Market News
- USD (USDIndex 92.45) slips from highs as risk sentiment picks up as CB keep their foot on the pump. Biden & Xi had a “productive” 90min call, their first since February.
- Yields down again from highs earlier in the week, (10yr 1.299%, from 1.37%). Oxford Economics expects 10yr rate to be at 1.7% by year end.
- Equities stalled again – USA500 -20 (-0.46%) at 4493 (Dow -0.43% & Nasdaq -0.25%). USA500.F 4504. (AMZN & MSFT lost over 1% yesterday). Asian stocks jump, Nikkei at 6-month high (+0.5%) & JPY weaker re: Biden/Xi & Kono to stand (likely to be next Japanese PM).
- USOil fell $2 to $67.50 after inventories yesterday, now back to $68.30. EIA inventories reported a -1.5m barrel vs -5.9m/b and -7 m/b last week.
- Gold found support at $1788 and has recovered $1800 now, as the USD dipped.
- Yesterday – ECB – no surprises on rates talked of a “moderately lower pace for PEPP” still at 20bln euro. Ms. Lagarde “We are re-calibrating PEPP, not tapering” Another non-event. – CLAIMS – a pandemic record low 310k, 4 week average 350k, BUT continuing long term claims increased to 2.8 mln.
- Overnight – More taper talk from Fed members, Biden said all federal employees will need to be vaccinated. German CPI flat at 3.9%, UK GDP misses (0.1% vs 0.5%) Trade balance slips another 2bln into the red, worsens, Manu. prodn misses but Ind. Production beats.
European Open – The December 10-year Bund future is up 6 ticks, outperforming versus Treasuries and signalling further gains in Eurozone bonds, which already staged a relief rally on Lagarde’s dovish leaning delivery of the slight taper in PEPP purchases. Rates are back in focus as the main signalling tool for the ECB’s policy stance and with the ECB’s newly tweaked guidance on the rate outlook that affirms a very dovish stance for the foreseeable future, markets clearly can live with a slight reduction in monthly purchase volumes. Interestingly, Holzmann suggested that the outlook for Fed tapering put pressure on the ECB. DAX and FTSE 100 futures are up 0.2% and 0.4% respectively, futures are also higher after a strong session in Asia overnight, suggesting that stocks also weren’t phased by the well flagged ECB announcement. Growth optimism is stabilising again and central bank policies will remain supportive for a long time to come. EURUSD flat at 1.1825, from a 40 pip, ECB range yesterday, GBP in demand, Cable has rallied to 1.3850 from a low at 1.3750 yesterday. USDJPY collapsed from 110.25 to 109.62 yesterday, recovering to 109.90 now.
Today – US PPI, Canadian Labour Market Report, ECB’s Lagarde, Fed’s Daly, Mester
Biggest Mover @ (06:30 GMT) NZDJPY (+0.35%) rallied from week low at 77.80 earlier to 78.30 now as sentiment improved, equities rallied and JPY demand cooled. Faster MA’s aligned higher, MACD signal line below 0 but rising, histogram just broke over 0. RSI 62 and rising, Stochs OB zone. H1 ATR 0.112, Daily ATR 0.576.
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Stuart Cowell
Head Market Analyst
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