields, is also weighing on the safe-haven Dollar.
FX markets – USD dropped, Yen declined.
EURUSD retests 1.1600 mark, Cable at 1.3689, USDJPY touched 114.16.

Andria Pichidi HFM

European Open – The December 10-year Bund future is slightly higher, US Treasury futures slightly in the red, as stock futures move higher in both Europe and North America after a good session for equities across Asia overnight. Market sentiment improved and GER30 and UK100 futures are currently up 0.4% and 0.3% respectively, while a 0.4% rise in the USA100 is leading US futures. EGB yields had dropped back markedly yesterday, but in the UK money markets are still bracing for an earlier than expected lift off on rates, which ironically is actually helping long rates to come down.

Today – Today’s data calendar is unlikely to change the overall picture, with only eurozone trade data for August and some final HICP readings on the agenda.

Biggest FX Mover @ (06:30 GMT) NZDJPY (+0.60%) Breached 80.55. Up for 7 days in a row. Currently faster MAs keep pointing up, MACD signal line is at 0 & histogram trending higher. RSI at 82 & Stochastic at 94 but both sloping down, all indicating further upwards move in the medium term but possible pullback in the short term. H1 ATR 0.123, Daily ATR 0.810.

Author

Andria Pichidi

HFM

Having completed her five-year-long studies in the UK, Andria Pichidi has been awarded a BSc in Mathematics and Physics from the University of Bath and a MSc degree in Mathematics, while she holds a postgraduate diploma (PGdip) in

EUR/USD climbs to daily highs on US CPI

EUR/USD now accelerates it rebound and flirts with the 1.1880 zone on Friday, or daily highs, all in response to renewed selling pressure on the US Dollar. In the meantime, US inflation figures showed the headline CPI rose less than expected in January, removing some tailwinds from the Greenback’s momentum.

GBP/USD clings to gains above 1.3600

GBP/USD reverses three consecutive daily pullbacks on Friday, hovering around the low-1.3600s on the back of the vacillating performance of the Greenback in the wake of the release of US CPI prints in January. Earlier in the day, the BoE’s Pill suggested that UK inflation could settle around 2.5%, above the bank’s goal.

Gold: Upside remains capped by $5,000

Gold is reclaiming part of the ground lost on Wednesday’s marked retracement, as bargain-hunters seem to have stepped in. The precious metal’s upside, however, appears limited amid the slightly better tone in the US Dollar after US inflation data saw the CPI rise less than estimated at the beginning of the year.