Monday’s risk rally was extended and intensified Tuesday as some fears about the novel coronavirus ebb. Risk-on trade lifted the Nasdaq (+2.1%) to a new closing record. The S&P 500 (+1.5%), Dow Jones Industrial Average (+1.4%), and Russell 2000 (+1.5%) followed suit with gains of about 1.5%. Emerging market currencies gains versus the greenback while China’s yuan rallies above 6.9900 against the dollar.
G10 currencies are quiet this morning. AUD is a marginal outperformer after Lowe reiterated the RBA is no rush to ease. Reported Coronavirus cases rose to 24K, maintaining the 20% daily growth rate.
EUR/USD sees further erosion of the rally from January’s low. Big U.S. equity market gains and a big rally in UST yields, which widened German-U.S. yield spreads helped to drive EUR/USD below 1.1040.
GBP/USD’s break below 2020’s low and support at 1.2955, to a new low at 1.2942, was short-lived. Upbeat risk sentiment and PMI beat trump lingering Brexit fears.
USD/JPY climbed above 109.25 on the back of higher U.S> yields and risk-on trading as recent virus-related haven flows unwind.
AUD/USD reverses direction after setting a 4-month low on Tuesday Asia trade. Flows out of safe havens and into high beta and emerging market currencies, along with gains in copper helped propel AUD/USD towards 0.6740.
Day ahead: Today brings final clues on Friday’s US payrolls report in the form of the ADP employment change and the ISM non‐manufacturing report. The ADP report has largely been a contrarian indicator for payrolls in recent months and should be ignored. The employment component of the ISM has had a better track record recently and a reading around 54 (previously 54.8) would be consistent with the consensus for payrolls (160K). Outside the US, Canada reports December trade figures. There are a number of interesting central bank speakers today, including the BoC’s Wilkins ECB President Lagarde and Chief Economist Lane.
G10 currencies are quiet this morning. AUD is a marginal outperformer after Lowe reiterated the RBA is no rush to ease. Reported Coronavirus cases rose to 24K, maintaining the 20% daily growth rate.
EUR/USD sees further erosion of the rally from January’s low. Big U.S. equity market gains and a big rally in UST yields, which widened German-U.S. yield spreads helped to drive EUR/USD below 1.1040.
GBP/USD’s break below 2020’s low and support at 1.2955, to a new low at 1.2942, was short-lived. Upbeat risk sentiment and PMI beat trump lingering Brexit fears.
USD/JPY climbed above 109.25 on the back of higher U.S> yields and risk-on trading as recent virus-related haven flows unwind.
AUD/USD reverses direction after setting a 4-month low on Tuesday Asia trade. Flows out of safe havens and into high beta and emerging market currencies, along with gains in copper helped propel AUD/USD towards 0.6740.
Day ahead: Today brings final clues on Friday’s US payrolls report in the form of the ADP employment change and the ISM non‐manufacturing report. The ADP report has largely been a contrarian indicator for payrolls in recent months and should be ignored. The employment component of the ISM has had a better track record recently and a reading around 54 (previously 54.8) would be consistent with the consensus for payrolls (160K). Outside the US, Canada reports December trade figures. There are a number of interesting central bank speakers today, including the BoC’s Wilkins ECB President Lagarde and Chief Economist Lane.
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