Forex today had the dollar on the back foot after the hawkish tone of the ECB sent the single currency on the March. The DXY was dropping from 92.50 to 91.78 on poor inflation at factory levels pushed the greenback to its lowest for this 2018 and near critical breakout points.
All eyes are on Friday's CPI and retail sales but the US PPI was a disappointment. December PPI fell 0.1% m/m (mkt: 0.2%), ex-food, energy and trade rose 0.1% m/m.
US stocks rose with the Dow up 0.6% and S&P 500 up 0.4% at the time of writing. US yields were relatively stable ahead of the long-end auction but the 30 years made for another dip within
a 10yr range of between 2.52-2.57% on the day, closing up around 2.53% at the time of writing.
EUR/USD was steered by EYR/JPY flows late in the NY shift with the pair dropping back to post ECB hawkish minutes highs of 1.2059, ending the NY session at 1.2040. The outlook is bullish on the daily sticks with the 10-D SMA broken and a close above 1.2023.
On the back of dollar weakness and noise around the possibility of another Brexit referendum enabled GBP/USD pulled its self up from the off early NY lows and moved into early Asia up +0.25% to 1.3537 a the time writing with a high of 55 on same handle form a cent lower on the day, (eyes on Friday's US CPI as investors look for higher rates in the UK, favouring a current better-bid theme in sterling).
USD/JPY was mixed as markets are not buying BOJ rhetoric over JGBs. but the weak dollar meant bulls could not break 111.90. Price dropped back to probe the 50% of Sep-Nov rise at 111.03, Nov's low is at 110.85 as next support area although technically the pair os oversold.
As for the commodity sector, Oil was higher, with WTI breaching through $64.50 and Brent hitting USD70/bbl for the first time since December 2014 in what’s been pretty straight-line moves for them both from USD41 and USD45/bbl in June. Gold
CRB jumps to 1 ½ year highs and the AUD/USD, awaiting trade data, was able to set a new trend high with eyes on the October 2017 high, closing at 0.7895 from a low of 0.7837. NZD/USD rallied after opening at 0.7230 and printed 0.7262 the high and closing thereabouts. As for the CAD, the reduced sentiment for Jan 17 BoC rate hike next week on NAFTA angst is anchoring the Loonie, although the ECB minutes cap rallies in USD/CAD as well. USD/CAD finished up 1.2524 from a high of 1.2594 and printing a low of 17 the on same handle. Gold stays on the hands of the bulls on dollar weakness $1,324.16 was the spot high, up 9 bucks for the day and closing at the highs as we move into early Asia.
Key events ahead in Asia:
Very little on the cards for the close of the week but we do have Aussie building permits, Japanese and Chinese trade data.
Key notes from US session:
- US PPI: services prices decline for the first time in 10 months - Wells Fargo
- Philly Fed: December Manufacturing Index revised up to 27.9 from 26.2
- US: Weekly initial claims was 261,000, an increase of 10,000 from previous week
- US Dollar Index slides further to test monthly lows
- US: So much growth, so little inflation... - ING
- ECB minutes: current monetary policy stance is appropriate
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