In view of analysts at Rabobank, US Treasuries are likely to continue to set the tone for the markets this week.
“Asian stocks ended Monday’s session in the red (the Nikkei fell 2.55%) as the yield on the US 10Y increased to an intraday high of 2.8831%. Looking from the perspective of technical analysis, the resistance area of 3.05%-3.10% is crucial to watch. A break higher would confirm that the multi-decade downside trend is being reversed.”
“In terms of major events, various central banks will hold interest rate meetings in the coming days, including the Bank of England on Thursday. With the main rate set to remain unchanged at 0.50%, the market will be looking for fresh clues about the timing of the next move.”
“In her preview Rabobank’s Jane Foley wrote that the uncertainties linked with Brexit present a unique backdrop that complicates the outlook for monetary policy in the UK. We see a strong chance of one rate hike at the end of this year. However, we are watchful for signs that the Bank could be minded to squeeze in two moves during the course of 2018, potentially to coincide with the May and November Inflation Reports. We expect a mildly hawkish tone from the February 8 policy meeting.”
“In terms of the latest developments regarding Brexit negotiations, it is being widely reported in the UK press this morning that Downing St has ruled the UK out from remaining within the EU’s customs’ unions after Brexit. The statement will have been aimed at putting a lid on the rifts between ‘remainers’ and ‘Brexiteers’ within PM May’s government that blew open last week. In some quarters May is being blamed for failing to show strong leadership and doing little to prevent various ministers laying out their own visions for Brexit. Once again talk of a leadership challenge rose to the fore over the weekend, though in truth the Conservative Party is so deeply divided over the issue of Brexit that a new leader would unlikely resolve the split. The EU’s Chief Brexit negotiator Barnier is due to visit Downing St this week in preparation for talks on the transitional arrangement after the UK leaves the EU next March. Downing St sources have been reported as claiming that a customs union was entirely different from a customs arrangement which would allow the UK the freedom to strike deals with non-EU countries.”
“Staying in Europe, today ECB President Mario Draghi will deliver his annual report to the European Parliament. Various Eurozone countries will publish PMIs this morning, which should confirm that the pace of expansion in services is robust across the region.”
“Moving to Asia, China will release the latest set of data later this week including trade, consumer and producer prices, foreign exchange and credit.”
“It will be a relatively quiet week in the US. Trade data on Tuesday is probably the most important to watch given that narrowing the deficit is one of the main objectives for President Trump. The consensus is for a USD 52bn shortfall in December up from USD 50.5bn. Fed Bullard, Kaplan, Dudley and Harker are scheduled to speak this week.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Follow us on Telegram
Stay updated of all the news
EUR/USD drops below 1.0850 as DXY extends gains
EUR/USD pulled back below 1.0850 during the American session and turned negative for the day, moving away from the three-day high it hit earlier at 1.0871. The US Dollar gained momentum in a relatively quiet session.
GBP/USD retreats further from seven-week highs toward 1.2300
GBP/USD dropped to 1.2300 after the beginning of the American session amid a stronger US Dollar. Earlier on Wednesday reached the highest level since February 2 at 1.2360. The pair holds an upward bias but bulls need above 1.2300.
Gold: XAU/USD fails to retake $1,970 Premium
Gold reversed at $1,971/oz and retreated finding support above $1,960. Higher US yields make it difficult for XAU/USD to gather strength. Also, the DXY is trading at daily highs near 102.80, adding weight to gold.
XRP Price Prediction: Whales could be expecting a 20% rally
XRP price has been rising impressively, drawing investors towards the crypto asset. However, these traders might want to brace for a potential pullback following the recent rallies despite the Ripple community preparing for a win against the SEC.
Athleisure does it again as earnings blowout send LULU up 17%
Lululemon Athletica (LULU), the only heir to Nike's (NKE) success in the athletic wear realm, reported earnings late Tuesday that show why it has remained a must-own stock despite the market tanking over the past year.