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Following the FED’s hawkishness on Wednesday, the ECB took it a step further. The central bank may have slowed down the pace of tightening moves, but the statement made very clear that this is not a sign that rates are anywhere close to the peak and that there will have to be further “significant” tightening to bring rates to restrictive level, in order to dampen demand and thus help to bring inflation down. “This is not a pivot, we are in it for the long game”. EUR rallied & Yields on short term credit erupted (2yr German yields moved 24.2bp – the most in a single day since 2008) and the DAX lost –3.28%. 7 other central banks (including BOE) also rose rates yesterday all commenting on the scourge of inflation. A big Risk-Off day. The AUD tanked 2.4%, the Yen lost 1.7%, Gold was down 1.7% and USOil was off 1.8%.

• The USD Index rallied from 104.80 blows to retake the key 105.00 band trades at 105.30 now. US Stocks tanked (-2.25%-3.2%) Yields held at lows too as Treasuries held on to gains, 10yr closed at 3.47% and are lower no at 3.45%. Asian stocks are also lower in the aftermath of CB week (Nikkei -1.87%) and more grim Chinese covid narratives…”Beijing death toll mounts as Covid sweeps through Chinese capital”, “Beijing urged to roll out Covid boosters to avoid 1mn deaths”. 


• EUR – rotates over 1.0600 at 1.0650 now, having spiked to 1.0720 post ECB. 


• JPY – rallied from 135.25 lows, to spike over 138.00 and now trades at 137.30. This week’s low was 134.50.


• GBP – Sterling collapsed from 1.2425 to 1.2150 as the BOE vote was split with 6 members agreeing on the 50bp hike and one voter wanting to go with 75bp, however 2 voted and will have argued strongly for no change. Markets hate uncertainty, but conversely, they also hate “group think”. The FTSE100 also closed -0.93%. UK Retail Sales today missed significantly (-0.4% decline vs a 0.3% gain).   


• Stocks – Wall Street collapsed (NASDAQ worst performer -3.2%) – US500 -99.57 (-2.5%) 3895, and slips below the key pivot at 3900 again. Big movers included the biggest of all APPL -4.69%, META -4.47%, NVAX -34.30%. FUTS trades at 3895 now.

However poor the prospects of a Santa Rally may appear, history is still on its side.

• USOil – Rallied to $77.54 again before falling to $75.25 and trades at $75.70 now.


• Gold – Collapsed into the key $1780 and cannot hold that level today, trading at $1775.


• BTC – Sentiment woes continue the biggest coin trades at $17.4k today. 

Today – EZ, UK & US Flash PMIs, EZ HICP (Final), Quadruple Witching.

Biggest FX Mover @ (07:30 GMT) AUDJPY (-0.40%) muted moves in FX following yesterday’s huge moves. Fell from highs on Tuesday at 93.35 to test 91.80 today. MAs aligned lower, MACD histogram & signal line negative and falling. RSI 35.45 & falling, H1 ATR 0.177, Daily ATR 0.935.

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Stuart Cowell

Head Market Analyst

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