Headlines:
- Dollar runs back the other way after hot start to the new year
- France December preliminary CPI +5.9% vs +6.4% y/y expected
- Germany November import price index -4.5% vs -1.6% m/m expected
- Eurozone December final services PMI 49.8 vs 49.1 prelim
- Switzerland December CPI +2.8% vs +2.9% y/y expected
- UK November mortgage approvals 46.08k vs 55.00k expected
- US MBA mortgage applications w.e. 30 December -10.3% vs +0.9% prior
Markets:
- AUD leads, USD lags on the day
- European equities higher; S&P 500 futures up 0.2%
- US 10-year yields down 5 bps to 3.692%
- Gold up 0.7% to $1,853.13
- WTI crude down 3.4% to $74.33
- Bitcoin up 0.9% to $16,807
It's all about the flows once again as the US dollar gave back the gains following its hot start to the new year from yesterday. The greenback was offered in European morning trade, in a bit of a run back towards the prevailing theme in the latter stages of last year i.e. sell the dollar, buy everything else.
That said, it wasn't as straightforward with oil sinking once again and is down over 3% on the day. WTI crude is down to $74 levels with Brent falling back under $80 as the anticipated "good" year for oil may have to wait longer before materialising. China worries and global recession risks are arguably still weighing on the minds of traders.
As for the dollar, its drop today is more prominent against the antipodeans as risk sentiment holds more optimistic in Europe again. A softer set of inflation numbers from France corroborates with that from Germany yesterday, helping to keep the mood more upbeat.
Despite a sharp drop in bond yields, the euro stuck in there and pushed higher with EUR/USD gaining from 1.0560 to 1.0635 while GBP/USD pulled higher from 1.1980 to 1.2080 before easing slightly.
USD/JPY also dropped from 130.80 to just below 130.00 at one point, before recovering back the entire drop as the session progressed.
Meanwhile, AUD/USD at the highs was over 2% up and hit 0.6885 before easing a touch to 0.6850 levels at the moment.
It's all about the push and pull to start the new year with flow-driven moves dominating proceedings.
