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The major US economic data yesterday (Q4 GDP lower; 3.9% from 4.2% but better than expected 3.6%, strong consumer spending, Durable goods, New Home Sales, Lower Inventories and Weekly Claims at new 22-mth lows) all added to the soft landing, disinflation, scenario for the US economy. A FOMC 25bp hike next week now has a 98% probability, up from 94% yesterday (2% for 50bp!). Stocks rallied, USD recovered and yields picked up from recent lows. Overnight – Asian stocks hit 8-mth highs and Core Inflation in Tokyo  hit a 42yr high at 4.3%. European & UK FUTS also higher. #TESLA gained +10.97%.

• The USD Index tested the 8-mth lows at 101.25, yesterday, rallied to test 102.00 following the data and trades back to 101.75 now.  


• EUR – sank below 1.0900 after posting 9-mth highs at 1.0929 and lows at 1.0855 yesterday before recovering to 1.0875 now. 


• JPY – Sank to test 129.00 yesterday, before rallying to 130.50, back to 129.50 following the CPI data and now up to 130.00.


• GBP – Sterling has rallied over 1.2400 yesterday and again today but has struggled to hold the key resistance level. Back to 1.2370 now.  


• Stocks – The US markets rallied yesterday (+0.61% to +1.76%) yesterday.  US500 +1.10%, (+44) 4060,  US500 FUTS trade firmer at 4062. TSLA +10.97%, CVX +4.86%, XOM +4.02% IBM -4.48%. Intel missed after hours -9.7%.  In Europe today LVMH posted strong Earnings, lifting European FUTS further.

• USOil – topped at $82.00 yesterday before dipping to $80.00. Trades at $81.40 now. 


• Gold – Tested into $1949 yesterday before breaching $1922 support, rallying to $1940 and now back to $1922.


• BTC – Continues to hold the $22k handle this week, spiking to $23.7k yesterday, and holds $23k currently. 

Today – US PCE Price Index, Personal Income & Consumption, Speech from ECB’s Lagarde.

Biggest FX Mover @ (07:30 GMT) GBPJPY (-0.38%). Declined from a test of 161.75 on close last night as JPY outperformed in Asia, to test 160.70. MAs aligning lower, MACD histogram & signal line positive but falling. RSI 49.76 & neutral, H1 ATR 0.268, Daily ATR 1.808.

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Stuart Cowell

Head Market Analyst

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