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Forex News Timeline

Thursday, February 22, 2018

The latest migration flows reported by the UK Office for National Statistics (ONS), earlier this Thursday, estimates that 130,000 EU nationals emigrat

The latest migration flows reported by the UK Office for National Statistics (ONS), earlier this Thursday, estimates that 130,000 EU nationals emigrated in the year to September, the highest number since 2008.Key points:   •  220,000 EU nationals came to live in the UK - 47,000 fewer than the previous year.
   •  Net EU migration - the difference between arrivals and departures - was 90,000, the lowest for five years.
   •  The figures also show that more British people are emigrating than are returning to live in the UK.  

EUR/USD is hovering over the 1.2300 neighbourhood on Thursday, posting small gains for the day following the publication of the ECB minutes. EUR/USD

Spot quickly reverted the spike to session peaks near 1.2310. ECB minutes showed some members preferred to drop easing bias. US data, Fedspeak next on tap in the NA session. EUR/USD is hovering over the 1.2300 neighbourhood on Thursday, posting small gains for the day following the publication of the ECB minutes.EUR/USD up on USD-selling, Fedspeak eyedSpot managed to stage a moderate rebound after bottoming out in the 1.2260 region earlier in the session, all amidst some correction lower in the greenback, as sellers seem to be clustered above the 90.00 handle when measured by the US Dollar Index (DXY). Furthermore, the European currency stayed apathetic on the ECB minutes, where some members of the Governing Council preferred to drop the easing stance. In addition, the Governing Council stressed that it is till premature to change the central bank’s communication. On another direction and on the US data front, weekly initial claims are next on tap ahead of speeches by New York Fed and permanent voter W.Dudley (centrist), Dallas Fed R.Kaplan (non voter, hawkish) and Atlanta Fed R.Bostic (voter, centrist).EUR/USD levels to watchAt the moment, the pair is losing 0.02% at 1.2280 and a breach of 1.2206 (low Feb.9) would open the door to 1.2167 (50% Fibo of 2014-2017 drop) and finally 1.2165 (low Jan.18). On the flip side, the next hurdle aligns at 1.2353 (10-day sma) seconded by 1.2371 (21-day sma) and then 1.2537 (high Jan.25).

Here are some of the key highlights from the Account (minutes) of the monetary policy meeting of the Governing Council of the European Central Bank, h

Here are some of the key highlights from the Account (minutes) of the monetary policy meeting of the Governing Council of the European Central Bank, held on 24-25 January 2018, were released this Thursday.     •  Too early to change communication
   •  Policy to evolve to avoid abrupt, disorderly adjustments later
   •  Some expressed preference for dropping easing bias

Turkey Capacity Utilization: 77.8% (February) vs previous 78.2%

UAE Energy Minister Suhail bin Mohammed al-Mazroui was out on the wires in the last minute, via Reuters, saying that oil undersupply is their main wor

UAE Energy Minister Suhail bin Mohammed al-Mazroui was out on the wires in the last minute, via Reuters, saying that oil undersupply is their main worry.Additional quotes:   •  OPEC no longer solely responsible for fixing oil market
   •  We are not targeting a price, we are targeting a balance
   •  We are not seeing the right level of investment at current oil price
   •  Increase in trust being seen between OPEC/non-OPEC producers

Analysts at Westpac note that New Zealand’s retail spending posted a modest 0.2% gain in the September quarter as some of the softness was due to decl

Analysts at Westpac note that New Zealand’s retail spending posted a modest 0.2% gain in the September quarter as some of the softness was due to declines in the volatile vehicle and fuel categories.Key Quotes“Core spending growth also slowed following earlier temporary boosts associated with high profile sporting events.” “We expect the December quarter retail spending figures will show that New Zealand households ended 2017 with a bang. We’re forecasting a 1.4% gain in spending over the quarter. Monthly spending figures have shown solid increases in core spending categories in recent months.”

FX Strategists at UOB Group believe the pair could slip back to the 0.7730 region in the near term. Key Quotes 24-hour view: “The anticipated weakne

FX Strategists at UOB Group believe the pair could slip back to the 0.7730 region in the near term.Key Quotes24-hour view: “The anticipated weakness exceeded our expectation by a wide margin as AUD crashed through several strong support levels before ending the day near the low. Downward momentum remains strong and with no sign of stabilization just yet, further weakness is expected from here. That said, the 0.7759 low that was seen earlier this month is a strong support level and may not yield so easily (next support is at 0.7730). On the upside, any intraday recovery is expected to hold below the overnight high of 0.7880 (0.7845 is already a strong resistance)”. Next 1-3 weeks: “After trading mostly sideways for several days, the sharp and abrupt decline yesterday that sliced through the 0.7820 support was unexpected. While it is too early to expect that AUD has moved into a bearish phase, the undertone has weakened considerably and this could lead to a test of the solid support at 0.7730 (the month-to-date low near 0.7760 is acting as a strong intervening support). Overall, we expect AUD to stay under pressure, at least for the next several days unless it can reclaim 0.7910”.

RBI minutes from this month’s meeting were more hawkish than expected and the markets are starting to price in potential rate hikes, suggests the anal

RBI minutes from this month’s meeting were more hawkish than expected and the markets are starting to price in potential rate hikes, suggests the analysis team at BBH.  Key Quotes“With inflation running above 5%, officials fretted that the 2-6% target band will be breached as fiscal policy runs too hot.  One member of the MPC noted that "Fixed income markets are telling us that we have fallen behind the curve.”  Next policy meeting isApril 5 and markets should start preparing for a possible rate hike then.”

The selling pressure on the CEEMEA currencies increased after the markets got spooked by the prospect of the Fed accelerating the pace of tightening,

The selling pressure on the CEEMEA currencies increased after the markets got spooked by the prospect of the Fed accelerating the pace of tightening, according to analysts at Rabobank.Key Quotes“The minutes revealed that US policy makers added the word “further” in front of “gradual increases.” While there was no indications that this could potentially mean either “faster” or “more”, the markets interpreted “further” as a signal that the Fed may deliver four hikes this year.”

Analysts at BBH point out that Canada reports December retail sales and is going to be a key economic release for today’s session.   Key Quotes “The

Analysts at BBH point out that Canada reports December retail sales and is going to be a key economic release for today’s session.  Key Quotes“The headline is expected to have been restrained by weaker auto sales, without which retail sales may have risen about 0.3% after the heady 1.6% rise November.  The market continues to discount a little less than a 50% chance of a hike in April.  The US dollar has risen from CAD1.2550 to CAD1.2710 in the past five sessions.  It overshot our retracement target near CAD1.2665, but has come back offered.  A move back below the CAD1.2660 area may suggest a near-term top is in place.”

Analysts at Nomura now project real GDP growth in Japan of 1.6% y-y in FY17, 1.4% in FY18, and 0.8% in FY19. Key Quotes “We raise our outlook mainly

Analysts at Nomura now project real GDP growth in Japan of 1.6% y-y in FY17, 1.4% in FY18, and 0.8% in FY19.Key Quotes“We raise our outlook mainly to reflect the sharp increase in US federal spending in the budget deal passed by Congress on 9 February. Our US analyst team responded to this news by upgrading its US economic outlook.” “Solid external demand leads to robust capex in Japan too We think Japanese real exports will continue to grow strongly through to at least summer 2018, supported by US demand that is likely to receive a further boost from sharp increases in Federal expenditure. We think capex will drive the Japanese economy, taking the form of increased investment at nonmanufacturers to tackle labor shortages as well as capex at manufacturers in response to growth in export volumes.” “Pace of growth in real consumer spending still only gradual The boost to Japanese output from increased exports has led to sustained improvement in employment conditions and helped to support growth in household incomes. However, we think growth in household incomes and real consumer spending is likely to remain modest because job momentum will probably peak out through FY19, as the economy slows as a whole, and the 2018 spring wage negotiations are likely to result in only a slight y-y improvement in base pay despite the government calling for a 3% hike in wages. We continue to assume that the hike to the consumption tax rate currently scheduled for October 2019 will be pushed back based on political considerations, mainly due to the slow pace of growth in household demand.” “2% inflation target yet to be achieved; Goldilocks economic conditions ongoing Improved growth prospects through FY19 should strengthen upward inflationary pressure as the pace of improvement in the output gap accelerates. However, household income and spending trends are not that strong, and we therefore think y-y growth in core CPI (nationwide CPI excluding fresh food) will hit 1.2% in 2018 Q3 (Jul– Sep) before gradually slowing again on the disappearance of inflationary boosts from energy prices. For the Japanese economy, we look for ongoing Goldilocks economic conditions—a combination of steady economic expansion and low inflation.”

Analysts at BBH do not see much new news in the FOMC minutes as the January meeting was seen in real time as a hawkish hold and the statement reflecte

Analysts at BBH do not see much new news in the FOMC minutes as the January meeting was seen in real time as a hawkish hold and the statement reflected an upgraded economic assessment and greater confidence that inflation would move toward target.  Key Quotes“It seems clear that the fiscal stimulus helped boost the near-term confidence.  Much attention has been devoted to debating whether the March dot plots will point to four hikes this year instead of three, which was the case in December.  However, the simple fact is that the Fed funds futures are not fully pricing in three hikes this year.  That gap between the market and the Fed is closing gradually, but remains and it is that adjustment that seems key for the investment climate.” “We have argued that there is an accumulation of evidence that the US economy is showing some classic sign of being late in the expansion cycle.  These include metrics like the 12-month moving average of non-farm payrolls, auto sales, credit card delinquencies, and financial speculation (cyber-currencies?).  The eurozone economy in contrast was seemingly accelerating.  However, after softer PMIs, Germany reported softer ZEW and weaker IFO surveys, and France saw all its February business confidence readings decline in February.  Of note, the German IFO expectations component fell the most in two years (105.4 from 108.3) and is at its lowest level in five months.”   

Australia’s unemployment rate may need to fall from 5.5% currently to around 4.0% before wage growth rises significantly and is partly due to the exis

Australia’s unemployment rate may need to fall from 5.5% currently to around 4.0% before wage growth rises significantly and is partly due to the existing excess capacity not captured by the unemployment rate, but also as the natural rate of unemployment may be notably lower than most estimates of 5.0%, according to Kate Hickie, Research Analyst at Capital Economics.Key Quotes“In theory, wage growth should start to rise rapidly once the unemployment rate falls to the natural rate, which the RBA estimates is around 5%, as labour supply shortages force employers to pay higher wages. And some surveys suggest the unemployment rate could fall to 5.0% later this year.” “In reality the high share of employees wanting to work longer, the “underemployed”, means that the unemployment rate will probably need to fall below 5.0% before capacity pressures start to bite. And there are a number of reasons to believe that the natural rate of unemployment may be lower than 5.0%.” “Admittedly, it is conceivable that the changing structure of the economy has increased the natural rate as the end of the mining boom has created a pool of workers whose skills no longer match those required. But this upward influence appears to have been more than offset by other factors. First, the growing importance of the so-called “gig economy”, where the barriers to finding work tend to be lower, is exerting a downward influence on the natural rate.” “Second, the ageing of the labour force is also having a downward impact as the greater skills and experience of older workers means they usually have a lower rate of unemployment. Third, the rising share of people with a tertiary education has probably reduced the natural rate as they tend to be more employable and are better able to adapt to changes in the labour market.” “Fourth, technological changes have made the matching process between employers and job seekers easier and have also made it simpler for employees to work remotely, thereby reducing geographical mismatches. Finally, government policies to incentivise work have probably reduced the natural rate, although the downward pressure from this factor may now be fading.” “So the natural rate of unemployment could be closer to 4.0% than the RBA’s current estimate of 5.0%, and it may still be falling. This means that wage growth will probably be lower for longer than most analysts, including the RBA, expect. This will weigh on underlying inflation and is a key reason why we doubt the RBA will raise interest rates from 1.5% until the second half of 2019.”

   •  USD consolidates FOMC minutes-led strong gains.     •  Softer US bond yields lending some support.    •  Weaker commodities fail to provide an

   •  USD consolidates FOMC minutes-led strong gains. 
   •  Softer US bond yields lending some support.
   •  Weaker commodities fail to provide an additional boost. The AUD/USD pair built on its steady climb through the mid-European session and has now recovered around 30-pips from the Asian session lows, sub-0.7800 level.  With the US Dollar still consolidating overnight strong gains, led by hawkish FOMC meeting minutes, a mildly softer tone around the US Treasury bond yields seems to be the only factor prompting some short-covering from a short-term ascending trend-line support on 4-hourly charts.  Meanwhile, a sharp slide in copper prices did little to provide any additional boost to the commodity-linked Australian Dollar, with the USD/US bond yield dynamics turning out to be key determinants of the pair's rebound back closer to 100-day SMA support break-point, now turned immediate resistance.  Bullish traders, however, are likely to wait for a follow-through buying interest, beyond the mentioned barrier, before positioning for any further near-term appreciating move.  On the economic data front, the scheduled release of weekly initial jobless claims data from the US would now be looked upon for some short-term trading impetus during the early NA session. Technical levels to watchMomentum beyond 100-DMA hurdle is likely to get extended towards 0.7860 level, above which the pair is likely to aim towards reclaiming the 0.7900 handle. On the flip side, weakness back below the 0.7800 handle, leading to a subsequent break below 0.7790 level would turn the pair vulnerable to accelerate the slide even below the very important 200-day SMA support toward retesting monthly lows support near 0.7760 area.
 

After bottoming out in the boundaries of 107.10, USD/JPY met some buying interest and is now managing to retake the 107.35/40 band. USD/JPY looks to

The pair continues to pare losses after bottoming out near 107.10. Yields of the US 10-year reference bouncing off 2.92%. Fedspeak and Japanese inflation figures (Friday) in the limelight. After bottoming out in the boundaries of 107.10, USD/JPY met some buying interest and is now managing to retake the 107.35/40 band.USD/JPY looks to yields, CPIThe pair is retreating for the first time after four consecutive daily pullbacks on Thursday, apparently in line with the retracement of yields in the US 10-year reference from Wednesday’s multi-year peaks in the 2.96% neighbourhood. The increasing risk-off trade seen in the wake of the publication of the FOMC minutes has given renewed oxygen to the safe haven JPY, dragging spot lower on prospects of further tightening by the Federal Reserve via rate hikes. Looking ahead, Fedspeakers will keep the attention around the buck while inflation figures for the month of February will be the salient event tomorrow in the Japanese economy.USD/JPY levels to considerAs of writing the pair is down 0.39% at 107.35 and a breakdown of 105.53 (2018 low Feb.16) would open the door to 102.54 (low Nov.3 2016) and finally 101.15 (low Nov.9 2016). On the upside, the initial hurdle is located at 107.92 (high Feb.21) seconded by 108.34 (21-day sma) and then 110.48 (high Feb.2).

Turkey Manufacturing Confidence increased to 110.8 in February from previous 108.3

St. Louis Federal Reserve President James Bullard, while speaking on economic growth on CNBC this Thursday, said:     •  Idea that we have to go 100b

St. Louis Federal Reserve President James Bullard, while speaking on economic growth on CNBC this Thursday, said:     •  Idea that we have to go 100bp in 2018 seems a lot to me
   •  Doesn’t see 120bp hike in 2018
   •  Have ways to go on inflation story
   •  Neutral Fed fund rate is pretty low
   •  Fed to make judgments as data comes in
   •  GDP growth expected to slow in 2019
   •  2018 GDP growth seen at 2.4-2.5%

   •  A modest USD retracement prompts some profit-taking.    •  Weaker oil prices helped limit further downside.    •  Canadian retail sales data e

   •  A modest USD retracement prompts some profit-taking.
   •  Weaker oil prices helped limit further downside.
   •  Canadian retail sales data eyed for fresh impetus. The USD/CAD pair struggled to build on early strength to near two-month tops and has now retreated to 1.2680-75 region.  The pair stalled its bullish trajectory just ahead of the very important 200-day SMA and was being weighed down by a modest US Dollar retracement. With investors looking past Wednesday hawkish FOMC meeting minutes, a softer tone surrounding the US Treasury bond yields, primarily led by reviving safe-haven demand, prompted some profit-taking off the USD bullish position and has been one of the key factors weighing on the major. Meanwhile, weaker oil prices, with WTI crude oil trading with a daily loss of over 0.5%, did little to provide any additional boost to the commodity-linked currency - Loonie and helped limit deeper losses, at least for the time being. Moving ahead, today's key focus would be on the monthly Canadian retail sales data, which along with the usual initial weekly jobless claims from the US would now be looked upon for some fresh impetus during the early NA session.Technical levels to watchAny subsequent weakness is likely to find support near 1.2650-45 area and is followed by 100-day SMA support near the 1.2620 region. On the upside, 1.2715-20 zone (200-day SMA) remains an immediate strong hurdle, which if conquered is likely to assist the pair to dart towards reclaiming the 1.2800 handle.
 

