JPY is regaining strength against the Dollar and Gold is rising strongly to the 1355 level
The USD was hit by a broad recovery across the G-10 currencies peers as the DXY comes back to flatness after the USDJPY was able to recover back to 107.50 after breaking below the 107.00 in the Asian session yesterday. The ZAR rallied after the ANC confirmed a no-confidence vote in Zuma for tomorrow, while the SEK eventually weakened as the Riksbank stresses lack of confidence in the inflation levels.
E-mini S&P 500 Futures ran upside stops through Monday highs during the early European hours, as the European cash equities opened higher and stayed in a tight range. Credit Suisse was up +2.8% after its earnings releases as the bank notes a 10% pickup in its markets unit due to volatility in early 2018. Metals and Crude futures continued to drift sideways for the day.
In the key headlines for the European session:
- The White House has spoken to the Cleveland Federal Reserve Bank President Loretta Mester about becoming the next Vice Chairman of the Fed, according to the Wall Street Journal
- The Eurozone’s 4Q GDP q/q came in as expected 0.6%. Germany had the same exact figure just as expected as there has been a pickup in German exports which is particularly strong.
- Riksbank holds rates at -0.5% as unanimously expected. The rate path is unchanged, but the language was tweaked to indicated that hikes could be beginning in the second half of 2018.
- Japan’s fourth-quarter GDP q/q came in at 0.1% vs the 0.2% expected as the annualized was 0.50% vs the 1.00% expected.
- People Bank of China: The Economy faces pressure on slight rises in inflation. The Open Market Operations rate increase can avoid excessive leverage.
- API Inventories according to people familiar with the data showed Crude Oil inventories increasing 4.0 Million barrels, Cushing dropping 2.3 Million, Gasoline +4.6 Million, and Distillates +1.1 Million.
Markets on tenterhooks as focus on U.S. Inflation data grows stronger. Volumes in the major currencies were largely subdued during the London session with the dollar attempting to pare losses as short-term shorts took some chips off the table. A huge barrier in the yen gave in, as the Japanese currency hit a fresh 15-month high only to see the dollar buyers emerge on a break below the 107.00. Treasuries stayed in tight ranges, as the European bonds edged higher while emerging market currencies rose the third day in four.
USDJPY – Reaches price levels last seen since 2016, breaching the 2017 trough and key support at 107.32. A closing break or intraday reversal is the key chart themes to watch as Wednesday session progresses that will define bias into the late week.
EURUSD – The pair broke the 21-Day Moving Average at 1.2333 and reached 1.2463 level and it’s expected its upward movement.
AUDUSD – Bulls put in good distance between the spot and the 200-DMA support tested last week at 0.7863, although smaller candle bodies appearing against the 13-day EMA line are worrisome developments and suggests up-move was only corrective.
GBPUSD – Broke the 1.3963 resistance level and reached 1.4014 as a high for Wednesday. A pattern of lower daily highs and down-slanting 13-day EMA at 1.3936 provides a bearish backdrop into Wednesday’s session.
USDCHF – Is set to stay bearish while below the 21-Day Moving Average at 0.9435.
USDZAR – The Rand rallies to under 11.70 after Zuma says ‘ I resign ‘ USD/ZAR reached 1.6453 level and its expected to continue its downward movement.
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