🔥 Dollar:
- USD/JPY nears test of 135.00, hints at reversal of momentum
- GBP/USD drops towards key support region as dollar runs hot
- EUR/USD looks to consolidate lower amid a stronger dollar for now
- USD/CAD runs into key resistance level, stays in search of a breakout move
- AUD/USD down to six-week lows on higher dollar, softer risk mood
- NZD/USD on the brink as upside rush looks to fall apart
📌 Headlines:
- Are the cracks finally showing up in the market?
- 10-year Treasury yields climb to highest in over three months
- ECB's Schnabel: Under all scenarios, a 50 bps rate hike in March is very much needed
- Top Pentagon official is reportedly to have arrived in Taiwan
- UK January retail sales +0.5% vs -0.3% m/m expected
- France January final CPI +6.0% vs +6.0% y/y prelim
- Germany January PPI -1.0% vs -1.6% m/m expected
- Eurozone December current account balance €15.9 billion vs €13.6 billion prior
📈 Markets:
- USD leads, NZD lags on the day
- European equities lower; S&P 500 futures down 0.6%
- US 10-year yields up 1.4 bps to 3.879%
- Gold down 0.5% to $1,827.53
- WTI crude down 3.5% to $75.75
- Bitcoin down 2.8% to $23,847
The late stumble in the risk mood yesterday is reverberating to today as we see markets go back to the familiar theme of buy the dollar, sell everything else. Traders are fearing a more hawkish/aggressive Fed and that is seeing the dollar run hot while stocks and bonds are being sold.
10-year Treasury yields briefly climbed up to a high of 3.92%, its highest in three months, and that is fueling a strong upside move in the greenback. Meanwhile, European equities are pulling back from recent gains with US futures also stumbling since the start of trading today.
Amid the move higher in bond yields, USD/JPY also clipped the 135.00 mark momentarily before keeping around 134.80 now - still up 0.6% on the day. Meanwhile, EUR/USD is gradually tracking lower and is trading down by 0.5% to 1.0615 at the lows for the day currently.
As the risk mood keeps more defensive, the dollar is also running hot against the commodity currencies with AUD/USD down 0.7% to 0.6825 and NZD/USD down 0.8% to 0.6205 at the moment. Both pairs are just off their daily lows with key technical levels in play as the dollar is on the cusp of a major technical breakout (see linked posts above).
It's going to be interesting to see how Wall Street takes to this now before the weekend and if we are finally going to see the start of a bigger trend in the market after the events this week.