UK’s second estimate of Q4 GDP revealed that the economy grew by a downwardly revised 0.4% q/q in the final quarter of 2017, with annual growth revise

UK’s second estimate of Q4 GDP revealed that the economy grew by a downwardly revised 0.4% q/q in the final quarter of 2017, with annual growth revised down from 1.8% to 1.7%, notes Andrew Wishart, UK Economist at Capital Economics.Key Quotes“Encouragingly, however, investment growth has remained strong. And with inflation starting to ease off and global economic growth robust, we suspect both household spending and net trade will provide greater support ahead.” “The downward revision from the first estimate was due to a small revision to production, which the ONS now thinks expanded by 0.5% on the quarter as opposed to 0.6%. That largely reflected a larger drag from the closure of the forties pipeline. Mining output is now thought to have contracted by -4.7% on the quarter as opposed to -3.9% in the first estimate.” “Meanwhile, quarterly growth in construction output was revised up slightly, from -1.0% to -0.7%. But the sector remains in recession, having contracted for three consecutive quarters. Growth in the dominant services sector was unchanged at 0.6% q/q.” “On the expenditure side investment and household expenditure were the main drivers of growth. A 1.1% quarterly rise in investment put annual growth for 2017 at 3.9%, the strongest since 2014. Household spending, meanwhile, increased by 0.3% q/q, down from 0.4% in Q3. Having fallen from 3.1% in 2016 to 1.8% in 2017, annual growth in household spending is likely to increase this year as the squeeze from inflation on real wages eases.” “Meanwhile, net trade knocked 0.5pps off quarterly growth as imports rose while exports fell slightly. But note that the trade figures were distorted by a large net acquisition of valuables, such as non-monetary gold, from overseas. Excluding this effect, net trade knocked just 0.1pps off quarterly growth.” “Looking ahead, most forecasters expect GDP growth to slow further this year (the consensus is 1.5%). However, with inflation set to drop back – easing the squeeze on households’ real incomes – investment intentions remaining strong, and exporters still benefitting from a weaker pound, we expect annual GDP growth to strengthen to 2.0%.”

Canadian retailers should end 2017 on a relatively soft note owing to a cold snap of winter weather and a pullback in motor vehicle sales, according t

Canadian retailers should end 2017 on a relatively soft note owing to a cold snap of winter weather and a pullback in motor vehicle sales, according to analysts at TDS.Key Quotes“We expect retail sales to come in flat while ex-auto sales should post a 0.2% increase. After a strong performance in 2017, industry reports suggest motor-vehicles spending should continue cooling to a more sustainable pace and level as consumers turn more cautious on debt-financed, big-ticket items. Gasoline sales should make a positive contribution due to higher prices. Meanwhile, unseasonably cold weather should hold back holiday spending. We also expect sales of electronics to unwind most of November's 12.9% gain, which was caused by the iPhone X release outside of the regular product launch schedule (typically September). We expect real retail sales to decline modestly on higher seasonally adjusted consumer prices, though volumes should still post a 4.3% increase in Q4. After a soft Q3, this should allow for a stronger contribution to growth from households' goods spending.” “FXIf our forecast is realized, USDCAD should respect the broad 1.25/1.27 range. More importantly, data surprises will resonate as the currency pair continues to exhibit a stronger contemporaneous correlation with data surprises, more so than rate spreads and oil prices. Retail sales volume should receive considerable attention given its implication for monthly GDP tracking and the broader narrative of a deceleration in growth. Taken in tandem with what is deemed to be a still too optimistic expectation for BoC rate hikes before July, we are comfortable in holding a defensive stance on CAD especially as the USD has regained a minor tactical footing recently. 1.2690 will be the key litmus test on the topside as this was the post-LFS high, and failure to hold will open considerable upside potential ahead of CPI on Friday. Look for dips towards 1.2550/1.2600 to act as firm support.”

In view of Stephen Brown, European Economist at Capital Economics, February’s fall in Ifo business sentiment matches the message from other surveys th

In view of Stephen Brown, European Economist at Capital Economics, February’s fall in Ifo business sentiment matches the message from other surveys that German GDP growth is nearing its peak, but the outlook remains bright.Key Quotes“The fall in the headline Business Climate Indicator (BCI) from 117.6 to 115.4 left it far weaker than the consensus forecast of 117.0 and at a five-month low. The survey breakdown showed that sentiment declined in each of the main sectors.” “While the current conditions component fell from January’s record of 127.8 to 126.3, it was still higher than in December. The business expectations component fell by much more, from 108.3 to a 10-month low of 105.4. Weaker expectations could reflect a number of factors, not least the appreciation of the euro, signs of slowing demand from China and the drop in German equity prices earlier this month.” “The headline BCI had previously looked consistent with a very strong pick-up in growth, but now “only” points to a slight rise in annual GDP growth from Q4’s 2.9%. An optimistic interpretation of this would be that February’s decline simply reflects the survey falling back in line with the long-run relationship with the official data and is therefore little cause for concern. A more pessimistic view would be that the Ifo is on track for its first fall in eight quarters in Q1 and the drop in expectations bodes ill for the future.” “As is often the case, the truth is probably somewhere in between. On a long-run basis the decline in businesses’ expectations does not seem particularly concerning, with the expectations index still broadly consistent with annual GDP growth of around 2.5%. But the key take-away from the Ifo and other recent surveys seems to be that growth is unlikely to accelerate further Indeed, data released earlier this week showed that both the ZEW and Composite PMI softened in February.” “Growth of between 2.5% and 3% would still be pretty strong. And once a government is formed, a small fiscal boost should help to ensure that healthy growth rates are sustained. We therefore maintain our above-consensus forecast for German GDP growth of 2.7% this year and 2.0% next.”  

United Kingdom CBI Distributive Trades Survey - Realized (MoM) came in at 8% below forecasts (13%) in February

The Norwegian Krone keeps the bullish view for the time being, said Jakob Christensen, Chief Analyst at Danske Bank. Key Quotes “The NOK has been tr

The Norwegian Krone keeps the bullish view for the time being, said Jakob Christensen, Chief Analyst at Danske Bank.Key Quotes“The NOK has been trading on a solid footing alongside the USD, which in our view has to do with (1) Nibor fixings following the price of offshore USD and (2) the recent NOK/SEK support from technicals”. “We remain bullish on the NOK and emphasise today’s Expectations Survey from Norges Bank as the next important data point. In particular, look out for any wage expectation details as this could have an impact on Norges Bank’s forecasts at the March monetary policy meeting. We remain long NOK/SEK spot and short EUR/NOK via options”.

The pair continues to face a rangebound theme in the near term, suggested FX Strategists at UOB Group. Key Quotes 24-hour view: “We expected USD to

The pair continues to face a rangebound theme in the near term, suggested FX Strategists at UOB Group.Key Quotes24-hour view: “We expected USD to move to 107.75 yesterday but were of the view that the next resistance at 108.05 is likely out of reach. In line with expectation, USD eased off after touching a high of 107.90. Upward momentum is beginning to wane but it is too early to expect a significant pullback. From here, a push higher to test the 108.05 resistance would not be surprising but a sustained move above this level is not expected (next resistance is at 108.50). Only a move back below 107.30 would indicate that a temporary top is in place”. Next 1-3 weeks: “We just shifted from a bearish to neutral stance yesterday and there is no change to the view. USD has likely moved into a consolidation phase and is expected to trade sideways for now, likely within a broad 106.30/108.50 range”.

Karen Jones, Head of FICC Technical Analysis at Commerzbank, noted the pair stays bid and could attempt a test of 0.9470. Key Quotes “USD/CHF has re

Karen Jones, Head of FICC Technical Analysis at Commerzbank, noted the pair stays bid and could attempt a test of 0.9470.Key QuotesUSD/CHF has recovered to the 23.6% retracement at .9389. This is being eroded and the market remains bid. The market has recently completed a reversal wedge pattern, which suggests further short term strength. We regard last weeks breach of the base of its 2017- 2018 down channel at .9231 and a long term Fibonacci retracement at .9200 as a false break and view .9188 as an interim low”. “We target nearby resistance at the .9470 8th April high a break of which should target the .9614/50% retracement. Dips lower should now find nearby support at the 20 day ma at .9338”.

The minutes of the late January FOMC meeting show that officials were firmly on track to raise interest rates again in March, even before the latest i

The minutes of the late January FOMC meeting show that officials were firmly on track to raise interest rates again in March, even before the latest incoming data showing stronger wage growth and core inflation or the boost to Federal spending, explains Paul Ashworth, Chief US Economist at Capital Economics.Key Quotes"A number of participants indicated that they had marked up their forecasts for economic growth", in part because those officials now think the impact of the recent tax cuts could be bigger than previously believed. Moreover, those comments pre-date the recent congressional agreement to boost both military and non-military discretionary spending, which means that the overall mix of fiscal stimulus will be significantly bigger over the next 18 months than was assumed at last month's FOMC meeting.” "A majority of participants noted that a stronger outlook for economic growth raised the likelihood that further gradual policy firming would be appropriate." The upshot is that the addition of "further" in the accompanying policy statement was intended to convey a more hawkish stance.” “We have long expected the Fed to hike interest rates four times this year, on the basis that Congress would loosen fiscal policy and core inflation would rebound markedly in 2018. That view is now rapidly gaining traction in the markets and among other economists. Fed officials themselves are still projecting three rate hikes, but were clearly more focused on the upside risks at this meeting.” “Finally, the meeting also included a big presentation by the Fed staff on inflation models. The assessment of the Phillips curve was damning. The effects of output gaps on inflation were "not easy to discern empirically" and their strength "had diminished noticeably in recent years". Nevertheless, there was a possible sting in the tail since "some research" suggested that the relationship between the two could be non-linear, with the response of inflation increasing as utilisation rates rise to very high levels.”    

Italy Consumer Price Index (MoM) below forecasts (0.4%) in January: Actual (0.3%)

Germany’s most prominent leading indicator, the Ifo index, took a big hit in February, illustrating that the latest market turmoil, the political impa

Germany’s most prominent leading indicator, the Ifo index, took a big hit in February, illustrating that the latest market turmoil, the political impasse in Berlin and new fears of a protectionist wave coming from the US as well as the US tax changes are leaving the first marks on business optimism. In February, the Ifo index stood at 115.4, from 117.6 in January, explains Carsten Brzeski, Chief Economist at ING.Key Quotes“The expectation component dropped particularly sharply, while the current assessment component is still close to its all-time high.” “Despite today’s disappointing Ifo reading, the German economy is still in good shape. It looks like an already mature cycle is getting longer and longer. At least in the first months of the year, the economy should maintain its strong momentum. Over the last year, confidence in the manufacturing sector has surged and finally caught up with already high confidence in the service sector. Order books are still richly filled and the domestic momentum remains strong.” “In our view, the German economy still has some upward potential and is not on the verge of overheating, as the output gap is positive but not extraordinarily high, capacity utilisation is above its historical average but still lower than in 2007 and investments have only started to increase this year. The big question over the course of 2018 will be whether less monetary policy accommodation – on the back of a stronger euro and higher long-term interest rates – can be offset by the recent upswing in the Eurozone economy and the general strength of the global economy.” “Another risk for the economy could come from a possible protectionist wave starting in the US. While German exports have proven to be very resilient to all kind of shocks, weaker trade with the US - on the back of tariffs - and the UK – on the back of Brexit and a weaker sterling – could leave some marks on the German economy.” “All in all, today’s Ifo drop is no reason to worry, yet. Rather, it provides evidence that even in Germany, the sky can be the limit.”    

Italy Consumer Price Index (EU Norm) (YoY) came in at 1.2%, above forecasts (1.1%) in January

Italy Consumer Price Index (EU Norm) (MoM) registered at -1.5% above expectations (-1.6%) in January

Italy Consumer Price Index (YoY) came in at 0.9%, above forecasts (0.8%) in January

According to analysts at Nomura, market interest in Japanese behaviour around fiscal year-end is rising. Key Quotes “We estimate corporate repatriat

According to analysts at Nomura, market interest in Japanese behaviour around fiscal year-end is rising.Key Quotes“We estimate corporate repatriation to by 11% more than a year ago and while over JPY1trn of repatriated funds is not insignificant, corporates can still sell foreign currencies before March. We also note there has been no JPY appreciation seasonality in March. Thus, we do not expect Japanese repatriation to be a major driver of yen currency crosses. In the medium term, we judge Japanese demand for foreign direct investment to be an important driver, possibly offsetting a large part of Japan’s current account surplus.”

Analysts at Scotiabank provide their thoughts on the Canadian retail sales data for December due to be reported at 1330 GMT today. Key Quotes: “Reta

Analysts at Scotiabank provide their thoughts on the Canadian retail sales data for December due to be reported at 1330 GMT today.Key Quotes:“Retail sales have been on a stellar run again. Can they keep it up in December's estimate on Thursday? The dollar value of sales has been on a solid growth trend and November's 1.6% m/m gain was the biggest since the start of last year and one of the biggest months over time. I'm going with a small gain this time but it would require continued strength outside of auto sales volumes and gas prices and there is always the caution that the retail sales growth estimate is largely a crap shoot. Gasoline prices and our estimates of seasonally adjusted auto sales fell in December. Indeed most of the December rise in headline retail sales was due to higher prices as the volume of retail sales grew by only 0.3% m/m and had its shining moment the month before during October. Pending December's estimate, sales volumes were tracking about 5% higher in q/q seasonally adjusted and annualized terms. That reversed the prior quarter's soft spot to restore a solid growth trend  Income growth is the main driver now with the massive increase in child benefit payments still supporting the level of sales.”

GBP futures markets showed investors trimmed their open interest positions by 745 contracts on Wednesday vs. Tuesday’s 188,734 contracts, according to

GBP futures markets showed investors trimmed their open interest positions by 745 contracts on Wednesday vs. Tuesday’s 188,734 contracts, according to preliminary data from CME Group. Volume followed suit, down by nearly 3K contracts.GBP/USD still targets 1.3765Cable is extending the leg lower to the sub-1.3900 area today, opening the door at the same time for a visit to February’s low at 1.3765 in the near term. The current negative view comes amidst irrelevant levels in open interest activity and a small drop in volume.

WTI (oil futures on NYMEX) stalled its downslide and now extends its recovery mode beyond the $ 61 threshold amid a retreat in the US dollar against i

Stalled USD buying aids oil-price recovery. Will it hold above the 61 handle? EIA crude inventory report in focus. WTI (oil futures on NYMEX) stalled its downslide and now extends its recovery mode beyond the $ 61 threshold amid a retreat in the US dollar against its major peers from eight-day tops of 90.17. The barrel of WTI dropped sharply for the second straight session, largely on the back of broad-based US dollar strength, fueled by upbeat Fed’s outlook on inflation and economy, which implied faster pace of tightening in the coming year. The FOMC minutes-led rally in the US dollar overshadowed the API report of a decrease in the US crude inventories. The API report released late-Wednesday showed an unexpected drop in the US crude oil stockpiles by 907,000 barrels to 420.3 million barrels for the week to Feb. 16. Later today, the official US government figures on the US crude supplies hog the limelight and provide fresh direction on oil prices. The US crude oil stockpiles will rise by 1.3 million barrels in the week to Feb. 16, the EIA data will show.WTI Technical LevelsAt $ 61.20, the resistances are aligned at $61.69 (5-DMA), $62.03 (20-DMA) and $62.66/64 (50-DMA/ 4-day tops). On the downside, the supports are located at $60.83 (5-day lows), $60.27 (Feb 8 low) and $60 (psychological support).  

