Today's Highlights
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Sterling volatile as data confuses
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UK retail sales likely to show drop in sales
Current Market Overview
The big news from yesterday was of course the vile Westminster murders. Our deepest sympathies go out to everyone affected by such a senseless atrocity. But out of adversity come the images and stories of real people with real humanity doing their utmost to help people they have never met before but will never forget and they too will never be forgotten by those they helped. So one deranged person spreading hate and violence is countered by hundreds of people helping strangers in any way they can. That's why these murderous morons will never win.
Back in the markets, the Pound had been trading upwards across the board for most of the morning but was aggressively sold off as risk aversion swept the currency markets. There was no clear reason for the sell-off in global equities. The GBP then dipped again after the first reports of the terror attack but did recover from these earlier losses; pushing up to a one month high against the USD and Euro. Data from the UK has been relatively good and investors are looking to today's Retail Sales report to confirm the improvements. However, with wage growth slowing, inflation on the rise and confidence waning, this number could disappoint.
Having cut rates 3 times last year, the Reserve Bank of New Zealand (RBNZ) late last night left rates on hold at 1.75% as expected. So no surprises here. The central bank once again reiterated that the NZD needs to fall further to balance growth and monetary policy needs to remain accommodative for a considerable period of time. They also see inflation rising in the months ahead. Governor Wheeler believes inflation will return to the medium term average level and felt the weak Gross Domestic Product (GDP) numbers experienced in Quarter Four was in part due temporary factors. As a result the RBNZ has grown less dovish at recent meetings.
It's a busier day today - we have German Consumer Confidence in the morning followed by UK Retail Sales at 10.30 GMT. This is expected at 0.4% month-on-month. This will be watched closely with Bank of England MPC member Broadbent also due to deliver a speech. A dovish tone from Broadbent and a third successive weak Retail Sales report would undermine Sterling and its recent gains.
In the afternoon, we have US unemployment claims expected at 240k and then Federal Reserve (FED) Chair Yellen is speaking. Assuming she comments on monetary policy, Fed officials may feel compelled to clarify the central bank's stance on interest rates following the USD recent sell-off.
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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.