The tone of markets is moderately risk‐off again overnight, though moves have been small (USD/JPY ‐20pts at 108.90). Aside from the steady increase in the death toll and infection rates (170 and 8000), there is little new news on the coronavirus. Markets took very little away from the FOMC outcome last night. There were minimal tweaks to the statement, a small downgrade to consumer spending (“moderate” from “strong”) offset by a small mark up to the inflation outlook.
Day ahead: Central banks remain in focus, with the BoE announcement and Carney’s last press conference the highlight and markets almost exactly 50/50 priced for no change or a 25bp cut. BoC Deputy Governor Beaudry is the most interesting speaker outside the BoE. Data‐wise, we get the first estimate of Q4 GDP in the US and German CPI data for January, which will color expectations for the flash estimate for the Eurozone (tomorrow). The US data are expected to show the economy expanded at a slightly above trend 2.1% q/q annual rate – similar to the growth rate in the previous two quarters. Such an outcome would be fully consistent with the Fed remaining on hold for an extended period. China’s official manufacturing and non‐manufacturing PMIs are out overnight tonight.
The pound remains weak, as it’s becoming clear that the UK and EU are ready for a post-Brexit trade and regulatory fight, with the UK digging in on fishing rights at the risk of a worse deal for the much large financial services industry, for example. Be it Jan 30 or later in H1 2020, the BoE looks set to cut 25bps.
DOW: The market tests the pierced bullish trend line and forms a bearish pattern. The breakthrough is up to date. Monday's gap is filled. It is possible that the downward trend of recent days continue.
Day ahead: Central banks remain in focus, with the BoE announcement and Carney’s last press conference the highlight and markets almost exactly 50/50 priced for no change or a 25bp cut. BoC Deputy Governor Beaudry is the most interesting speaker outside the BoE. Data‐wise, we get the first estimate of Q4 GDP in the US and German CPI data for January, which will color expectations for the flash estimate for the Eurozone (tomorrow). The US data are expected to show the economy expanded at a slightly above trend 2.1% q/q annual rate – similar to the growth rate in the previous two quarters. Such an outcome would be fully consistent with the Fed remaining on hold for an extended period. China’s official manufacturing and non‐manufacturing PMIs are out overnight tonight.
The pound remains weak, as it’s becoming clear that the UK and EU are ready for a post-Brexit trade and regulatory fight, with the UK digging in on fishing rights at the risk of a worse deal for the much large financial services industry, for example. Be it Jan 30 or later in H1 2020, the BoE looks set to cut 25bps.
DOW: The market tests the pierced bullish trend line and forms a bearish pattern. The breakthrough is up to date. Monday's gap is filled. It is possible that the downward trend of recent days continue.
No comments:
Post a Comment