   •  UK Q4 GDP growth revised lower.    •  EUR unaffected by weaker IFO survey. The EUR/GBP cross built on yesterday's tepid recovery and might now

   •  UK Q4 GDP growth revised lower.
   •  EUR unaffected by weaker IFO survey. The EUR/GBP cross built on yesterday's tepid recovery and might now looking to breakthrough 100-day SMA barrier following the release of UK GDP figures.  The British Pound lost some additional ground after the second estimate of the UK GDP showed 0.4% q-o-q growth during the last quarter of 2017, down from the original reading of 0.5% and also below market expectations.  Adding to this, the yearly growth rate was also revised lower to 1.4% and further dented the sentiment surrounding the British Pound, which has been recently weighed down by uncertainty surrounding the upcoming Brexit talks.  Meanwhile, traders seemed to have largely ignored today's disappointing release of German Ifo business climate index, which dropped sharply to 115.4 in February as compared to last month's 117.6 and expectations of 117.0. Technical levels to watchA follow-through buying interest beyond the 0.8855-60 region (100-DMA) has the potential to continue lifting the cross towards back towards the 0.8895-0.8900 heavy supply zone.  On the flip side, 0.8825 level now seems to have emerged as an immediate support, which if broken might drag the cross back towards challenging the 0.8800 handle before eventually dropping to its next support near the 0.8770-65 region.
 

According to CME Group’s flash data for EUR futures markets, open interest rose marginally by 675 contracts on Wednesday vs. Tuesday’s final 568,158 c

According to CME Group’s flash data for EUR futures markets, open interest rose marginally by 675 contracts on Wednesday vs. Tuesday’s final 568,158 contracts. On the opposite side, volume decreased significantly by more than 106K contracts, reverting 2 consecutive advances.EUR/USD still targets 1.2200/1.2165, ECB keyEUR/USD is alternating gains with losses during the European morning following four consecutive daily pullbacks. Some decent support emerged today around 1.2260, as investors seem to be waiting for the release of the ECB minutes for near term direction. The important drop in volume yesterday removed some downside pressure against the backdrop of a somewhat steady activity in open interest.

The UK GDP second estimate came in at 0.4% q/q in the fourth quarter of 2017, a tad weaker than the 0.5% figure seen last while missing estimates. Wh

The UK GDP second estimate came in at 0.4% q/q in the fourth quarter of 2017, a tad weaker than the 0.5% figure seen last while missing estimates. While on an annualized basis, the UK economy’s growth rate accelerated to 1.7% in Q4, beating the consensus forecasts of 1.5% and 1.5% booked in the first readout.

United Kingdom Total Business Investment (QoQ) registered at 0%, below expectations (0.5%) in 4Q

United Kingdom Index of Services (3M/3M) above forecasts (0.4%) in January: Actual (0.6%)

United Kingdom Total Business Investment (YoY) below expectations (2.4%) in 4Q: Actual (2.1%)

USD/JPY remains underpinned by USD recovery and higher US interest rates, according to Chief Analyst, Jakob Christensen at Danske Bank. Key Quotes “

USD/JPY remains underpinned by USD recovery and higher US interest rates, according to Chief Analyst, Jakob Christensen at Danske Bank.Key Quotes“We still expect the combination of portfolio flows into Japan ahead of the fiscal year end on 31 March, stretched short JPY positioning and fragile risk appetite to weigh on the cross in coming months. We target 104 in 1-3M. We are currently sidelined in USD/JPY, but tactically we would consider selling on rallies to around 109.”

February’s fall in Ifo business sentiment suggests that German GDP growth is nearing its peak, but should remain strong, according to Stephen Brown, E

February’s fall in Ifo business sentiment suggests that German GDP growth is nearing its peak, but should remain strong, according to Stephen Brown, European Economist at Capital Economics.Key Quotes“The fall in the headline Business Climate Indicator (BCI) from 117.6 to 115.4 left it far weaker than the consensus forecast of 117.0 and at a five-month low. While the current conditions component fell, it remained higher than it was in December. The fall in the business expectations component was much larger and left the index at a 10-month low. Weaker expectations could reflect a number of factors, not least the relatively strong euro, signs of slowing demand from China and the drop in German equity prices earlier this month.” “On the basis of the long-run historical relationship, the Ifo now only points to a slight rise in annual GDP growth from Q4’s 2.9%. And as the indicator has overstated growth in recent quarters and is on track to record its first fall in eight quarters in Q1, it might be more accurate to say that growth is close to its peak. Nevertheless, growth of close to 3% would still be very strong by German standards. And once a government is formed, a small fiscal boost should help to ensure that healthy growth rates are sustained. We therefore maintain our forecasts for above-consensus German GDP growth of 2.7% this year and 2.0% next.”  

EUR/USD is now looking to extend the rebound from daily lows and is testing the upper end of the range in the 1.2280/90 band in spite of the lower-tha

German IFO came in below expectations for the current month. Spot looks to gather traction to the 1.2290/1.2300 region. ECB minutes, Fedspeak next of relevance later in the day.EUR/USD is now looking to extend the rebound from daily lows and is testing the upper end of the range in the 1.2280/90 band in spite of the lower-than-expected results from German releases.EUR/USD bid after German data, eyes on ECBThe pair stays in the area of 1.2280/90 after the German IFO series came in below initial estimates for the month of February. In fact, Business Expectations (105.4), Current Assessment (126.3) and Business Climate (115.4) all missed consensus today and dropped from January’s readings. In the meantime, some selling bias is surrounding the buck today, therefore allowing spot to attempt a bounce to higher levels with gains so far capped by the proximity of the 1.2390 level. On another direction, EUR will be in centre stage later today as the ECB will release its minutes from the January meeting. The focus of attention will be, as usual, on the members’ views on a potential change in the forward guidance. Across the pond, weekly initial claims area due along with speeches by New York Fed and permanent voter W.Dudley (centrist), Dallas Fed R.Kaplan (non voter, hawkish) and Atlanta Fed R.Bostic (voter, centrist).EUR/USD levels to watchAt the moment, the pair is up 0.02% at 1.2285 and a breakout of 1.2353 (10-day sma) would target 1.2371 (21-day sma) en route to 1.2537 (high Jan.25). On the other hand, the next support emerged at 1.2206 (low Feb.9) followed by 1.2167 (50% Fibo of 2014-2017 drop) and finally 1.2165 (low Jan.18).

   •  USD consolidates hawkish FOMC minutes-led strong gains.    •  Reviving safe-haven demand offsets USD strength. The USD/JPY pair stalled its st

   •  USD consolidates hawkish FOMC minutes-led strong gains.
   •  Reviving safe-haven demand offsets USD strength. The USD/JPY pair stalled its steady rebound near the 107.60 region and has now retreated back closer to the Asian session lows.  The pair snapped four consecutive days of winning streak and was being weighed down by a fresh wave of global risk-aversion trade, which was seen underpinning the Japanese Yen's safe-haven appeal.  Meanwhile, the US Dollar also seems to have entered a bullish consolidative phase, especially after yesterday's upsurge following a hawkish assessment of the latest FOMC meeting minutes, and also did little to provide any fresh bullish impetus to the major. It would now be interesting to see if bulls are able to regain their dominant position or the pair continues with its downfall amid relatively thin US economic docket, highlighting the release of usual weekly jobless claims data later during the early NA session.Technical outlookOmkar Godbole, Analyst and Editor at FXStreet writes: “While a test of the descending trendline resistance of 108.25 is likely, further gains could be transient, especially if the 10-year US Treasury yield breaks above 3 percent. Also, the weekly 5-MA is sloping downwards and is currently seen at 108.25. So, gains above the same are to be viewed with caution.” “On the downside, only an end of the day close below the 5-day MA would shift attention to recent low of 105.00,” he further added.
 

The headline German Ifo business climate unexpectedly improved in February, coming in at 115.4 points versus last month's 117.6 and expectations of 11

The headline German Ifo business climate unexpectedly improved in February, coming in at 115.4 points versus last month's 117.6 and expectations of 117.0. Meanwhile, the current economic assessment bettered estimates, arriving at 126.3 points in the reported month, as compared to last month's 127.7 and 127.0 anticipated. The Ifo Expectations Index – indicating firms’ projections for the next six months missed expectations, arriving at 105.4 in February versus expectations of 107.9 and 108.4 recorded in Jan.

Germany IFO - Business Climate below expectations (117) in February: Actual (115.4)

Germany IFO - Expectations below expectations (107.9) in February: Actual (105.4)

Italy Industrial Sales s.a. (MoM) climbed from previous 1.3% to 2.5% in December

Germany IFO - Current Assessment registered at 126.3, below expectations (127) in February

Italy Industrial Orders s.a (MoM) rose from previous 0.3% to 6.5% in December

United Kingdom Gross Domestic Product (QoQ) below forecasts (0.5%) in 4Q: Actual (0.4%)

United Kingdom Gross Domestic Product (YoY) above expectations (1.5%) in 4Q: Actual (1.7%)

Italy Industrial Sales n.s.a. (YoY) rose from previous 5.1% to 7.2% in December

Italy Industrial Orders n.s.a (YoY) dipped from previous 8.9% to 6.9% in December

According to analysts at Deutsche Bank, the FOMC minutes indicated that “a majority of participants noted that a stronger outlook for economic growth

According to analysts at Deutsche Bank, the FOMC minutes indicated that “a majority of participants noted that a stronger outlook for economic growth raised the likelihood that further gradual policy firming would be appropriate”.Key Quotes“On the economy, it noted that “a number of participants indicated that they had marked up their forecasts for economic growth in the near term relative to …the December meeting” and that “several others suggested that the upside risks to the near-term outlook for economic activity may have increased.” On inflation,"almost all participants who commented agreed that a Phillips curve type inflation framework remained useful…”. Elsewhere, some participants said that they saw an appreciable risk that inflation would continue to fall short of the Fed’s objective, but overall inflation is expected to “move up” this year and stabilise around 2% over the medium term. On wage gains, “a number of participants judged that the continued tightening in labour markets was likely to translate into faster wage increases at some point”.”

   •  USD preserves FOMC minutes-led strong gains.    •  CAD weighed down by weaker oil prices.    •  Canadian retail sales data eyed for fresh impe

   •  USD preserves FOMC minutes-led strong gains.
   •  CAD weighed down by weaker oil prices.
   •  Canadian retail sales data eyed for fresh impetus. The USD/CAD pair extended its consolidative price action and was seen oscillating within a narrow trading band around the 1.2700 handle, or near two-month tops.  The pair swung from an intraday low level of 1.2625, touched in reaction to the latest FOMC meeting minutes, and rallied over 75-pips after details revealed that policymakers supported the need to keep raising interest rates. With the US Dollar managing to preserve its recent gains, a fresh wave of selling pressure around crude oil prices weighed on the commodity-linked currency - Loonie and remained supportive of the pair’s upbeat tone through the early European session.  It, however, remains to be seen if bulls are able to build on the momentum or continue facing difficulty in breaking through the key 200-day SMA barrier, currently near the 1.2715-20 region. On the economic data front, today's important release of the key Canadian monthly retail sales, along with the usual weekly jobless claims data from the US would now be looked upon for some fresh impetus. Later in the day, the weekly EIA US crude oil inventories data would also influence the pair's momentum and help grab short-term trading opportunities.Technical levels to watchA decisive move beyond the 1.2715-20 barrier (200-DMA) now seems to pave the way for an extension of the pair's bullish trajectory towards the 1.2790-1.2800 supply zone. On the flip side, any meaningful retracement is likely to find support near mid-1.2600s and is closely followed by 100-day SMA support near the 1.2625-20 region.
 

Hong Kong SAR Unemployment rate: 2.9% (January)

Hong Kong SAR Consumer Price Index remains unchanged at 1.7% in January

Jakob Christensen, Chief Analyst at Danske Bank, sees the single currency under pressure ahead of the ECB event later today. Key Quotes “The Fed min

Jakob Christensen, Chief Analyst at Danske Bank, sees the single currency under pressure ahead of the ECB event later today.Key Quotes“The Fed minutes last night failed to move USD much and while the dollar has seen tentative signs of support from tighter USD liquidity, in order to change the dollar game fundamentally, we will need the Fed’s Powell to hint at a more hawkish policy stance in his testimony next week”. “Today, focus will be on the ECB’s minutes for EUR: to the extent that these spell out worries over euro appreciation, it could lead markets to have second thoughts about the rally since the New Year, but in our view the risk is rather that attention will centre on a possible shift in guidance in March, which would support the single currency”.

In opinion of FX Strategists at UOB Group, Cable keeps the neutral bias and a test of the vicinity of 1.3760 is not ruled out. Key Quotes 24-hour vi

In opinion of FX Strategists at UOB Group, Cable keeps the neutral bias and a test of the vicinity of 1.3760 is not ruled out.Key Quotes24-hour view: “GBP traded in a choppy manner yesterday, swinging from a low of 1.3905 to 1.4008 before plummeting back down to the current level of 1.3915. While downward momentum remains patchy, the undertone has weakened and a break below the overnight low of 1.3905 low could lead to further weakness towards 1.3860 (next support is some distance away at 1.3800). Resistance is at 1.3955 followed by 1.3985. The 1.4008 high is not expected to come into the picture for now”. Next 1-3 weeks: “we were of the view that the consolidation phase “could last for last for a while more”. The sharp drop yesterday that cracked the bottom of the expected 1.3920/1.4200 consolidation phase came as a surprise and has shifted the immediate pressure to the downside. In other words, the outlook for GBP has turned negative and this could lead to further weakness towards the 1.3764 low seen earlier this month. Only a move back above 1.4020 would indicate that the immediate downward pressure has eased”.

Chief Analyst, Jakob Christensen at Danske Bank, explains that EUR/GBP increased slightly on the back of the higher UK unemployment rate and weak empl

Chief Analyst, Jakob Christensen at Danske Bank, explains that EUR/GBP increased slightly on the back of the higher UK unemployment rate and weak employment growth released yesterday, but the market is still pricing in 20bp for a rate hike in May, and they do not expect today’s UK GDP figures to alter this.Key Quotes“For now, key risk factor for GBP remains Brexit ahead of the EU summit on 22-23 March. We expect EUR/GBP to trade within the range of 0.8880-0.8925 in the short term, while the wide range of 0.8650-0.90 is likely to remain intact in coming months with the prospects of BoE rate hikes curbing the upside potential.”

In view of Karen Jones, Head of FICC Technical Analysis at Commerzbank, the pair remains directly offered when trading below the 1.2340/71 band. Key

In view of Karen Jones, Head of FICC Technical Analysis at Commerzbank, the pair remains directly offered when trading below the 1.2340/71 band.Key QuotesEUR/USD continues to weigh on the downside following its failure move to a new high. The new high has been accompanied by a divergence of the daily and weekly RSI and Fridays price action represented a key day reversal which suggests that the market is likely to remain under pressure. Intraday rallies are indicated to fail circa 1.2340, and while capped by this and the 20 day ma at 1.2371, the market will remain directly offered”. “Nearby support is now 1.2206/1.2165, the 18th January low, this guards the 2017-2018 uptrend, which lies at 1.2044 and a close below here will be needed to confirm the end of the move higher”. “Above the 2008-2018 resistance line at 1.2680 would target 1.3190 the 50% retracement of the move down from 2008”.

