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Market watch - 20th January 2020

Bank Holiday MLK But AFEX Offices Are Open Today

The Greenback is trading a bit firmer in tight overall market ranges – except with the CNY and MXN today -  as it matched its exactly 25-day peak against the Euro overnight today, remains close to its 3-day high the Loonie from last Friday morning with USDCAD in exceedingly narrow ranges over the past three-weeks or so, while it hit its one-week best with the British Pound overnight today.  The Buck is trading within striking distance of its 8-month peak with the Japanese Yen from early Friday morning along with its nearly 6-day best versus the Swiss Franc as elevated risk tolerance in the aftermath of the US-China ‘phase-one’ trade agreement is reflected by record highs on the key Dow Jones Industrial Average and S&P 500 domestic stock indices during Friday trading. Notably the US 10-year Treasury Bond yield is also trading close to its one-week high along with elevated domestic equities.  The Dollar is trading at its fresh 10-day high with the Aussie, its new 5-day peak with the Kiwi, but fell to its fresh 6.5-month low versus the Yuan as CNY benefited from the inking of the US-China trade deal last week. The official passage of the USMCA trade agreement in the Senate coupled with elevated risk appetite managed to help push the USDMXN to its fresh 15.5-month low this morning.  There is no economic data scheduled for today as it’s the Martin Luther King Day Holiday with nothing significant for tomorrow morning either, but the domestic HPI MoM release is slated for Wednesday morning, the CB Leading Index MoM and Crude Oil inventories are on tap for Thursday morning, and domestic Flash Manufacturing and Services PMI numbers follow on Friday in a relatively light data week.  The 4-day World Economic Forum Annual Meeting starts tomorrow as well. 

The Canadian Dollar is trading near its 3-day low against the USD from early Friday trading with the USDCAD in very tight ranges over the past few weeks, but is within striking distance of its 11-month peak with the Japanese Yen from last Friday along with its new 10-day high versus the broadly softer EUR as well.  The Loonie was supported by the official passing of the new USMCA by the US Congress on Thursday afternoon, the WTI crude oil price hitting an 11-day peak this morning, along with the general support of the commodity group by the signing of the US-China ‘phase-one’ trade agreement. Further, the CAD remains supported by the vocally neutral Bank of Canada (BoC) in contrast to the recent dovish actions by the other major central banks.  There is no domestic economic data scheduled for this morning, but Manufacturing Sales MoM is scheduled for Tuesday morning followed by the release of the key CPI MoM and Wholesale Sales MoM early Wednesday morning just ahead of the BoC monetary policy meeting announcement coming at 10am that day.  The Domestic Retail Sales MoM number follows on Friday morning as well in a busy data week.   

The Single Currency fell to its fresh 25-day low versus the Greenback early this morning, its fresh 10-day low with the Loonie early today, while it managed its five-day best with the broadly weaker Pound this morning. General concern over the lack of inflation and growth in the Eurozone on the backdrop of the ECB maintaining a 0.0% Main Refinancing Rate and negative Bank Deposit Rate (@-0.50%) continues to fuel worries about the overall economy in general.  Meanwhile, flows back in the Dollar after the signing of the US-China ‘phase one’ trade deal has come at the expense of the Common Currency to some extent.  German PPI MoM data matched its 3-month best of +0.01% compared to 0.0% consensus forecast and previous this morning. The Eurogroup Meeting has started this morning with ECOFIN Meeting beginning on Tuesday morning along with the start of the annual World Economic Forum.  Both Eurozone and German ZEW Economic Sentiment figures are scheduled for tomorrow, the key European Central bank (ECB) monetary policy meeting follows on Thursday morning along with Eurozone Consumer Confidence data, with both EU and German Flash Services and Manufacturing PMI overnight Friday morning ahead of ECB President Christine Lagarde giving a speech at the World Economic forum as well.

Sterling fell to its one-week low versus the Dollar and Loonie this morning, along with its 5-day trough with Euro as the general concern over the softer UK economy has left Sterling on its back foot. The key GDP MoM, CPI YoY, and Retail Sales MoM data all missed their respective targets last week confirming analysts worries.  Indeed, both the GDP and Retail Sales numbers were also surprisingly negative in addition to below the economist consensus forecasts. Meanwhile, while the recently obtained Conservative Tory majority has improved Brexit sentiment, there has yet to be final agreed resolution to how the UK will exit the European Union and this uncertainty is a key factor in UK economic woes also. Rightmove HPI MoM last night was positive at +2.3% versus -0.9% previous last night.  Key UK employment data is scheduled for release Tuesday morning, including the always important Average Earnings Index 3m/Y, Claimant Count, and Unemployment Rate data figure. Public Sector Net Borrowing and CBI Industrial Order Expectations are on tap for this Wednesday morning followed by Bank of England (BoE) Monetary Policy Committee Member Jonathan Haskel giving a speech on this Friday morning at the World Economic Forum ahead of the Flash Manufacturing and Services PMI data also.

The broadly stronger Dollar is trading close to its fresh eight-month high with the Yen this morning, its 10-day best with the Aussie Dollar along with the Swiss Franc alike, and its 5-day peak with the Kiwi today as well.  The Buck fell to its new 6.5-month low versus the Chinese Yuan largely on the key US-China ‘phase one’ trade agreement while the official passage of the USMCA North America free trade agreement in both houses of the US Congress pushed the Greenback to its new 15.5-month low vis-à-vis the Mexican Peso as well. The Dollar remains close to its fresh one-month high with the South African Rand from last Tuesday morning in line with the USD strength trend.  The release of the Japanese Revised Industrial Production MoM was just -0.1% below forecast at -1.0% yesterday evening on -0.9% previous and forecast.  The Bank of Japan (BoJ) monetary policy meeting announcement is due this evening tentatively, with no change expected to already existing aggressive quantitative easing policy now.  Australian Westpac Consumer and New Zealand GDT Price Index on tap for release late Tuesday night. The Aussie CB Leading Index MoM on Tuesday morning local time is followed by the release of the Japanese Trade Balance along with the key Australian Employment Change and Unemployment Rate in the evening.  Thursday night sees the NZ CPI QoQ number, AU Flash Services and Manufacturing PMI along with Japanese Flash Manufacturing PMI data.  

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