TARIFFS: China May Consider Probing Wine From France: CCTV Account Via BBG

Comments crossing from ECB's Muller via Bloomberg, generally considered one of the more hawkish members of the Governing Council:

• "*ECB'S MULLER: NO REASON TO REDUCE RATES FURTHER IN NEAR TERM"
• "*ECB'S MULLER: EURIBOR RATES WILL BE PRETTY STABLE IN NEEAR TERM"
• "*MULLER: HIGHER ECB RATES NOT A QUESTION OF NEXT MONTHS OR QRTRS"
• "*MULLER: PERHAPS A FEW YEARS AHEAD ECB RATES COULD BE HIGHER"

The pushback against cuts is not surprising, and comments around steady rates/hikes is in line with fellow hawk Schnabel. There's been no discernible reaction a the back-end of the Euribor curve to these headlines.

A reminder that in December, EUR rates moved to quickly increase the implied probability of ECB rate hikes in 2027/2028. Some of that hawkish repricing has faded in the weeks since though, with the first full 25bp Euribor--implied hike now priced in September 2027 (versus June 2027 prior).

• Overall, general dollar weakness has been evident as news was received surrounding the Fed’s DoJ subpoenas in reference to building renovations. This has reignited independence risks and a put the ‘sell-America’ trade back on the short-term agenda. Despite this, the Japanese yen has failed to receive a meaningful boost to start the week, with a brief flurry down to 157.52 well supported during APAC hours.
• Domestic factors are certainly playing their part here, as Friday’s reports of PM Takaichi dissolving the Lower House and associated speculation that she could call for a snap election continues to rise. The Yomiuri newspaper has reported that Feb. 8 or Feb. 15 are likely dates for this to occur.
• Technically, last week’s breach of 157.89 for USDJPY was a meaningful development, confirming a resumption of the medium-term uptrend. The next significant topside target will be 158.87, last year’s high and a key resistance. Support to watch lies much lower down at 155.35, the 50-day EMA.
• Naturally, the latest leg lower for the yen is prompting renewed speculation for potential intervention from the MOF, and sure enough, officials have been hardening their language in recent weeks. However, it is worth noting that USDJPY was around 2.5% higher than current levels when intervention commenced in 2024.
• Additionally, ING point out that based on those last interventions, they still suspect there may be a preference to wait for a USD-negative market event (previously a cool US CPI report) to intervene.

The trend structure in WTI futures remains bearish and recent gains still appear corrective - for now. Moving average studies are in a bear-mode position, highlighting a dominant downtrend. Note that resistance at the 50-day EMA, at $58.32, has been breached. This signals scope for a stronger corrective phase. Key resistance is at $61.25, the Oct 24 high. A resumption of the downtrend would open $53.77, a Fibonacci projection. The trend structure in Gold remains bullish and today’s strong start to this week’s session reinforces current conditions. Gold has cleared resistance at $4549.9, the Dec 26 high, to confirm a resumption of the primary uptrend. Sights are on the $4600.0 handle, where a break would open $4630.7, a Fibonacci projection. Initial firm support to watch lies at $4385.9, the 20-day EMA. A break would signal the start of a corrective phase.

• WTI Crude down $0.21  or -0.36% at $58.95
• Natural Gas up $0.09 or +2.68% at $3.254
• Gold spot up $78.96 or +1.75% at $4589.83
• Copper up $13.2 or +2.24% at $603.7
• Silver up $4.34 or +5.43% at $84.2305
• Platinum up $97.64 or +4.28% at $2377.78