Among the first acts on trade by the new US Administration was to withdraw from the Trans-Pacific Partnership multilateral trade pact and Trump's oppo

Among the first acts on trade by the new US Administration was to withdraw from the Trans-Pacific Partnership multilateral trade pact and Trump's opposition to TPP was well-known, but less appreciated by his critics, is that the two leading Democrat candidates for the presidency in 2016 were also opposed, explains Marc Chandler, Global Head of Currency Strategy at BBH.  Key Quotes“Trump may not accept the Obama Administration's pivot to Asia, but he does seem to recognize the need preserve the US presence and provide a counter-weight to the rise of China. Moreover, it seems clear that it cannot be unilateral and successful.  Although Trump talks the language of the post-WWI "America First," he is not the isolationist that he is often depicted.”“With the Australian Prime Minister visiting the US, it may not be surprising that cooperation is being discussed.  Prime Minister Turnbull has suggested that Australian's A$2.53 trillion pension savings fund (the 4th largest such pool of retirement savings in the world), which invests infrastructure could be interested in providing some funding for Trump's new initiative.”“There is a ten-year old regional security group dubbed the "Quad."  It is composed of Australia, India, Japan and the US.  A discussion has reportedly begun that reanimates the alliance to include an economic function.  The preliminary discussion is about launching an infrastructure initiative that offers an alternative to China's One Belt One Road.  Officials have been careful to stress it is not a rival to China but an alternative.  Semantics.”“China's Xi announced the 1B1R initiative in 2013.  Last May, $124 bln was committed to the initiative.  It has captured the imagination of many.  One US investment bank predicted it would draw $1.3 trillion in investments over the next decade.”“The size of the Quad's initiative is not known.  It is still in the early stages.  But it will not have to begin from scratch.  With considerable less fanfare, Japan is already engaged in a substantial infrastructure initiative in Asia.  Japan funds more infrastructure projects in Philippines, Myanmar, Singapore, Thailand, and Vietnam over China.  China leads in Cambodia, Laos, Malaysia.  BMI Research estimates that since 2000, Japan's regional infrastructure investment of around $230 bln has outstripped China's $155 bln investment, counting completed and ongoing projects.”“For China, the 1B1R initiative seems to serve at least two purposes.  First, it is about projecting its power and influence.  Second, it is about absorbing its surplus capacity in various industries.  Traditionally, the US financed global infrastructure to export its savings, extend its influence, and build markets abroad.  For Japan, it seems only marginally interested in expanding its influence, but seems more interested in using is savings and spare capacity.”“However, China appears clumsier on the world stage.  Its loans are often collateralized with strategically important assets and projected-related loans are at market rates without transparency or environmental and social impact assessments. At the year, Sri Lanka, for example, surrendered the strategically important Hambantota Port because it was unable to service its debt to China.  China has secured a Hong Kong-esque arrangement, where it has secured Hambantota with a 99-year lease by forgiving $1.1 bln of Sri Lanka's debt.”“Similarly, China lent billions of dollars to Djibouti and established its first foreign military base there last year, which incidentally is a few miles from the US naval base, which is the only permanent US military facility in Africa.  Due to its debt to China, Djibouti’s was forced to lease land to its creditor.  Several other countries, including, Turkmenistan, Argentina, Namibia, and Laos, have also fallen into China's debt trap.  Now Kenya may be forced into a situation like Sri Lanka and may have to grant China a concession for its Mombasa port.”  

German Chancellor Angela Merkel is out on the wires now, via Reuters, saying that stability, growth pact to remain compass in Europe.    •  European

German Chancellor Angela Merkel is out on the wires now, via Reuters, saying that stability, growth pact to remain compass in Europe.    •  European answers to global problems needed ‘more than ever’
   •  No coincidence that 1st chapter of coalition agreement focuses on Europe
   •  Outlooks for 2018, 2019 are positive for European economies

Switzerland Industrial Production (QoQ): 8.7% (4Q) vs 8.6%

Analysts at Nomura suggest that in the absence of any revisions to the headline rates of growth (0.5% q-o-q and 1.5% y-o-y) the focus in the second es

Analysts at Nomura suggest that in the absence of any revisions to the headline rates of growth (0.5% q-o-q and 1.5% y-o-y) the focus in the second estimate of GDP for UK will be on the expenditure side of the accounts.Key Quotes“Consumer and investment spending growth will be focal points as we try to make sense of how Brexit has influenced growth via its impact on sterling, inflation and uncertainty.”

Switzerland Industrial Production (YoY): 19.6% (4Q) vs 5.5%

The greenback, in terms of the US Dollar Index (DXY), keeps the upbeat mood so far this week and is now looking to consolidate the break above the psy

DXY managed to break above the 90.00 mark post-FOMC. US 10-year yields climbed to multi-year tops near 2.96%. USD vigilant on ECB minutes and Fedspeak later today. The greenback, in terms of the US Dollar Index (DXY), keeps the upbeat mood so far this week and is now looking to consolidate the break above the psychological 90.00 handle.US Dollar attention to FedspeakThe index is up for the fifth consecutive session so far on Thursday although it is currently facing some selling pressure in response to the recent breakout of the critical 90.00 barrier. DXY found some extra oxygen following another fresh multi-year high in yields of the key US 10-year reference on Wednesday, climbing to the 2.96% area in the wake of the FOMC minutes. In this regard, the buck stays supported by the somewhat hawkish message from the Committee yesterday, which gave an upbeat assessment of the economy and still expects US consumer prices to clinch the Fed’s 2% target. Regarding the rate path, the Federal Reserve stays on the way to tighten further its monetary conditions this year, with the next rate hike expected to come as soon as the March meeting. However, it seems the buck will need a deeper change in sentiment in order to not only extend gains but also to shift to a bullish trend. In this regard, next week’s testimony by Chief J.Powell before Congress could be key. Talking about a rate hike next month, CME Group’s FedWatch tool now sees the probability of this scenario now at 84.5%, based on Fed Funds futures prices. In the US data space, the usual weekly report on the labour market is due next along with speeches by New York Fed and permanent voter W.Dudley (centrist), Dallas Fed R.Kaplan (non voter, hawkish) and Atlanta Fed R.Bostic (voter, centrist).US Dollar relevant levelsAs of writing the index is up 0.07% at 90.16 and a break above 90.57 (high Feb.8) would aim for 91.00 (high Jan.18) and then 91.22 (55-day sma). On the flip side, the immediate support aligns at 88.26 (2018 low Feb.16) seconded by 88.14 (200-month sma) and finally 86.89 (support line off 72.70).

The Fed minutes for the January meeting seem to have set off another (so far) minor explosion in markets, according to Michael Every, Senior Asia-Paci

The Fed minutes for the January meeting seem to have set off another (so far) minor explosion in markets, according to Michael Every, Senior Asia-Pacific Strategist at Rabobank.Key Quotes“The Dow closed down -0.7%, a 500-point drop from its intra-day peak, and failing to hold the 50% retracement from its previous, larger sell-off; the S&P broke back below its 50-day moving average; Treasury yields spiked, with 10-years up to 2.95% at their peak (1bp lower than that at time of writing in Asia); and the USD went up like a shot. EUR/USD is at 1.2276 when 1.26 was in sight late last week, for example, not helped by some soggy European PMIs, although USD/JPY is faring slightly better at 107.50. We can probably expect that to ripple through to EM FX when trading really kicks in today. AUD/USD is also decisively back below 0.78, and with Aussie 10-year yields now decisively below those of the US, surely it is not “if” but “when” we see much further downside pressure on that cross.” “So what of those Fed minutes? What really changed? Well, not really that much aside from more gradualist language in a positive direction, including the addition of the word “further” in regards to the need for gradual rate hikes. Yes, “further”. Not “faster”. That seems to have been the key trigger word. Does it imply the need for more hikes this year than the market had anticipated? Wouldn’t that be “faster”, technically? Is that still the case if they imply they will need to keep going longer than they had originally thought? (Which we won’t know until the revised ‘dot plot’ in March.) Or does “further” simply fulfill the grammatical function of meaning “a continuation of what we are already doing”? In which case, is all this fuss out of place?” “One thing I also noticed in the Fed minutes was this: “It was noted that the pace of wage gains might not increase appreciably if productivity growth remains low.” Perhaps that’s partly because I’ve just been doing a deep-dive (at the very shallow end!) into the ‘productivity thing’, but it was interesting because that’s not how things in developed economies are supposed to work. We are supposed to see higher productivity allowing for higher wages - if the capitalists ever let workers get it, in the view of Marxists, of course. We aren’t supposed to get stuck in a low-wages-flowing-through-to-low-productivity-flowing-back-to-low-wages vicious circle – although that is something we have long flagged as being an entirely plausible explanation for why the Phillips Curve no longer seems to exist outside the mind of central banks and (most?) economists: it is, for example, the status quo in many emerging markets.”

   •  Hawkish FOMC minutes prompt fresh selling on Wednesday.    •  Strong USD continues to add to the bearish pressure.    •  Risk-off mood lending

   •  Hawkish FOMC minutes prompt fresh selling on Wednesday.
   •  Strong USD continues to add to the bearish pressure.
   •  Risk-off mood lending some immediate support.Gold remained under some selling pressure for the fifth consecutive session on Thursday and is currently placed at over 1-week lows, around the $1320-21 region.  The precious metal did spike higher, to an intraday high level of $1336, following the release of FOMC meeting minutes, but met with some fresh supply as the details pointed to the need for further interest rate hikes.  The policymakers showed confidence on inflation, economic outlook and justified gradual Fed monetary policy tightening cycle, which eventually prompted some aggressive selling around the non-yielding commodity.  Meanwhile, the US Dollar stood tall in wake of the perceived hawkish assessment of the latest minutes and further collaborated towards driving flows away from dollar-denominated commodities - like gold.  Further downside, however, seemed cushioned by a fresh wave of global risk-off trade, which tends to underpin the precious metal's safe-haven demand. Hence, it would be prudent to wait for follow-through selling before positioning for any further near-term weakness. Technical levels to watchImmediate support is now pegged near the $1315-14 region, below which the commodity seems to head towards $1310 intermediate support en-route $1307 level. On the upside, $1326-28 zone now seems to act as an immediate hurdle, above which the metal could jump back towards $1340 supply zone.
 

UK Q4 GDP Overview The UK docket sees the Q4 GDP revision, which will be published later this session at 0900 GMT. The second estimate of the United

UK Q4 GDP OverviewThe UK docket sees the Q4 GDP revision, which will be published later this session at 0900 GMT. The second estimate of the United Kingdom GDP is expected to confirm a 0.5% growth in the fourth quarter of 2017. The annualized reading is also expected to show that the pace of expansion increased to 1.5% in Q4.Deviation impact on GBP/USDReaders can find FX Street's proprietary deviation impact map of the event below. As observed the reaction is likely to remain confined between 10 and 40 pips in deviations up to 2.5 to -2.5, although in some cases, if notable enough, a deviation can fuel movements of up to 70 pips.  How could affect GBP/USD? The spot could take a further beating on a softer GDP print and test the 1.3850 support zone. On an upside surprise, the GBP/USD pair is likely to extend the ongoing recovery mode in a bid to test the 1.39 handle. Technically, “the pair is placed near an important support near the 1.3900 handle, marking 50% Fibonacci retracement level of 1.3458-1.4345 up-move. With short-term technical indicators gradually drifting into bearish territory, a convincing break below the mentioned support would turn the pair vulnerable to slide further towards 61.8% Fibonacci retracement level support near the 1.3800 round figure mark en-route an important horizontal support near the 1.3765-60 region. On the upside, any recovery attempts now seem to confront immediate resistance near mid-1.3900s and any subsequent up-move might continue to be capped at the 1.40 handle,” Haresh Menghani, Analyst at FXStreet, writes.Key NotesUK: Q4 GDP expected to remain unchanged at 0.5% - TDS Market movers for today – Danske BankAbout the UK GDPThe Gross Domestic Product released by the Office for National Statistics (ONS) is a measure of the total value of all goods and services produced by the UK. The GDP is considered as a broad measure of the UK economic activity. Generally speaking, a rising trend has a positive effect on the GBP, while a falling trend is seen as negative (or bearish).

Chief Analyst at Danske Bank Jakob Christensen assessed the prospects for the European cross in the next months. Key Quotes “EUR/GBP increased sligh

Chief Analyst at Danske Bank Jakob Christensen assessed the prospects for the European cross in the next months.Key QuotesEUR/GBP increased slightly on the back of the higher UK unemployment rate and weak employment growth released yesterday”. “However, the market is still pricing in 20bp for a rate hike in May, and we do not expect today’s UK GDP figures to alter this”. “For now, key risk factor for GBP remains Brexit ahead of the EU summit on 22-23 March”. “We expect EUR/GBP to trade within the range of 0.8880-0.8925 in the short term, while the wide range of 0.8650-0.90 is likely to remain intact in coming months with the prospects of BoE rate hikes curbing the upside potential”.

France Consumer Price Index (EU norm) (MoM) in line with expectations (-0.1%) in January

France Inflation ex-tobacco (MoM) in line with expectations (-0.1%) in January

France Consumer Price Index (EU norm) (YoY) in line with expectations (1.5%) in February

France Business Climate came in at 112 below forecasts (113) in February

Japan’s Currency Chief Asakawa is back on the wires now, noting that the Japanese banks are in search of yield. Additional points: Flattening yield

Japan’s Currency Chief Asakawa is back on the wires now, noting that the Japanese banks are in search of yield.Additional points:Flattening yield curve compresses banks' profits. Japanese banks have solid capital.

The German IFO Business Climate Overview The German Ifo surveys for February are lined up for release later today at 0900 GMT. The headline Ifo Busin

The German IFO Business Climate OverviewThe German Ifo surveys for February are lined up for release later today at 0900 GMT. The headline Ifo Business Climate Index is expected to tick lower to 117.0 in Feb. The Current Assessment sub-index is also seen lower at 127.0 this month, while the Ifo Expectations Index – indicating firms’ projections for the next six months – is likely to ease to 107.9 in the reported month.Deviation impact on EUR/USDReaders can find FX Street's proprietary deviation impact map of the event below. As observed the reaction is likely to remain confined between 3 and 40 pips in deviations up to 2.4 to -3.2, although in some cases, if notable enough, a deviation can fuel movements of up to 60 pips.  How could affect EUR/USD?The spot could find support and head back towards the 1.23 handle on a positive surprise, while a test of 1.2200 levels cannot be ruled out on a disappointing headline figure. According to Karen Jones, Analyst at Commerzbank, Technically, “EUR/USD continues to weigh on the downside following its failure move to a new high. The new high has been accompanied by a divergence of the daily and weekly RSI and Friday’s price action represented a key day reversal which suggests that the market is likely to remain under pressure. Intraday rallies are indicated to fail circa 1.2340, and while capped by this and the 20-day ma at 1.2371, the market will remain directly offered.”  However, the reaction to the data is likely to be short-lived, as all eyes remain on the ECB January meeting minutes due later today for fresh trading impetus.Key NotesEurozone: Focus on German IFO and ECB Minutes – TDS EUR/USD Forecast: approaching double-top neckline support ahead of ECB minutesAbout the German IFO Business ClimateThis German business sentiment index released by the CESifo Group is closely watched as an early indicator of current conditions and business expectations in Germany. The Institute surveys more than 7,000 enterprises on their assessment of the business situation and their short-term planning. The positive economic growth anticipates bullish movements for the EUR, while a low reading is seen as negative (or bearish).  

Cable remains under pressure while the next support emerges at 1.3765, noted Karen Jones, Head of FICC Technical Analysis at Commerzbank. Key Quotes

Cable remains under pressure while the next support emerges at 1.3765, noted Karen Jones, Head of FICC Technical Analysis at Commerzbank.Key Quotes“No change - GBP/USD remains on the defensive following the recent failure at the short term resistance line, which is currently located at 1.4122. Support is found at the 1.3765 recent low and the 1.3658 September peak and only below here alleviates immediate upside pressure, to negate it we need a close below the 1.3425 2016- 2018 uptrend. Nearby resistance is the 20 day ma at 1.4008”. “Above the resistance line there is scope for a retest of the 1.4345 recent high and the 1.4343 200 week ma. Above 1.4400, the April 2015 low can be seen at 1.4568”.

FX Strategists at UOB Group noted the pair’s downside could extend to the key support at the 1.2200 neighbourhood. Key Quotes “We highlighted yester

FX Strategists at UOB Group noted the pair’s downside could extend to the key support at the 1.2200 neighbourhood.Key Quotes“We highlighted yesterday (22 Feb, spot at 1.2340) that the mild downward pressure in EUR would increase further unless it can reclaim 1.2435”. “EUR slipped further in overnight trading and is pressuring the solid 1.2275 support at the time of writing. Downward pressure has clearly improved and the odds for further weakness towards the month-to-date low of 1.2204 have increased considerably”. “Looking further ahead, a clear break below 1.2204 would indicate that EUR has moved into a bearish phase. For now, we hold a ‘negative’ outlook for EUR unless it can move back above 1.2400 within the next few days. On a shorter-term note, 1.2360 is already a strong resistance”.

