Market News Today
The stock rally continued overnight as sentiment remains underpinned by growing conviction that the vaccine rollout will boost the global recovery and as Asian markets are coming back from the extended weekend. China remains closed for the Lunar New Year holiday. The JPN225 closed 1.3% higher above the 30000 mark, after trimming some gains following an FT story that China is considering limiting rare earth mineral supplies to US defence contractors, which rekindled concern over the future of US-China relations. This is a reminder that virus developments are not the only factor determining the world growth outlook.
Bond markets meanwhile remain under pressure as reflation trades unfold and the US 10-year rate jumped 2.3 bp to 1.23%. JGB rates are up 0.1 bp at 0.075%. GER30 and UK100 futures are marginally higher, underperforming versus US futures. US Treasury yields are at their highest since March. In FX markets, the USDIndex fell to a 3-week low while the USDJPY lifted to 105.54 amid broad pressure on the Yen, although the Dollar was lower against most other currencies. USOIL retraced to $59.90 from $60.95 – US boosted power demand but also threatened oil production in Texas. Crude markets are well into pre-pandemic ranges, yet global demand is not likely be restored to pre-pandemic levels for a considerable time.
Bitcoin flirts with breaking through the $50,000 barrier – 350% gains in the past 12 months.
Today – Data releases today focus on the second reading for Eurozone Q4 GDP, and German ZEW investor confidence for February. There is room for an upside surprise on the ZEW against the background of the global stock rally and strengthened confidence in the global recovery.
Biggest (FX) Mover @ (07:30 GMT) NZDJPY (+0.51%) Broke 3-year Resistance area 76-76.50 following a 3-month rally. Faster MAs however have retraced in the past 4 hours, confirming the pullback from 76.70 highs to 76.30, and are currently sideways, suggesting consolidation above the 20-hour SMA. MACD histogram & signal line lost some ground, with RSI at 57 and Stochastic sloping aggressively lower in line with the pullback. However only a break below the 20-hour SMA could suggest further decline.
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Andria Pichidi
Market Analyst
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