What is correlating in FX? - Nomura

Ross J Burland FXStreet

Analysts at Nomura offered the list of top 10 positive correlations that are now dominated by the relationship between JPY (crossed with EUR or USD) and various interest rate measures, including nominal swap rate differentials (2y, 5y, 10y) and the German and US 10y sovereign yield, respectively.

Key Quotes:

"A new entrant into the list includes the relationship between NOKSEK and the respective 2y nominal swap rate differential, which has strengthened markedly since the beginning of March. We expect the Riksbank to normalise policy before Norges Bank, and we think this could continue to weigh on NOKSEK in the coming quarters.

"While the top 10 negative correlations show a degree of easing in correlations in the last two weeks, the list is now fully dominated by commodity prices (specifically the relationship between precious metals with JPY and NOK crossed with USD, and the relationship between oil prices with NOK, crossed with EUR or USD)."

"A notable two-week positive change in correlations includes the sudden strengthening in the relationship between NOKSEK and changes in crude oil prices. In addition, the 2s10s spread of the of the EUR swap curve has begun correlating more strongly positive with various EUR crosses (particularly crossed with AUD, NOK and NZD)."

Author

Ross J Burland

FXStreet

Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.

EUR/USD holds steady above 1.1850 as markets eye Eurozone GDP, US CPI inflation releases

The EUR/USD pair trades on a flat note near 1.1870 during the early Asian session on Friday. The major pair steadies amid mixed signals from the latest release of US economic indicators. Traders await the preliminary reading of the Eurozone Gross Domestic Product for the fourth quarter and US inflation data, which are published later on Friday.

GBP/USD consolidates around 1.3600 vs. USD; looks to US CPI for fresh impetus

The GBP/USD pair remains on the defensive through the Asian session on Friday, though it lacks bearish conviction and holds above the 1.3600 mark as traders await the release of the US consumer inflation figures before placing directional bets.

Gold: Will US CPI data trigger a range breakout?

Gold retakes $5,000 early Friday amid a turnaround from weekly lows as US CPI data loom. The US Dollar consolidates weekly losses as AI concerns-driven risk-off mood stalls downside. Technically, Gold appears primed for a big range breakout, with risks skewed toward a bullish break.

Bitcoin, Ethereum and Ripple stay weak as bearish momentum persists

Bitcoin, Ethereum and Ripple remain under pressure, extending losses of over 5%, 6% and 4%, respectively, so far this week. BTC trades below $67,000 while ETH and XRP correct after facing rejection around key levels. With bearish momentum persisting and prices staying weak, the top three cryptocurrencies continue to show no clear signs of a sustained recovery.

A tale of two labour markets: Headline strength masks underlying weakness

Undoubtedly, yesterday’s delayed US January jobs report delivered a strong headline – one that surpassed most estimates. However, optimism quickly faded amid sobering benchmark revisions.

Aster Price Forecast: Demand sparks on Binance Wallet partnership for on-chain perpetuals

Aster is up roughly 9% so far on Thursday, hinting at the breakout of a crucial resistance level. Aster partners up with Binance wallet for the second season of the on-chain perpetuals challenge.