   •  Softer US bond yields providing some respite.    •  Weaker commodities fail to lend any support.  The AUD/USD pair managed to rebound around 2

   •  Softer US bond yields providing some respite.
   •  Weaker commodities fail to lend any support.  The AUD/USD pair managed to rebound around 20-pips from session lows but seemed struggling to gain any follow-through traction  The pair extended last Friday's rejection slide from the 0.80 neighborhood and broke below 100-day SMA support, near the 0.7825-20 region, in reaction to perceived hawkish FOMC meeting minutes. The pair subsequently dropped to sub-0.7800 level during the Asian session on Thursday, albeit found some support at lower levels. With the US Dollar holding on to its gains, a mildly softer US Treasury bond yields seemed to be the only factor providing some immediate respite for higher-yielding currencies - like the Aussie. Further gains, however, remained capped amid a fresh wave of selling pressure around commodity space, especially copper, which tends to dampen demand for the commodity-linked Australian Dollar.  It would now be interesting to see if the pair is able to find any follow-through buying interest or the rebound turns out to a dead-cat bounce amid firming expectations about gradual Fed monetary policy tightening cycle through 2018. Moving ahead, today's US economic data, highlighting the release of usual weekly jobless claims, might provide some short-term trading impetus ahead of Fedspeaks, later during the NY trading session.Technical levels to watchAny further weakness is likely to find immediate support near the 0.7775-70 region, (200-day SMA), which if broken might turn the pair vulnerable to accelerate the fall towards 0.7725 intermediate support en-route the 0.7700 handle. On the upside, any meaningful recovery attempt is likely to confront fresh supply near the 0.7820-25 region (100-day SMA), above which a fresh bout of short-covering could lift the pair further towards 0.7860 supply zone.
 

The downside pressure around the European currency remains intact so far this week, taking EUR/USD to the 1.2270/65 band, or session lows. EUR/USD no

Spot dropped further early Thursday to the area of 1.2270. USD keeps the bid fashion following FOMC minutes. German IFO, ECB minutes next on relevance in Euroland. The downside pressure around the European currency remains intact so far this week, taking EUR/USD to the 1.2270/65 band, or session lows.EUR/USD now looks to the ECBThe pair has been trading in the negative ground since Friday amidst a strong pick up in the sentiment around the greenback. However, it remains to be seen whether the ongoing rebound in the buck is in fact a convinced change of heart from investors rather than a corrective up move. Spot moved lower in tandem with higher US 10-year yields following the somewhat hawkish FOMC minutes published late on Wednesday, where the Committee’s view on the economy remains solid and members appear confident that inflation will reach the Fed’s target sooner rather than later. On another direction, EUR will be in centre stage later today as the ECB will release its minutes from the January meeting. The focus of attention will be, as usual, on the members’ views on a potential change in the forward guidance. Further releases in the region include the German IFO for the current month. Across the pond, weekly initial claims area due along with speeches by New York Fed and permanent voter W.Dudley (centrist), Dallas Fed R.Kaplan (non voter, hawkish) and Atlanta Fed R.Bostic (voter, centrist).EUR/USD levels to watchAt the moment, the pair is losing 0.15% at 1.2264 facing immediate contention at 1.2206 (low Feb.9) followed by 1.2167 (50% Fibo of 2014-2017 drop) and finally 1.2165 (low Jan.18). On the upside, a breakout of 1.2353 (10-day sma) would target 1.2371 (21-day sma) en route to 1.2537 (high Jan.25).

In the euro area , a key release is the ECB minutes from the January meeting, according to analysts at Danske Bank. Key Quotes “No changes were anno

In the euro area , a key release is the ECB minutes from the January meeting, according to analysts at Danske Bank.Key Quotes“No changes were announced at the meeting but we will look for the attention the (in hindsight) small sell-off and exchange rate volatility had at the time of the meeting. Also, we will be looking for any indications of when the ECB could revisit forward guidance.” “In Germany, we will get numbers for the IFO expectations, which we believe will show a further decline to 107.9, possibly influenced by some turbulent weeks in the stock markets.” “In the UK , we will get more details about what drove economic growth in Q4 with the second release of GDP growth.” “Also in the UK , Theresa May and her most senior cabinet ministers will meet to try and agree on a Brexit trade deal that they want with the EU in the post-Brexit future. This will be a litmus test for the UK Prime Minister as her cabinet still appears to be divided between those who want a soft and a hard Brexit.” “Overnight, we will get January inflation figures for Japan . Inflation has been ticking upwards over the past year but it has been driven primarily by energy prices. The underlying price pressure in Japan remains very low. Recently, according to IHS Markit data, prices charged by both the service and the manufacturing sector have risen. It will be interesting to see whether these figures will also induce higher consumer prices.”  

USD/JPY has begun clawing back after risk appetite evaporated during early Tokyo trading, and the pair is now trading just above 107.50. The Dollar r

Dollar rally shortlived as Yen maintains safe haven status. The pair heads into European markets back in yesterday's range. USD/JPY has begun clawing back after risk appetite evaporated during early Tokyo trading, and the pair is now trading just above 107.50. The Dollar rallied following the FOMC's Minutes, which relayed a positive outlook for economic growth and inflation prospects within the US economy, but the Greenback's gains leaked out of USD/JPY in Tokyo trading as risk aversion continues to send the Yen higher. The Yen is still the market's favourite safe haven, but continuous talking points from the Bank of Japan (BOJ) and notable figures from the central bank have been very busy telling markets that now is not the time to buy the Yen, with their language ramping up last week to include thinly-veiled threats of market intervention should the Yen continue to gain in markets. The sooth-talking appears to be working, and while the Yen is still the go-to safe haven, the currency is certainly quicker to release its grip following bouts of risk aversion. USD/JPY TechnicalsThe pair is still deeply bearish on the heels of the Yen's recent strengthening, despite four straight days of Dollar gains in the broader market. Last Friday saw the pair reach 105.55, a 14-month low, and USD/JPY sees itself still far below the 200-day SMA, and a declining channel still in place, though incredibly steep. Support is currently priced in at 107.15 and 106.72, with resistance forming a zone between 107.90 and 108.27.    

Additional comments hitting the wires from the Fed Vice Chairman Randal Quarles (voting member on the FOMC), as he continues to speak in Tokyo. The n

Additional comments hitting the wires from the Fed Vice Chairman Randal Quarles (voting member on the FOMC), as he continues to speak in Tokyo. The natural rate of interest is increasing in the US.

EUR/JPY has rebounded after plummeting early in the Tokyo session and has clawed its way back to just beneath 107.50 after reaching a low of 107.15. 

EUR/JPY falls in risk-off markets. Decline halted as Euro firms, Yen recedes. EUR/JPY has rebounded after plummeting early in the Tokyo session and has clawed its way back to just beneath 107.50 after reaching a low of 107.15.  Risk aversion on the back of the FOMC's positive outlook on the US economy and increased expectations for inflation growth sent markets into full risk-off mode Wednesday, with equities closing lower and safe haven assets such as the Yen gaining on the day. The Bank of Japan's continuous rhetoric talking down markets in the face of a strengthening Yen appears to be having an effect, as the Yen is beginning to release its vice-grip on currency pairs following frequent bouts of risk aversion that plague the markets.EUR/JPY TechnicalsThe Euro's recent gain against the Yen has sent the pair back up, but the underlying trend is still steeply bearish, with the price still trading far below the 34 EMA and the 200-day SMA; Support is priced in at 106.83 and 106.17, and resistance is piling up from 107.89 and 108.48.

Japanese top currency official/ FX Head Masatsugu Asakawa is out on the wires, via Reuters, commenting on the exchange rate in Tokyo. BOJ easing isn'

Japanese top currency official/ FX Head Masatsugu Asakawa is out on the wires, via Reuters, commenting on the exchange rate in Tokyo. BoJ easing isn't aimed at weakening the yen. The global economy is on solid footing.

Today we get the second estimate of Q4 GDP, which is expected to remain unchanged at 0.5% q/q, but will give us the first look at the expenditure comp

Today we get the second estimate of Q4 GDP, which is expected to remain unchanged at 0.5% q/q, but will give us the first look at the expenditure components like business investment, according to analysts at TDS.Key Quotes“We also get the CBI retail sales survey for February, which may be watched a bit more closely than usual given the disappointment in December-January retail sales.”

The minutes of the 7 February policy meeting of RBI suggest that although the majority of monetary policy committee (MPC) members were concerned about

The minutes of the 7 February policy meeting of RBI suggest that although the majority of monetary policy committee (MPC) members were concerned about rising inflation risks, they voted for the status quo because the recovery is still in a nascent stage and needs to be nurtured, explains the research team at Nomura.Key Quotes“Governor Patel stated that inflation is becoming generalised, Deputy Governor Acharya warned that the RBI’s policy stance may need to change once growth strengthens, while hawkish member Patra sees a series of hikes.” “Does this change your economic view? Not yet, although risks are biased towards tightening once the growth recovery strengthens. In the near term, we expect inflation to moderate and growth to disappoint the RBI and hence see another 5-1 vote for the status quo on 5 April. However, with growth-inflation data likely to be higher after April, we believe there is a risk of more hawkish rhetoric at meetings in June and beyond, including a change in policy stance. We expect policy rates to remain unchanged in 2018, but risks to food price inflation have risen owing to the recent tilt in government policies.”

In view of Jennifer McKeown, Chief European Economist at Capital Economics, Luis de Guindos, who is set to replace Vítor Constâncio as the ECB’s Vice

In view of Jennifer McKeown, Chief European Economist at Capital Economics, Luis de Guindos, who is set to replace Vítor Constâncio as the ECB’s Vice President this June, may well be less dovish than his predecessor.Key Quotes“What’s more, his appointment makes it more likely that arch-hawk Jens Weidmann will succeed Mario Draghi as President after his term ends next October.” “The Eurogroup of euro-zone finance ministers has given its backing to Spanish Economy Minister Luis de Guindos to be the next Vice President of the ECB. The candidacy of his only opponent, Irish central bank Governor Philip Lane, was withdrawn just ahead of the decision. So while Mr de Guindos must still be officially appointed by the European Council after it meets on 22nd/23rd March, this looks like a formality.” “Mr de Guindos might seem like a relatively dovish appointment since he is from one of the economies where monetary policy support is needed the most. Indeed, due to the significant spare capacity in the Spanish economy and the fact that inflation is further below the ECB’s 2% target than the euro-zone average, appropriate monetary policy for Spain is arguably looser than for the region as a whole.” “But while their background might influence their views, Governing Council members are explicitly required to consider what is best for the euro-zone altogether and not to pursue national interests. Moreover, Mr de Guindos’ key role in Spain’s post-crisis fiscal austerity as Economy Minister suggests that he will not be particularly dovish as a monetary policymaker. This could be a stark contrast to Mr Constâncio, who is widely considered to be one of the most dovish members of the Governing Council.” “Two other doves are set to leave the six-member Executive Board (EB) by the end of next year: Chief Economist Peter Praet and President Mario Draghi. The former role is likely to go to Philip Lane, whose stance is not yet clear, but he seems unlikely to be as dovish as Mr Praet. As for the Presidency, having another Southern European as Vice President makes it all the more likely that Bundesbank President and arch-hawk Jens Weidmann will succeed Mario Draghi when his term ends in October 2019 to become the first ever German ECB President. That decision will probably be announced around June 2019.” “This is not a foregone conclusion, for several reasons. Mr Weidman’s forceful opposition to the ECB’s asset purchases makes him a controversial choice. And precedent suggests that his appointment might require the only female member of the EB, Sabine Lautenschläger, to step down to avoid having two members of the same nationality. This would defy the European Parliament’s demand for more women on the EB.” “But Mr Weidmann has toned down his anti-QE rhetoric recently, and the fact that policy normalisation is likely to be underway anyway by the time Mr Draghi leaves makes him seem more appropriate for the role. Various women are in the running to join the Executive Board in future, including Sylvie Goulard (now Deputy Governor of the Banque de France), perhaps when Benoît Cœuré’s term ends next year.” “In all, the Governing Council looks set to look a bit more hawkish by the end of 2019. This lends some support to our view that while interest rates will begin to rise later than markets envisage, the pace of tightening may be a bit quicker than the gradual upward profile that is now priced in.”  

The minutes of the January FOMC meeting make clear that “gradual” remains the operative word for policy, explains Elliot Clarke, Research Analyst at W

The minutes of the January FOMC meeting make clear that “gradual” remains the operative word for policy, explains Elliot Clarke, Research Analyst at Westpac.Key Quotes“Clear in this communication was greater optimism over the outlook for the labour market and growth, but also a reluctance to believe that activity momentum will translate into a material lift in wage and consumer inflation. At January, the risks were seen as balanced.” “Beginning first with activity. Recent data was believed to be consistent “with continued above-trend economic growth and a further strengthening in labor market conditions”. 
On business investment, “Participants characterized their business contacts as generally upbeat about the economy”, though “several participants expressed considerable uncertainty about the degree to which changes to corporate taxes would support business investment and capacity expansion”. This caveat arguably is as much to do with the timing of new activity as it is the eventual scale of this investment.” “For households, the focus was on the willingness of consumers to spend. Of particular note, “In connection with solid growth in consumer spending, a couple of participants noted that the household saving rate had declined to its lowest level since 2005, likely driven by buoyant consumer sentiment or expectations that the rise in household wealth would be sustained.” Note here the focus is on positive expectations of the future rather than concern over the low level of the savings rate and its ongoing downtrend.” “The labour market remains the chief support of consumer and FOMC confidence. The January minutes highlighted that underemployment (the U6 measure) has now returned to “pre-recession levels”. Combined with strong employment growth and stable participation, the absence of slack is good reason for households to be positive on their job prospects.” “That said, there remains “few signs of a broad-based pickup in wage growth”. Caution over the longevity of tax-cut induced pay increases was also raised, “a few participants suggest[ing] that such a boost could be in the form of onetime bonuses or variable pay rather than a permanent increase in wage structures”. The Committee still believes that an absence of slack will win out and see wage growth accelerate, but this will only occur slowly.” “In the meantime however, financial conditions are offering substantial support. As per the minutes, “Many participants noted that financial conditions had eased significantly over the intermeeting period... the decline in the dollar and the rise in equity prices... more than offsetting the effects of the increase in nominal Treasury yields”.” “That financial conditions have eased at a time when the FOMC is tightening policy will grant confidence that downside risks associated with further gradual rate increases and quantitative tightening are negligible. More to the point, this implies that risks to the FOMC rate view (and our own) are arguably to the upside.” “The equity market correction of early February notwithstanding, since the January FOMC meeting, we have seen a further significant increase in government spending (1.5% of GDP in the 18 months to September 2019) and signs of stronger wages. On consumer inflation, the January CPI print will have also given the FOMC greater cause for confidence that inflation disappointment is behind them and that the risks are instead skewed to inflation at or moderately above target.” “In these circumstances, a continued ‘gradual’ increase in the fed funds rate through 2018 and 2019 (five hikes in total) is still the best base case. However, a careful eye will need to remain on financial conditions. Should they continue to move in the opposite direction to policy, a more concerted effort by the FOMC may prove necessary to keep the economy on an even footing.”

The yen remains the top-performing currency this month, but it has given back some its gains over this week and some of this is related to a general b

The yen remains the top-performing currency this month, but it has given back some its gains over this week and some of this is related to a general bounce-back in the dollar, but some is more yen-specific, according to Bilal Hafeez, Research Analyst at Nomura.Key Quotes“Looking at how USD/JPY has traded during different trading sessions over the course of the day, we find that the Tokyo trading session appears to be seeing the largest moves in the yen. Last week it was yen strength and this week it has been for yen weakness. This suggests that Japanese investors have been grappling with USD/JPY breaking out from its 108-114 range of the past year that occurred last week. Typical dip-buyers such as lifers and retail may have been reluctant to buy last week, but have returned this week. Extrapolating these dynamics out several weeks is difficult, especially as we come close to fiscal year-end. Nevertheless, monitoring USD/JPY’s price action during the Tokyo session could provide an important clue for its path over the very short run.” “More generally, the challenge in trading the yen is that its correlation with risk markets, such as equities, is changing. This year the yen has sometimes behaved as a “risk-on” currency and sometimes a “risk-off” currency. This could partly be related to the broader tech cycle that is Japan-supportive, but it is also suggestive of a transition in market regime that is unfolding. The one trend we think is associated with whatever regime emerges is a weak dollar against the yen thanks to the US’s twin deficits, a “stagflationary” tilt in macro data and valuations.”

