FX News Today
- 10-year Bund yields are down -0.6 bp at 0.216% in opening trade. Treasury yields also fell back from overnight highs and are now down -0.2 bp at 2.739%, while JGB yields remain up 0.8 bp at 0.001%.
- Stock markets mostly managed to move higher in Asia overnight (excluding the Nikkei which closed with a loss of 0.09%) and DAX futures are also up, while US futures are narrowly mixed and the FTSE 100 future is swinging between gains and losses.
- Brexit developments remain in focus, but while in the UK officials continue to struggle to find a consensus on the way forward, the focus in the Eurozone turns to the ECB meeting today.
- Rates are widely expected to remain on hold and the guidance little changed, but Draghi is likely to sound much more cautious on the growth and inflation outlook, which should underpin stock markets.
- Norges Bank is also expected to hold rates steady and the data calendar focuses on Eurozone PMI readings, which are expected to show further weakness in the preliminary release for January.
- US earnings reports have helped to underpin risk appetite in recent days, while the ongoing government shutdown is preventing timely data releases and leaving investors focused on trade talk developments, company news and in Europe, Brexit jitters.
Charts of the Day
Main Macro Events Today
- EU Services, Manufacturing, and Composite PMI – The Services PMI is expected to come out at 51.5 in January, compared to 51.2 in December. This is expected to have a positive impact on the Composite PMI, which is expected to rise to 51.4 compared to 51.1 in December. The Manufacturing PMI is expected to have remained at the same levels as in December.
- World Economic Forum at Davos – The third day of the WEF annual meetings held in Davos and attended by officials from over 90 countries. Comments from central bankers and other influential officials can create significant market volatility.
- ECB Interest Rate Decision – ECB is not expected to proceed with any changes in the interest rate yet as it is has just started evaluating the effects from the end of QE in December. However, communication could provide important information regarding the future path of policy.
- US Jobless Claims – Initial Jobless Claims are expected to rise to 220k compared to 213k last week, while Continuing Jobless Claims are expected to decline slightly to 1.735M, compared to 1.737M last week.
- US Services, Manufacturing, and Composite PMI – Reductions in PMIs are expected in all sectors, in conjunction with the overall perception of a slowdown in the US, and the ongoing government shutdown.
Support and Resistance Levels
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Dr Nektarios Michail
Market Analyst
HotForex
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