Market snapshot, dollar bid, ECB dovish - ANZ

Analysts at ANZ noted that the USD rallied overnight, helped by higher US yields and dovish guidance from the ECB, although volatility picked up a bit during Mnuchin’s Senate confirmation hearing.

Key Quotes:

"Acknowledging that headline inflation will rise further in coming months, ECB President Draghi stressed that policy is set with a medium term orientation and that there is no evidence yet of a pick-up in core inflation (0.9% y/y). Draghi said that the ECB needs to see a self-sustaining, durable rise in inflation that converges on target before they would consider adjusting to a tighter policy. That is not the case at present and tapering was not discussed at the meeting. US bond yields continued to push higher with the yield on the 10-yr Treasury note rising to 2.47%, fuelled by the lift in the Philly Fed Index.

One of Trump’s most frequent comments during the election campaign was “on day one in office”. The market is anticipating more detail on fiscal policy, trade policy and regulatory change and the Trump trade has re-awakened a bit over the past 24/48 hours. Oil was firmer rising ~1.0% to around $51.40, although off its highs as the EIA reported a 2.35m barrel rise in stocks last week. Stock markets were under mild downward pressure, and gold slipped a touch."