US Congress has passed legislation in recent months, which is likely to result in an expansion of fiscal policy at a time when the US economy is growi

US Congress has passed legislation in recent months, which is likely to result in an expansion of fiscal policy at a time when the US economy is growing at an above-trend pace and close to full employment, explains the research team at ANZ.Key Quotes“If an economy hasn’t much spare capacity, then there is a limit to how fast the economy can sustainably grow. Any demand-side stimulus that attempts to push growth above potential will tend to spill over into higher inflation.” “The March FOMC meeting will be critical to see how FOMC officials assess the impact of this fiscal stimulus on growth and inflation. If officials judge that the US economy has limited spare capacity and/or flexibility to accommodate this stimulus, they could respond with a more aggressive normalisation profile (steeper dot plot).” “The fiscal stimulus is likely to result in higher longer-term rates and has the potential to heighten overall financial market volatility.”“What we’re watchingFed Chair Powell will deliver his first semi-annual monetary policy testimony against a backdrop of solid growth. Will the consensus definition of gradualism have to change given above trend growth, fiscal expansion and rising inflation?  We expect the Fed to hike by 25bps at its 20–21 March meeting. Opinion polls point to a hung parliament in Italy as the most likely outcome of the4 March elections. That may not be a bad outcome for financial markets. In Germany, the result of the SPF ballot on whether to form a government with the CDU/CSU is also due 4 March. CPI releases for the euro area and Japan are worth close attention, given that US core CPI has surprised to the upside in recent months. Upside inflation surprises tend to stoke financial market volatility.”  

Nomura’s heat-map of high-frequency data suggest that non-agricultural GDP growth continues to recover, led mainly by investment and external demand,

Nomura’s heat-map of high-frequency data suggest that non-agricultural GDP growth continues to recover, led mainly by investment and external demand, while consumption demand has been mixed, possibly due to weak monsoon rains and higher fuel costs, explains the research team at Nomura.Key Quotes“We see the recovery concentrated on the demand side, while supply side indicators are showing a slower pace of catch-up.” “Nomura’s Composite Leading Index has risen to near a seven-year high in Q1, pointing to a V-shaped recovery in non-agricultural GDP growth. However, agricultural output has been hit by weak monsoons, and this may partly blunt the pickup in non-agricultural GDP growth in the near term. We forecast a sharp rebound in GDP growth to 7.5% in 2018 from 6.2% in 2017.” “The Nomura Economic Surprise Index for India has moderated from its highs in January but remains significantly above its mean, indicating that there is a higher probability of negative data surprises in coming months.” “The Nomura RBI Policy Signal Index moderated to 0.01 in February, firmly remaining in the “no change” zone. Despite upside risks to inflation, we believe that balance sheet stress, underlying inflation at ~4.5% and tighter financial conditions are why the RBI is still neutral. However, risks to food inflation are skewed to the upside due to government policies that are increasingly geared towards lifting rural incomes. We expect policy rates will be left unchanged through 2018, but see the risk of more hawkish rhetoric in Q2, when both growth and inflation look poised to pick up.”

NZD/USD is still trading to the downside, heading into the European session near Wednesday's low of 0.7316. The Kiwi seems to have halted the slide t

Kiwi stoops as risk aversion sends Dollar higher. The contraction in Credit Card Spending limited upside potential. NZD/USD is still trading to the downside, heading into the European session near Wednesday's low of 0.7316. The Kiwi seems to have halted the slide the followed the FOMC Meeting Minutes, which saw bond yields jump and the Dollar surge as risk aversion takes the tops off equities and risk assets once again. Despite the Greenback's cool-off during the overnight session, profit-taking had little effect on the pair, and the Kiwi remained on the lower end following a contraction in New Zealand Credit Card Spending growth, with the figure coming in at 4.6% versus the previous reading of 6.3%.NZD/USD TechnicalsThe pair is tending to the bearish side, but bullish potential still remains, with Daily candles still trading above the 34 EMA and 200-day SMA, despite four straight days of declines. Support for the pair rests at 0.7298 and 0.7248, with resistance priced in at 0.7326 0.7353.

Analysts at TDS suggest that for Eurozone data today we get the German IFO survey for February and they're just slightly above consensus for current s

Analysts at TDS suggest that for Eurozone data today we get the German IFO survey for February and they're just slightly above consensus for current sentiment, looking for a small fall to 127.4 (mkt 127.9), but are more pessimistic for expectations, looking for a decline 107.2 (mkt 107.9).Key Quotes“This leaves us exactly on top of consensus for the headline business climate, looking for a 117.0 print. Shortly after midday we also get the ECB minutes, which will be watched closely after the substantial turn in market sentiment that was driven by the release of the December minutes last month. We think that it's too early for any of the conversation on altering the forward guidance, and that's much more likely to come at the March meeting when the ECB has new macro forecasts in hand. We will be watching though for any further discussion around the appreciation of the EUR into the January ECB meeting, as Draghi failed to convince markets to stop pushing the EUR higher from there.”

Federal Reserve (Fed) Vice Chairman Randal Quarles, the central bank’s supervision chief, is out on the wires now, via Reuters, making his scheduled s

Federal Reserve (Fed) Vice Chairman Randal Quarles, the central bank’s supervision chief, is out on the wires now, via Reuters, making his scheduled speech titled "10 years after the Global Financial Crisis: How has the world economy changed and where will it go?" at the International Financial Symposium, in Tokyo.Key Headlines:US monetary policy remains accommodative. US economy is performing very well. Anticipates further gradual rate increases. Gradual rise in interest rates are 'appropriate'. Small divergences on inflation target is not a great concern. Soft inflation likely transitory. Investment drought that has afflicted US economy may be breaking. Recent US tax and fiscal policy could help sustain economy's momentum. Recent volatility in equities shows that assets prices can move rapidly and unexpectedly.

The Japanese currency stole the limelight across the fx space in Asia this Thursday, despite the FOMC minutes-induced rally in Treasury yields, as ris

The Japanese currency stole the limelight across the fx space in Asia this Thursday, despite the FOMC minutes-induced rally in Treasury yields, as risk-aversion emerged the key theme after the Asian equities joined the Wall Street sell-off. Rising expectations of a faster pace of the US tightening pushed the Treasury yields higher across the curve, in turn, weighed down on the alternative risk assets such as the equities. On the other hand, the Antipodeans, the EUR, and GBP traded in the red zone, as the US dollar held steady near 8-day tops of 90.08 versus its main competitors. Among the commodities, gold prices dropped nearly -0.50% to $ 1325 levels while WTI was down 1%, as a broadly stronger dollar offset a report of a drop in the US crude stockpiles.Main topics in AsiaUK Treasury Select Committee to launch cryptocurrency inquiry - Reuters The UK's Treasury Select Committee, a bipartisan group of MPs from both sides of the line, is set to begin an official inquiry into cryptocurrencies and blockchain technology, according to a UK statement. UK Cabinet angered by Theresa May's Brexit strategy paper - The Telegraph As reported by The Telegraph, Theresa May's official strategy document found no friends in the UK Parliament. German finance ministry expects growth swing to continue - Reuters The German Finance Ministry's latest monthly report shows incredibly bullish expectations; details via Reuters. Nikkei tumbles back below 22,000.00 as markets pull back Japan's leading Nikkei 225 Index is sinking as risk aversion takes hold of the Asian markets, testing 21,640.00 as of writing.  Fed's Kashkari - Fed should be patient, allow inflation to build Fed's Kashakri's comments are crossing the wires via Reuters … Fed's Kashkari - Aggressive rate hikes could push economy into recession Fed's Kashkari is worried that aggressive interest rate hikes could invert the yield curve and tip economy into recession. Key Focus aheadMarkets gear up for another eventful calendar ahead, with the speech by the FOMC member Quarles, eyed for further insights on the Fed’s rate hike prospects for this year. In the European session, the German Ifo business surveys and UK Q4 GDP second revision will offer fresh trading impetus to the EUR, GBP traders, as they await the ECB monetary policy meeting minutes for fresh cues on the bank’s tapering plans. The NA session is also expected to remain busy, as the Canadian retail sales will be reported at 1330GMT. At the same, the US will report its weekly unemployment claims data, following which the Fed officials Dudley and Bostic will deliver their respective speeches. Also, of interest, will be the US EIA crude inventories report that is expected to provide fresh direction on oil prices. EUR/USD - Down 2% from recent highs, but long-run bull outlook intact The EUR/USD pair fell to 1.2265 in Asia - the lowest level since Feb. 12, tracking the post-Fed minutes rise in the treasury yields and the resulting widening of the US-DE two-year bond spread in the USD positive manner. GBP/USD drooping under the weight of Brexit fears ahead of UK GDP figures The UK will see GDP figures at 09:30 today, with median forecasts anticipating figures to come in at 1.5% for the headline figure, unchanged from the previous reading. UK Q4 GDP to be confirmed at 0.5% q/q - Barclays The Barclays Research Team offer a sneak peak on what to expect from today’s UK Q4 GDP second estimate due on the cards at 0930GMT.Key Events Ahead 

In its Q4 2017 monetary policy report, the People’s Bank of China (PBoC) reiterates its “prudent and neutral” monetary policy stance and continues to

In its Q4 2017 monetary policy report, the People’s Bank of China (PBoC) reiterates its “prudent and neutral” monetary policy stance and continues to highlight financial stability as its top priority, notes the research team at Nomura.Key Quotes“We read this as a sign that financial deleveraging and the deepening of market reforms will remain in place for years.”“Does this change our economic views? No. Financial deleveraging will continue to put downside pressure on economic growth.”“Strategy implications?On rates, the report supports a neutral liquidity stance which supports our 2s5s repo steepener position. We will wait to see how money market rates evolve after the lunar new year holiday before reassessing our view on onshore fixed income products, although in the current conditions our inclination is positive. On FX, the emphasis on the role of market forces in determining the exchange rates is consistent with the longer-term objective of RMB internationalisation and achieving reserve-currency status. We also believe that the easing of outflow restrictions will be gradual.”

  Crude oil was unable to hold itself up following Wednesday trading and has slid further with WTI testing 61.00 per barrel after dipping to 60.74.

  Crude oil was unable to hold itself up following Wednesday trading and has slid further with WTI testing 61.00 per barrel after dipping to 60.74. API crude oil inventories provided temporary solace for oil prices after showing a surprise contraction in oil stores of 900,000 barrels, a welcome miss from the anticipated million barrel surplus traders were anticipating. The buoyancy was shortlived, and oil prices have resumed slumping heading into the London market session. As American oil supply continues near record levels and OPEC struggles to stem production in the face of a massive supply glut, oil prices will continue to be biased towards the downside, as upticks in demand for fossil fuels are still unable to eat up the record pileups in crude stocks.Crude TechnicalsCrude prices are remarkably off their 2018 highs and the recent retracements were shortlived following Brent's bounce from 62.00 and WTI's 58.11 low. Support is priced in for WTI and Brent at 59.70 and 63.15 respectively, while WTI resistance prices in at 62.60 and Brent sees resistance at 65.80.

Justin Smirk, Research Analyst at Westpac, explains that while we have seen the removal of some of the excess slack in the labour market, as measured

Justin Smirk, Research Analyst at Westpac, explains that while we have seen the removal of some of the excess slack in the labour market, as measured by the broader measures of labour market utilisation, they still observe on-going weakness in wage outcomes.Key Quotes“Total hourly wages ex bonuses increased 0.6% in Q4, just slightly above market and Westpac expectations for 0.5% lifting the annual pace modestly from 2.0%yr to 2.1%yr.” “Private sector wages grew 0.5% holding the annual rate at 1.9%yr. Public sector wages grew 0.6% with the boost coming from professional & technical (1.0%), education (0.8%) and health care (0.9%). Public sector wage inflation is holding an annual pace of 2.4%yr which is just up on the 2016 record low of 2.3%yr.” “There has been a clear improvement in labour market condition through 2018 as measured by total employment, full-time employment, hours worked, unemployment and even underemployment (where a worker is willing and able to work more hours than they do) and yet there is still no meaningful lift in wage inflation. This is despite the fact 2017 saw a larger than usual rise in the minimal wage which was expected to boost wages in Q3 – we are still waiting for that to happen.” “A Phillips Curve constructed from wages and underutilisation (unemployment plus underemployment) still has wages underperforming. If the relationship held then based on a 14.2% underutilisation rate wages should be growing around 2¾%yr.” “By industry manufacturing wages are starting to lift, 2.3%yr in Q4 from 2.2% in Q3 and 2.0%yr in Q1. There has even been an improvement in mining if from a low base (1.4%yr from Q1 low of 0.6%yr). The strongest industries for wages were health care (2.8%yr), arts & recreation (2.6%yr) and education & training (2.4%yr).” “Wages continue to underperform relative to the broader economy. Underemployment may have been part of the story but as the labour market improved through 2017 wages continued to lag, particularly in NSW. The state with the strongest growth in population, Vic, and thus higher underemployment also has stronger wages growth. Nevertheless outside of the public sector wages in Vic are still somewhat subdued.” “The RBA may be heartened by the modest lift but we are still a long way from wages threatening the inflation outlook and thus there is little here to get excited about.”

Germany's trade surplus with the US widened in 2017, according to the German Federal Statistical Office.  Germany exported goods worth €111.5 billion

Germany's trade surplus with the US widened in 2017, according to the German Federal Statistical Office.  Germany exported goods worth €111.5 billion and imported goods worth €61 billion in 2017, resulting in a surplus of €50.5 billion.  The data is unlikely to go down well with the officials in Washington. Germany has been criticized in the recent past by US President Donald Trump for its large trade and current account surpluses.

Analysts at Nomura note that the US existing home sales fell 3.2% m-o-m to an annualized pace of 5.38mn in January, below expectations (Nomura: +1.6%

Analysts at Nomura note that the US existing home sales fell 3.2% m-o-m to an annualized pace of 5.38mn in January, below expectations (Nomura: +1.6% to 5.66mn, Consensus: +0.5% to 5.60mn).Key Quotes“The prior month’s sales were revised down to 5.56mn from 5.57mn. Singlefamily home sales fell 3.8% m-o-m with broad-based slowing across regions, while sales of condos/co-ops rose 1.6% m-o-m. The National Association of Realtor attributed the decline in January to a continued shortage of inventories available for sale.” “Lean housing supply appears to have stifled sales despite a strong level of buyers’ interest. Months’ supply indicator rose to 3.4 months from 3.2 in December, but the supply level remains low by historical standards. Although home prices have already been rising rapidly, consumers’ expectations of rising interest rates in the near term could be contributing to increased buyer interest. The median existing-home price in January was $240.5k (+5.8% y-o-y), highlighting the 71st consecutive month of y-o-y gains.” “GDP tracking update: Existing home sales fell sharply in January, below our expectations. This downside surprise implies less brokers’ commissions in Q1, which are a component of residential investment. We lowered our tracking estimate of Q1 real GDP growth by 0.1pp to 1.8% q-o-q saar.”

GBP/USD is heading into Thursday trading on its backfoot, testing Wednesday's low of 1.3905. Sterling bulls have worked hard to push the pair up with

Sterling declines as bond yields drive USD higher. Brexit continues to bog down GBP/USD buying potential. GBP/USD is heading into Thursday trading on its backfoot, testing Wednesday's low of 1.3905. Sterling bulls have worked hard to push the pair up with nothing to show for it except for brief volatility spikes, as GBP/USD has continued to sink lower for the past four trading days. With China back on in the markets after taking the first half of the week off to celebrate Chinese New Year, bearish pressure remains high as commodities and equities retreat in another fear-fueled round of risk aversion. Wednesday saw the release of the FOMC's meeting minutes and an increasingly positive outlook on the US economy coupled with increased projections for inflation expansion sent equities tumbling and bond yields back up to recent highs, reinvigorating the US Dollar's recent recovery and sending the USD higher once again against the major currency bloc. Despite the Bank of England (BOE) gearing up to increase interest rates as soon as May in the face of the UK's own growth figures, the GBP is left on tenuous footing as Brexit continues to weigh down financial markets, with a growing uproar from UK businesses seeking clarification on trade rules post-Brexit, and Prime Minister Theresa May's recently published negotiation plan drawing a furor within the UK's Parliament.GBP/USD TechnicalsWith the pair down from the recent swing high of 1.4144, the GBP/USD is now testing into the 1.3900 handle heading into London markets; the overall bullish trend remains intact, but the window of opportunity is closing with the 34 EMA acting as support from 1.3885, and the rejection of 1.4144 putting in a lower high as the Dollar surges. Support levels are priced in at 1.3852, 1.3796, and 1.3764 while a resistance zone builds above current prices from 1.4064 to 1.4140.

