US Stock markets crashed into close (US30 -622pts) after a weak day. US data biased lower (Philly Fed 16.0 vs 23.2, Initial Claims 248K vs 217k & Housing data mixed.) USD cools on its safe-haven bid. Gold rallied to test $1900, Oil remained under $90.00, Yields widened again but remain elevated. Asian markets also slipped (Nikkei -0.43%, ASX worst performer -1.0%.) Claims & counterclaims yesterday over who fired on who, expelled a US diplomat and today there are reports of 30 more troop and tank withdrawals; also “provided there is no further n invasion of e,” Blinken & Lavrov will meet late next week.
Overnight – JPY hurt by weaker CPI data (0.2% vs 0.3% & 0.5% previously). Fed hawk Mester says rates should rise more quickly and the balance sheet needs to be reduced more swiftly than it did post the financial crash. Nothing new but more hawkish overtones and pressure to act. UK Retail Sales stronger than anticipated, 1.9% vs 1.1% but December numbers were revised down to -4.0% from -3.7%. Poor christmas for UK retailers. French CPI in-line and unchanged at 0.3%.
European Open – The March 10-year Bund future is down -13 ticks, US futures are also lower, but outperforming, with reports of a planned US- meeting helping to boost confidence and boosting stock market sentiment. Safe haven demand is ebbing and DAX and FTSE 100 futures are up 0.3%, while a 0.7% rise in the NASDAQ is leading US futures higher. Not that e jitters are resolved and markets will keep a weary eye on developments. For now though they seem willing to buy into the headlines, which will likely see yields nudging higher early in the session. EGBs have staged a remarkable rally this week, as officials pledged caution and gradualism as they prepare to remove stimulus.
Today - US Existing Home Sales, EZ Consumer Confidence, Fed's Williams, Brainard, Evans; ECB's Elderson, Panetta. Earnings NatWest; Allianz, EDF, Deere.
Biggest FX Mover @ (07:30 GMT) NZDJPY (+0.58%) Rallied from lows of 75.86 on Monday to 0.77.35 now. MAs aligned higher, MACD signal line & histogram significantly above 0 line, RSI 63.25 & rising, Stochs OB zone H1 ATR 0.123 Daily ATR 0.755.
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Stuart Cowell
Head Market Analyst
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