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Intermarket:
- SP Futures 3920 (-0.19%)
- EUSTXX 3698 (+0.03%)
- Crude Oil 61.65 (+0.82%)
- US 10YR 1.30 (+0.15%)
- EurUsd 1.2043 (+0.07%)
- UsdJpy 105.91 (+0.04%)
- DAX 13904 (-0.02%)
US markets saw a mixed session yesterday despite the surprise in retail sales (+ 5.3% in January, the most in seven months) and January FOMC minutes revealing that “it was likely to take some time for substantial further progress to be achieved”. The S&P 500 closed marginally lower, with Nasdaq also weighed down by inflation-sensitive tech shares. The 10-year UST bond yield briefly tested 1.33% before retreating to close at 1.28%, while crude oil prices soared amid the cold weather across central US, and Bitcoin crossed $52k for the first time.
Trading resumed in mainland China after the Lunar New Year celebrations with modest losses posted. Losses are being incurred in Hong Kong and Japan too.
Some focus this morning on news 25% of British businesses may fire staff if the government’s furlough program is not extended beyond April. Other news was from Big tech after Facebook banned Australian users and publishers from sharing or viewing news content on its website.
Looking ahead: today we get ECB Minutes, US initial jobless claims, Philly Fed and BOE’s Saunders, Fed’s Brainard and Bostic are speaking.
Matters that Matter:
• Democratic drive for Biden’s $1.9 trillion stimulus plan could leave progressive priorities behind
• Fed minutes show willingness to steer past coming jump in inflation
• Amid Texas freeze, oil producers still shut; governor bans natural gas exports
• COVID response drives $24 trillion surge in global debt - IIF
• Japan Inc shun blanket wage hikes amid coronavirus pain, most oppose Olympics as planned - poll
• Australia employment rises in Jan as economy emerges from lockdowns
• Facebook news goes dark in Australia as content spat escalates
• Italy’s new PM Draghi promises sweeping reforms, urges national unity
Majors 1-Day View:
USDJPY
- Selling from 4 month highs yesterday switched signals to temporarily bearish. In Asia trade, the trend of higher daily lows was briefly interrupted, although the trend remains intact. As such, the call for Thursday is cautiously bearish, and we prefer to sell into rallies towards 106.10s.
- USDJPY and GBPJPY still remain supported on carry demand and vaccine remittances.
- US Yields firm, but off from highs.
- USDJPY option KOs reported at 106.50, 107.00
EURUSD
• Tuesday’s bearish engulfing set the stage for yesterday’s ¾ Big Fig loss. As such, the outlook for Thursday remains bearish.
• Sharp rise in yields, Empire State, Retail Sales boosted USD. • Offers trail down to 1.2050.
AUDUSD
• Prices posted a lower daily high & low on Wednesday, but buyers returned at the lows to post a little changed close. As such, signals are less clear. But on balance, a marginal bearish slant still remains for today and the call is to sell on a rally to .7780s.
• Solid employment data supportive.
• Offers reported at .7800.
GBPUSD
• Prices posted losses of ¾ Big Fig on Wednesday, interrupting the trend of higher daily lows. As such, with caution, the call for Thursday remains bearish.
• Pound Off the highs on USD strength, but trend remains intact until 1.3800 is violated.
• Significant option defence reported ahead of 1.4000 Barriers.
FX Relative ATR Grid
Comment: Volatility continued to expand on Wednesday, with Eur, Chf and Jpy pushing beyond the 22 Day ATR. All pairs are now trading with decent volatility levels.
Relative Strength Grid
Comment: The strongest trends remain visible in GBP (long), JPY crosses (long), AUD pairs (long), CHF pairs (long). The largest flows yesterday were seen in USD (strength), EUR (Weakness), JPY (Weakness).