The overnight sell-off in the AUD/USD seems to have stalled just below 0.78, however, buyers are in no mood to step in, given the 10-year AU-US yield

AUD/USD remains depressed around 0.78. The 10Y AU-US yield spread has turned negative. The overnight sell-off in the AUD/USD seems to have stalled just below 0.78, however, buyers are in no mood to step in, given the 10-year AU-US yield spread has turned negative. As of writing, the yield on the US 10-year treasury note is at 2.932 percent. Meanwhile, its Aussie counterpart is seen at 2.85 percent. The 10-year yield spread has tilted in favor of the greenback for the first time since 1998. So, the greenback is now a high yielding currency and hence the USD/JPY could replace the AUD/JPY cross as a barometer of risk sentiment. Ahead in the day,  the Aussie will likely remain under pressure, courtesy of the negative yield spread and the risk-off tone in the markets. That said, a minor corrective rally cannot be ruled out, given the oversold nature of the 1-hour RSI and 4-hour RSI.AUD/USD Technical LevelsThe spot was last seen trading at 0.7795. A move above 0.7805 (session high) could yield a corrective rally to 0.7860 (5-day MA) and 0.7870 (10-day MA). On the downside, breach of support at 0.7774 (200-day MA) would shift attention to 0.7759 (Feb. 9 low) and 0.7744 (61.8% Fib R of Dec-Jan rally).  

The EUR/USD pair fell to 1.2265 in Asia - the lowest level since Feb. 12, tracking the post-Fed minutes rise in the treasury yields and the resulting

EUR/USD under pressure, possibly due to widening US-German (DE) yield differential.  However, risk reversals show long-term bullish outlook is intact. The EUR/USD pair fell to 1.2265 in Asia - the lowest level since Feb. 12, tracking the post-Fed minutes rise in the treasury yields and the resulting widening of the US-DE two-year bond spread in the USD positive manner. As of writing, the currency pair is trading at 1.2280 - down 2 percent from the Feb. 16 high of 1.2556. Currently, the two-year yield spread stands at 277 basis points; the highest level since 1988, according to Reuters data. The spread could rise further in favor of the USD as investors price-in a more hawkish Fed. Also, the uncertainty surrounding the Italian elections and German SPD vote have strengthened the demand for EUR puts (bearish bets). "Two-week through 1-month expiry risk reversals have shown a growing implied volatility premium for EUR puts (sell EUR) over EUR calls (buy EUR) this week", according to a Reuters report. However, the long-term outlook remains bullish as the one-year risk reversals are being paid at 0.325 EUR calls (i.e. EUR calls are in demand or call premium is higher than put premium). As for today, the common currency could take cues from the German IFO readings (due at 09:00 GMT) and bond yield differential.EUR/USD Technical LevelsFXStreet Chief Analyst Valeria Bednarik writes, "In the 4 hour chart, technical indicators have recovered from oversold readings, but the pair remains below its 20 and 100 SMAs, with the shortest crossing below the largest, both around 1.2380, also a Fibonacci resistance. The pair will need to recover beyond the next resistance at 1.2425, to regain its bullish stance, while below 1.2300, chances are of further slumps for this Thursday. Support levels: 1.2300 1.2260 1.2225 Resistance levels: 1.2380 1.2425 1.2460

The UK’s Express is out with the breaking news, citing that the US officials have confined that the US Embassy in Montenegro is 'under attack' by gren

The UK’s Express is out with the breaking news, citing that the US officials have confined that the US Embassy in Montenegro is 'under attack' by grenade-throwing group of attackers.Key Points:“It is currently unknown if the Embassy is still under attack or how many people are injured.In a security alert issued by the office based in the capital Podgorica, people were warned to avoid the area.” The alert said: "The US Embassy in Podgorica advises US citizens there is an active security situation at the US Embassy in Podgorica."Avoid the Embassy until further notice."

The XAU/USD (Gold) one-month 25 delta risk reversals, which shows the volatility premium for XAU put strikes vs XAU call strikes, fell to zero (neutra

One-month risk reversals show falling demand for XAU calls.  Long-run upside bias intact.  The XAU/USD (Gold) one-month 25 delta risk reversals, which shows the volatility premium for XAU put strikes vs XAU call strikes, fell to zero (neutral) today vs. 0.125 yesterday. The recent high of 0.40 was seen on Feb. 14.  The decline from 0.40 to 0.00 indicates falling implied volatility premium for XAU calls (buy gold) over XAU puts (sell gold). So, the options market has shed short-run bullish bias on gold.  That said, the long-run bullish outlook is still intact. The one-year 25 delta risk reversals are being paid at 0.65 XAU calls vs. January low of 0.0. The recent high was 0.70 XAU calls. 

The Barclays Research Team offer a sneak peak on what to expect from today’s UK Q4 GDP second estimate due on the cards at 0930GMT. Key Quotes: “In

The Barclays Research Team offer a sneak peak on what to expect from today’s UK Q4 GDP second estimate due on the cards at 0930GMT.Key Quotes:“In line with available output data, we expect GDP to be confirmed at 0.5% q/q assuming IoS remains in line with recent trends (ie, +0.1%m/m). We forecast the expenditure breakdown to show slower consumption growth (+0.1%q/q). But a pickup in capex (+0.3%q/q). Monthly trade data points towards a sizeable negative contribution of net exports (-0.6pp) but this will likely be offset by positive inventories.”

Fed's Kashkari is worried that aggressive interest rate hikes could invert the yield curve and tip economy into recession.  An inverted yield curve i

Fed's Kashkari is worried that aggressive interest rate hikes could invert the yield curve and tip economy into recession.  An inverted yield curve in a situation in which the yields on the short-duration bonds are higher than the yields no the long duration bonds of the same credit quality. 

Japan's leading Nikkei 225 Index is sinking as risk aversion takes hold of the Asian markets, testing 21,640.00 as of writing. China picked a bad day

Nikkei's retracement ends early following FOMC. Risk aversion pulling down equities across the board. Japan's leading Nikkei 225 Index is sinking as risk aversion takes hold of the Asian markets, testing 21,640.00 as of writing. China picked a bad day to return from holidays, with Chinese institutions back in the markets to face soured risk appetite after taking the first half of the week off to celebrate Chinese New Year. Increased growth and inflation expectations came out of Wednesday's FOMC Minutes, causing bond yields to spike to recent highs and sending the US Dollar marching up the charts as risk hopes evaporated to end the day's New York session. Equities, commodities, and risk assets are still feeling the sting, with broad markets sliding in Tokyo's Thursday trading session. Risk aversion continues to plague Japan from two fronts: market fear pulling cash out of equities sending the Nikkei lower, and risk aversion causing traders to pile into the Yen despite constant plying from the Bank of Japan (BOJ) attempting to keep the Yen from going any higher. Recent Yen buying appeared to recede following newly-made threats from the BOJ that market intervention could be accomplished if things don't improve, but even that threat couldn't keep the Yen down for long with inflation fears sending cash dumping into the Yen once again. The Nikkei can expect to continue suffering at the hands of US growth figures, keeping any gains in the index capped as risk appetite sours on a regular basis.Nikkei TechnicalsThe Nikkei began declining in late January, and the recent bounce from 20,565.00 looks set to end, with the index turning away from 22,195.00 and looking set to continue lower. Technical resistance is piling up from 22,133.00 and 22,365.00, while chart support is springing up from recent swing lows at 21,330.00 and 20,926.00.

The Yen picked up a bid in Asia, courtesy of the rising bond yield-led risk aversion in the equities. The currency pair fell below the 200-hour movin

USD/JPY dipped below 1h 200-MA of 107.23. Stocks turn risk-averse, tracking rising treasury yields. The Yen picked up a bid in Asia, courtesy of the rising bond yield-led risk aversion in the equities. The currency pair fell below the 200-hour moving average (MA) of 107.23 and printed a session low of 107.15. As of writing, the spot is trading at 107.27. The Fed minutes released in the North American session triggered speculation the central bank is prepping for aggressive rate hikes. Consequently, the markets began pricing in a more hawkish Fed. The US 10-year treasury yield rose to a four-year high of 2.96 percent, pushing the stocks lower. The Dow index closed lower by 150 points. Meanwhile, as of writing, stocks in Australia are down 0.10 percent. Also, Germany's DAX futures are pointing to a negative open.   Further, the risk aversion will likely worsen if the US 10-year treasury yield moves above 3 percent. So, corrective rallies in USD/JPY, if any, could be short-lived. Only a sharp drop in the treasury yields and the uptick in stocks could lift the USD/JPY pair.USD/JPY Technical LevelsA break above 107.38 (upward sloping 1H 50-MA) would open up upside towards 107.58 (1h 10-MA) and 107.91 (overnight high). On the downside, breach of support at 107.15 (session low) would allow for a deeper sell-off to 106.84 (1h 100-MA) and 106.73 (50% Fib R of 105.55-107.91).  

NZD/JPY is continuing Wednesday's slide into Tokyo trading, testing into 78.40 after failing to hold the 79.00 handle in New York. Following increase

NZD/JPY declines as FOMC, bond yields spook markets. Risk appetite sours in the face of growing inflation expectations. NZD/JPY is continuing Wednesday's slide into Tokyo trading, testing into 78.40 after failing to hold the 79.00 handle in New York. Following increased growth and inflation expectations from the FOMC Minutes, The US Dollar started grinding its way up the charts as bond yields jumped and equities tumbled, and the Kiwi is currently falling against the Yen once again as a result. The Kiwi has been rangebound against the Yen for ten days straight, and just as the pair looked set to break out of the range and claim the 79.00 handle, the FOMC statement has sent NZD/JPY tumbling once more, and further selling pressure could see the pair breaking below the recent range.NZD/JPY TechnicalsNZD/JPY has once again turned away from the 200-day SMA as Wednesday's rejection of the 79.00 psychological level leaves the 34 EMA intact as falling resistance within the same area. Resistance is built up from 78.94 and 79.20, while support is currently priced in at 78.32, 78.09, and the recent swing low at 77.63.

Fed's Kashakri's comments are crossing the wires via Reuters- Fed should be patient, let inflation build.  Don't know if the US is at full employm

Fed's Kashakri's comments are crossing the wires via Reuters- Fed should be patient, let inflation build.  Don't know if the US is at full employment.  We are not sure about the neutral rate or output gap either.  Best hope is that tax cuts lead to greater investment and productivity.  Is very focused on wage growth, labor market slack and inflation.  2-percent inflation target would give Fed more flexibility in fighting future downturns.  Fed will respond if inflation starts to show itself.  We are seeing some signs of inflation building, but takes more than one month's data.  Wants to see definitive signs of inflation rising to 2 percent before supporting more rate hikes.       

The yield on the Aussie 10-year government bond has dropped below its US counterpart, taking the spread down to -0.08 - the lowest level since 1998. 

10Y Aussie-US yield spread has turned negative.  Is USD/JPY a new global risk barometer The yield on the Aussie 10-year government bond has dropped below its US counterpart, taking the spread down to -0.08 - the lowest level since 1998.  It essentially means the US dollar has replaced Aussie dollar as a high yielding or risk currency. So, it is safe to say that USD/JPY has replaced AUD/JPY as the new global risk barometer. Yield differential  

Koichi Hamada, an adviser to Japan's Prime Minister and emeritus professor of economics at Yale, suggested Japan buys foreign bonds in an interview wi

Koichi Hamada, an adviser to Japan's Prime Minister and emeritus professor of economics at Yale, suggested Japan buys foreign bonds in an interview with Reuters.Key highlights:Bank of Japan (BOJ) should consider buying foreign bonds to encourage inflation. Current laws prohibit BOJ from purchasing foreign bonds for the purpose of influencing currency markets. Academic workaround allows bond-buying to spur economic growth. BOJ has dismissed option repeatedly, too difficult to convince G20 countries bond purchases are for economy-priming and not currency manipulation. Hamada has suggested this strategy in the past.

The People's Bank of China (PBOC) set the Yuan reference rate at 6.3530 vs. 6.3247 a week ago  

The People's Bank of China (PBOC) set the Yuan reference rate at 6.3530 vs. 6.3247 a week ago  

The post-Fed minutes pick up in the treasury yields spooked the equity markets, pushing the Yen crosses lower.  The AUD/JPY pair fell from 84.86 to 8

AUD/JPY - the risk barometer is under pressure, suggesting the post-Fed risk aversion is here to stay.  AUD/JPY created bearish outside day candle.   Focus on stocks.  The post-Fed minutes pick up in the treasury yields spooked the equity markets, pushing the Yen crosses lower.  The AUD/JPY pair fell from 84.86 to 83.99, creating a bearish outside day candle. So far, the follow-through has been weak, meaning the pair has extended the decline to an eight-day low of 83.76. The bearish outside day candle and a negative follow-through indicate the downtrend (that began on Jan. 23) has resumed. Moreover, AUD/JPY is widely considered a barometer of risk, thus the decline indicates the risk aversion seen in the US markets and Asian equities could be extended to Europe. As of writing, Germany's DAX futures are down 28 points or 0.23 percent. Also, S&P 500 futures are down 5 points. Meanwhile, The MSCI AC Asia Pacific index is down 0.5 percent.  Ahead in the day, the cross is likely to mimic the action in the stocks. The daily RSI continues to show positive divergence, however, only an uptick in equities could yield a corrective rally in the pair.AUD/JPY Technical LevelsAs of writing, the pair is trading at 83.76. A break below 83.48 (38.2% Fib R of June 2016 low - September 2017 high) would expose 83.32 (Feb. 14 low) and 83.00 (psychological level). On the higher side, a move above 84.11 (session high) could yield a rally to 84.50 (10-day MA) and 84.86 (previous day's high). Only a daily close above 84.86 would signal a short-term bottom has been made.   

The UK's Treasury Select Committee, a bipartisan group of MPs from both sides of the line, is set to begin an official inquiry into cryptocurrencies a

The UK's Treasury Select Committee, a bipartisan group of MPs from both sides of the line, is set to begin an official inquiry into cryptocurrencies and blockchain technology, according to a UK statement.Key highlights:TSC looking at crypto markets and underlying distributed ledger technology. Focus on opportunities, risks posed to consumers, businesses, and the government. "People are becoming increasingly aware of cryptocurrencies...they may not be aware that they are currently unregulated in the UK... no protection for individual investors," Nicky Morgan, chair of the Treasury Committee Committee will collect evidence, submit a report with recommendations to government. Statement comes on heels of Mark Carney decrying Bitcoin "a failed currency".

Analysts and ING Bank said that with the latest Fed minutes showing members generally very upbeat on growth, and giving the economy the benefit of the

Analysts and ING Bank said that with the latest Fed minutes showing members generally very upbeat on growth, and giving the economy the benefit of the doubt on wages and inflation, merely hiking rates at the Fed's next meeting on March 22nd may not be viewed as a particularly hawkish act - indeed, to stamp his authority, Powell may need to ratchet up the rhetoric on the pace of Fed tightening, and the scale of tightening likely for 2019 too.Key Quotes:"And thereby lies the problem. Because if there is anything that is likely to generate more volatility in equity markets, and indeed, in bond markets, it is thoughts of a more aggressive Fed. US equities were soft again yesterday, bond yields higher and the dollar a little stronger too. But Asian markets may push back against this today, on China's markets first day back from the Lunar New Year holiday.   Whilst very little is clear in financial markets, one thing that does seem crystal clear today is that currently, stocks are not sufficiently weak for the Fed to hold off from hiking in March. The S&P500 is still more than 1% higher than it was at the start of the year. Unless such markets are in disorderly retreat, then this view is unlikely to change."

