Market action
The momentum worked up in the Asian and European sessions failed to follow through into the US session today. Most development in markets elsewhere reversed sharply today: equities rushed higher after challenging the lowest levels since the first trading day of the year ahead of the US open and are even looking for their best gains since that day as well, and bonds consolidated after swooning earlier on the UK inflation data. In FX land, the USD was pushed back from its highest levels on the day vs. the commodity currencies and lost some ground on its best levels vs. the Euro as well.
The momentum worked up in the Asian and European sessions failed to follow through into the US session today. Most development in markets elsewhere reversed sharply today: equities rushed higher after challenging the lowest levels since the first trading day of the year ahead of the US open and are even looking for their best gains since that day as well, and bonds consolidated after swooning earlier on the UK inflation data. In FX land, the USD was pushed back from its highest levels on the day vs. the commodity currencies and lost some ground on its best levels vs. the Euro as well.
BoE's King: no inflation worry just yet
The Bank of England's King was out giving a speech at a university today that threw a bit of cold water on the latest very high inflation data when he said that "undesirably low" money supply will prevent the inflation threat. "Provided monetary growth remains well under control - and remember at present it is undesirably low - inflation should return to target in the medium term." This is certainly putting a brave face on things in light of the very high inflation data out of the UK, so Mr. King better hope that he is right. Remember that the BoE minutes from the last meeting are up tomorrow. GBP backed off a bit against the Euro on this development and after nearly touching the very interesting 0.8700 level in EURGBP.
The Bank of England's King was out giving a speech at a university today that threw a bit of cold water on the latest very high inflation data when he said that "undesirably low" money supply will prevent the inflation threat. "Provided monetary growth remains well under control - and remember at present it is undesirably low - inflation should return to target in the medium term." This is certainly putting a brave face on things in light of the very high inflation data out of the UK, so Mr. King better hope that he is right. Remember that the BoE minutes from the last meeting are up tomorrow. GBP backed off a bit against the Euro on this development and after nearly touching the very interesting 0.8700 level in EURGBP.
US Housing Survey a downer
The US NAHB Housing Survey, which measures present sales, sales expectations in the next six months, and foot traffic of prospective buyers at new homes registered another drop in January, vs. the improvement expected. This was the lowest reading since June and is more than a bit disappointing considering the renewal and expansion (to home buyers who have owned their home for more than five years vs. only first-time home buyers in the first iteration) of the legislation through the end of April 2010. Optimists can hope that the unseasonably cold weather in December and early January contributed to the poor reading.
The US NAHB Housing Survey, which measures present sales, sales expectations in the next six months, and foot traffic of prospective buyers at new homes registered another drop in January, vs. the improvement expected. This was the lowest reading since June and is more than a bit disappointing considering the renewal and expansion (to home buyers who have owned their home for more than five years vs. only first-time home buyers in the first iteration) of the legislation through the end of April 2010. Optimists can hope that the unseasonably cold weather in December and early January contributed to the poor reading.
Technical developments
The market was rather low on technical developments today. The bearish GBPUSD reversal looks a bit less compelling than it did this morning, though it is still worth consideration. CAD and AUD fought back somewhat on the strong equity session in North America, the dovish BoC meeting and unsupportive interest rate spreads notwithstanding. Elsewhere, EURUSD's close right on the 200-day moving average sets up an interesting test of whether we are ready to break into a new wave of the downtrend here. USDJPY looks perhaps the most interesting, after a new low on the year was rejected in today's trade ahead of the key 90.00 level. This creates a more emphatic line in the sand for the bulls than previous rally attempts.
The market was rather low on technical developments today. The bearish GBPUSD reversal looks a bit less compelling than it did this morning, though it is still worth consideration. CAD and AUD fought back somewhat on the strong equity session in North America, the dovish BoC meeting and unsupportive interest rate spreads notwithstanding. Elsewhere, EURUSD's close right on the 200-day moving average sets up an interesting test of whether we are ready to break into a new wave of the downtrend here. USDJPY looks perhaps the most interesting, after a new low on the year was rejected in today's trade ahead of the key 90.00 level. This creates a more emphatic line in the sand for the bulls than previous rally attempts.
Chart: EURGBP
A tremendous sell-off of late on the Cadbury deal and then today's high inflation data. Meanwhile, interest rate fundamentals have hardly changed. Now that the cat is out of the bag on the Cadbury deal, should we look for some GBP consolidation? Note that 0.8700 is an interesting support area ahead of the longer term low down at 0.8400.
A tremendous sell-off of late on the Cadbury deal and then today's high inflation data. Meanwhile, interest rate fundamentals have hardly changed. Now that the cat is out of the bag on the Cadbury deal, should we look for some GBP consolidation? Note that 0.8700 is an interesting support area ahead of the longer term low down at 0.8400.
Looking ahead
Watch out for the US weekly confidence data out at 2200 GMT today - last week saw a tremendous drop. Anything other than mean reversion (a jump of 2 or 3 points this week vs. -6 last week) is certainly a point of concern. Last Friday's initial January Michigan confidence data was virtually unchanged from its December level. Australia confidence data is up in Asia tonight, and important inflation data - Canada's CPI and US' PPI are in focus in tomorrow's North American session for bonds and therefore also for the JPY, as we look to whether USDJPY can stage a renewal of the rally here.
Watch out for the US weekly confidence data out at 2200 GMT today - last week saw a tremendous drop. Anything other than mean reversion (a jump of 2 or 3 points this week vs. -6 last week) is certainly a point of concern. Last Friday's initial January Michigan confidence data was virtually unchanged from its December level. Australia confidence data is up in Asia tonight, and important inflation data - Canada's CPI and US' PPI are in focus in tomorrow's North American session for bonds and therefore also for the JPY, as we look to whether USDJPY can stage a renewal of the rally here.
No comments:
Post a Comment