USD/JPY bid on Tokyo, bulls following the NY lead. USD/JPY to break this key resistance? On the back of higher US yields when the markets were

USD/JPY bid on Tokyo, bulls following the NY lead. USD/JPY to break this key resistance?On the back of higher US yields when the markets were volatile over the FOMC minutes, USD/JPY was back on the bid towards the 108 handle but efforts were rejected at key resistance again. Currently, USD/JPY is trading at 107.49, down -0.17% on the day, having posted a daily high at 107.79 and low at 107.49. FOMC Minutes: officials saw an appreciable risk of inflation lag to target Once the markets had made up their mind that the FOMC minutes are pointing to a faster pace of tightening this year, yields bounced as did the dollar, completely reversing the initial offer and bid in bonds.  What traders eventually got a grasp of s that the January 30-31 meeting was in fact before the release of the strong figures on average hourly earnings (+2.9%), the better-than-expected readings in the CPIs data and thus those 'concerns' from some members who argued that there was an appreciable risk of inflation lag to target may not have been as prominent at the meeting. Fed speakers coming upMeanwhile, for the day ahead, it looks to be quiet out there despite China that will be arriving back to their desks today. In terms of catalysts, there will be a line up of Fed speakers, starting today withFOMC's Member Kashkari Speech, then Randal Keith Quarles, Raphael W. Bostic tomorrow and Willian C. Dudley on Friday. USD/JPY levelsThe price was oscillating above that 107.67 Tenkan line but 107.80 was still proving to be a tough resistance guarding 108.00 and sellers emerged to current spot. However, further out, 110.85 is key ahead of and 111.44/50 as being a double Fibonacci retracement that is lining up with a lower and descending 200-D SMA at 111.39.Valeria Bednarik, chief analyst at FXStreet explained that in the 4 hours chart for the pair shows that the 100 SMA maintains its bearish slope above the current level, while technical indicators retreat from overbought readings. "Yet," she added,  "at the same time that the pair is holding above the 50% retracement of its latest daily slump at 107.20, now the immediate support."

AUD/USD is continuing to sink following Wednesday's drop, breaking past the 0.7800 barrier heading into the Tokyo open and currently testing 0.7790.

AUD/USD extends drop on Dollar boost. FOMC, bond yields driving USD higher. AUD/USD is continuing to sink following Wednesday's drop, breaking past the 0.7800 barrier heading into the Tokyo open and currently testing 0.7790. The Aussie took a header on Wednesday following the FOMC Minutes that sent the Dollar driving higher across the board. With the FOMC's increased projections for growth and inflation within the US economy driving up bond yields to record highs, The US Dollar soared, sending AUD/USD tumbling as the bearish trend looks set to continue. The Reserve Bank of Australia (RBA) continues to be stuck between a rock and a hard place; with the Australian economy lagging behind global trends and data continuing to middle or disappoint, the RBA is set to stand pat on interest rates well into 2020 as the rest of the world gears up for rate increases in the face of rising inflation. The RBA's wait-and-see mode will remain firmly in place while the central bank waits for positive growth figures from economic releases. Australia will see Retail Sales figures late Thursday at 21:45 GMT; market forecasts anticipate a small bump in the numbers, with median estimates for the headline figure at 1.4% versus the previous reading of 0.2%.AUD/USD TechnicalsAs FXStreet's very own Valeria Bednarik notes, "Technically, the pair is biased lower according to technical readings in the  4 hours chart as the price remains well below a bearish 20 SMA, while technical indicators lack directional strength, but hold within the negative territory. A steeper decline could be expected on a break below 0.7820, the 50% retracement of the December/January rally." Support levels:  0.7820  0.7770 0.7730 Resistance levels: 0.7890 0.7930 0.7965    

The American dollar surged across the board as the 10-year treasury yield rose to 2.96 percent after the Fed minutes release. The uptick in the yield

Kiwi fell to 0.7307 in Asia - the lowest level since Feb. 14. Broad based USD strength and risk aversion hurt the NZD. The pair is holding above 0.73 in Asia. The American dollar surged across the board as the 10-year treasury yield rose to 2.96 percent after the Fed minutes release. The uptick in the yields also weighed over the US stock markets. The Dow dropped more than 400 points in the last 2 hours of NY trade, and as of writing, the futures are reporting a drop of 0.20 percent or 48 points. Amid broad-based USD strength and risk aversion in the stocks, NZD/USD fell from 0.7386 to an eight-day low of 0.7307. The minutes of the January Fed meeting revealed that many policymakers believe the stronger growth has increased the chance of future rate hikes. These positive comments seem to have put a bid under the USD, indicating the investors have begun repricing a more hawkish Fed. That said, most in the markets do not expect the Fed to the Fed to shift from three to four hikes this year in its median outlook. As of writing, the spot is trading largely unchanged on the day at 0.7318.NZD/USD Technical LevelsPrevious day's bearish outside day candle adds credence to the argument that the pair has topped out at 0.7437 (Feb. 16 high). So, the pair could break below 0.73 (psychological level) and extend losses to 0.7222 (upward sloping 50-day MA) and 0.72 (zero levels). On the higher side, breach of resistance at 0.7330 (10-day MA) would open up upside towards 0.7386 (previous day's high) and 0.74 (psychological resistance).  

As reported by The Telegraph, Theressa May's official strategy document found no friends in the UK Parliament; May's negotiation outline was made avai

As reported by The Telegraph, Theressa May's official strategy document found no friends in the UK Parliament; May's negotiation outline was made available to the Cabinet less than 24 hours before it was sent off to the European Union, leaving UK Ministers furious with the Prime Minister. Key highlights: May's negotiation note published Wednesday, with little input from UK Ministers. no mention of May's pledge to end free movement post-Brexit. May's outline leaves little room for Britain to negotiate trade deals according to Euro-sceptics. Document results in Brexit 'in name only' and 'a perversion of democracy' - Jacob Rees-Mogg. Note likely to increase tensions at Thursday's Brexit Cabinet Meeting.

Japan Foreign bond investment increased to ¥-553.1B in February 16 from previous ¥-973.2B

Japan Foreign investment in Japan stocks: ¥127.1B (February 16) vs ¥-429.5B

Analysts at Nomura offered the FOMC minutes. Key Quotes:  "The FOMC minutes from the 30-31 January meeting were in line with our current expectation

Analysts at Nomura offered the FOMC minutes.Key Quotes: "The FOMC minutes from the 30-31 January meeting were in line with our current expectations for four hikes in 2018, with the next hike at the upcoming March FOMC meeting. However, the minutes as well as developments since the January FOMC meeting point to an increased likelihood of a more hawkish tone in the March meeting. The minutes indicated that relative to forecasts submitted in December meeting, “a number of participants” revised up their near-term growth forecasts.  The reasons for the upward revisions included good data and positive revisions to the estimated effects of the tax plan. The minutes indicated that participants expect increased likelihood that further gradual policy firming would be appropriate. Moreover, the January minutes showed that the FOMC had an intensive discussion on inflation, described in a new section called “Inflation Analysis and Forecasting.” In light of the unexpected underperformance of inflation in 2017, the FOMC staff presented the results from a range of models and noted factors “beyond those captured … that appeared to have put downward pressure on prices in recent years.”  Those factors consist of structural changes as well as temporary (“idiosyncratic”) price shocks. Although the FOMC participants maintained the traditional view that changes in slack in the system and the long-run inflation trend are both important forces in forecasting inflation, the discussion did not reach any tangible conclusions that would have significant monetary policy implications.  We expect that the Monetary Policy Report that will be released on Friday will provide a more detailed discussion of the inflation forecasting analysis."

Forex today was all about the FOMC minutes and a frantic aftermath with plenty for everyone considering there was a big turn around in sentiment from

Forex today was all about the FOMC minutes and a frantic aftermath with plenty for everyone considering there was a big turn around in sentiment from the initial moves in the markets.  Prior to the FOMC minutes, the USD retained its firmer tone despite the relatively benign comments from various Fed officials. The DXY had been on track for the 90 handle at the start of the US session but the bulls were facing headwinds there and the dollar was sent back to oscillate below 89.80. Prior to the minutes, the equity market took solace from Fed comments and upward momentum in the February US Markit PMI with a supportive earnings backdrop. Stocks then cheered the minutes with a spike and broke the correlation to the yen that also rallied on a weaker greenback.US yields were also higher at the start of the session, but these too dropped back from 2.89% to 2.87% in the 10 yrs before rallying right up to 2.9060%, just shy of the YTD high of 2.9095%.  The FOMC minutes arrived and while all officials agreed that the inflation target should be met in 2018, some officials, however, also saw an "appreciable risk of an inflation lag" to the 2% target. This was enough to send yields lower and the DXY back to 89.60 and the 10 yr yields below 2.90% on the knee-jerk.  Then, the turn around came. The dollar rallied hard onto the 90 handle from down at 89.60 and the 10yr yields reached 2.9537. Given that the Jan meeting and minutes came before a series of additional inflationary and bullish economic data, such as the strong figures on average hourly earnings (+2.9%) and the stronger-than-expected readings in the CPIs, coupled with what the FOMC regard as above-trend growth and the falling unemployment rate, markets decided to get long of  the dollar again. Gold and stocks subsequently dropped on the outlook for the possibility of four rate hikes in 2018 - (Fed fund futures yields are pricing in the prospects of the first of four rates hikes to come as soon as March with a total of four hikes priced by end-2019). As for the other currencies, EUR/USD opened near 1.2340 while markets awaiting the FOMC minutes. EUR/USD was around 1.2360 before dropping back to below the 1.23 handle and meeting 1.2273 the low. GBP/USD was already struggling and licking its wounds after meeting a 1-week low down at 1.3927 on the back of a mixed labour market report with arise in the UK ILO jobless rate. There had also been talk of a hard Brexit faction in PM May's party who are demanding a clean break from the EU.  Carney & Co. were also testifying with an upbeat assessment of the economy going forward underpinning the pounds robustness for the session. The best part of the range was between 1.3910-1.3990 better bid post the FOMC minutes until the turn around that sent cable back to 1.3912 before the Asian handover.  EUR/GBP has been in a sideways drift since the shenanigans of the dollar over the FOMC minutes but was sent lower fro the 100-hourly SMA at 0.8846 in the London handover as cable picked up a bid. The cross ended the NY session at 0.8822 +0.1%, from within a range of 0.8813-0.8851.  USD/JPY is still constructive on the upside as fears over a stock market rout and deficit risks subside with traders buying the dip. Also, the Markit Mfg PMI as being the highest since Oct 2014 supported the case for the pair above 200-HMA. Initially, though, USD/JPY fell on the back of the FOMC minutes until the DXY and yields flipped. The yen was offered even as stocks changed course as investors concentrated on a faster pace of rate hikes form the Fed this and next year. USD/JPY ended NY at 107.77 from within a range of 107.28 and 107.90. As for the antipodeans, the Kiwi was taken as high as 0.7385 before losing flight and dumping to 0.7316 for the close. AUD/USD turned around and was threatening the bull's commitments at 0.7800 once again with a look in towards the 200/100-D SMA convergence down in the 0.7770's.Key events ahead:Analysts at Westpac noted the key events as follows: "Euro Area: ECB Minutes for the Jan 24-25 meeting are released. Interest will be on a discussion around upside risks relating to cyclical momentum, and downside risks relating to global factors including FX developments.UK: Q4 GDP 2nd estimate is released for the UK after the first estimate came in at 0.5% with firmness in the services sector.US: Fed speak includes Bostic at the 2018 Banking Outlook Conference and Dudley at a NY Fed briefing on Puerto Rico and the US Virgin Islands."Key notes from the US sessionFOMC Minutes: officials saw an appreciable risk of inflation lag to target UK employment data made for mixed reading; BoE implications? - Scotiabank Carney & Co. TSC testimony proceeds again after suspension UK PM May: still wants Brexit transition period of around 2-years – RTRS  

The German Finance Ministry's latest monthly report shows incredibly bullish expectations; details via Reuters. Key highlights: German economy bei

The German Finance Ministry's latest monthly report shows incredibly bullish expectations; details via Reuters.Key highlights:German economy being boosted by an increase in domestic consumer demand. Growing internal demand being driven by strong employment, rising wages, low borrowing costs. Export demand also rising. Exports and company investment additional growth drivers. Foreign demand for German manufacturing equipment, machinery ticking up as well.

Crude oil halted its recent decline following a surprise contraction in crude inventories, and WTI is currently trading near 61.25 per barrel while Br

Oil halts decline following surprise API contraction. Fossils still under pressure from FOMC outlook, firming Greenback Crude oil halted its recent decline following a surprise contraction in crude inventories, and WTI is currently trading near 61.25 per barrel while Brent floats just above 65.00. Oil has been dropping recently as rising bond yields and inflation fears chip away at equity indexes and commodities. Tuesday's decline in crude prices comes on the heels of a lopsided FOMC meeting, where FOMC members highlighted risks and imbalances within the US economy, but overall inflation expectations were still raised, sending the US Dollar surging. The oil slide halted on the back a surprise contraction in API Weekly Crude Oil Stocks that saw inventories decline by 900,000 barrels, a downside beat to the million-plus surge that was anticipated. Despite the shrinkage, US oil production is still at record highs, and OPEC is struggling to stem the flow of oil production that is currently flooding supply chains.Oil TechnicalsWTI and Brent are both still deeply off their 2018 highs of 66.63 and 71.26 respectively, with WTI bouncing off 58.11 and Brent recovering from 61.79. With the recent recovery likely a retracement instead of an outright reversal, support for WTI and Brent currently sits at 60.90 and 64.40 respectively, while WTI sees strong resistance from 62.60 with Brent resistance at 64.40.

USD/CAD had a volatile Wednesday, closing on the high side and trading just beneath 1.2700 heading into the overnight session. The Dollar gained acro

USD jumping on positive FOMC, bond yields. Faltering oil prices contributing to CAD weakness. USD/CAD had a volatile Wednesday, closing on the high side and trading just beneath 1.2700 heading into the overnight session. The Dollar gained across the board following the FOMC Minutes, where officials voiced concerns about market imbalances and risks within the US economy, but overall growth expectations were raised and interest rate increases should begin soon. Bond yields spiked and equities tumbled following the FOMC, driving the USD higher against the major bloc currencies. The recent Dollar revival amidst rising bond yields has upended the bearish trend in USD/CAD, with February's rally pricing in a higher low for the pair, and continued positive growth coupled with inflation fears in the US economic outlook could send the pair trading higher, using the recent turnaround from 1.2460 as a foothold.USD/CAD TechnicalsWith the Greenback rallying and the Loonie struggling under the weight of its correlation with falling oil prices, the pair is set to challenge the 200-day SMA, currently sitting at 1.2715. The rejection from support off the 34 EMA near the 1.2500 handle will give buyers confidence, and the nearest resistance will likely be the top of 2017's 3rd quarter consolidation range at 1.2910. A bearish continuation will face support from 1.2450, 1.2353, and the recent higher low of 1.2245.

EUR/USD has turned south again since the initial post FOMC minutes spike to 1.2360 where markets perceived the FOMC split on whether the inflation tar

EUR/USD bears back in control.EUR/USD below 10 and 21-D SMAs.EUR/USD has turned south again since the initial post FOMC minutes spike to 1.2360 where markets perceived the FOMC split on whether the inflation target will definitely be achieved.  FOMC Minutes: officials saw an appreciable risk of inflation lag to target However, considering the meeting was before the recent run of further inflationary outcomes in the economy, there was a big turnaround in yields and the dollar. Currently, EUR/USD is trading at 1.2283, down -0.05% on the day, having posted a daily high at 1.2300 and low at 1.2283.EUR/USD turns around and eyes levels towards 2017-2018 uptrend at 1.2044EUR/USD opened near 1.2340 in NY and traders sat on their hands awaiting the FOMC minutes for the most part. However, the dollar had been creeping higher with eyes on the 90 handle, that was subsequently achieved in the big turn-around post FOMC minutes event. EUR/USD was around 1.2360 before dropping back to below the 1.23 handle and meeting the aforementioned lows. EUR/USD levelsBulls have well and truly lost sight of the 2008- 2018 key target at 1.2680 on the wide and the price now looks committed to the downside on this break of 1.2300 below the 21 and 10-D SMAs. On the wide, the January 18 low at 1.2165 would be next in focus head of the 2017-2018 uptrend at 1.2044.