FOREX: EUR Hampered by Lack of Deal Progress
Mar-13 09:35
- JPY trades firmer against all others early Thursday, the inverse of the price action seen at this point yesterday - however USD/JPY has bounced well off the pullback lows at Y147.58. The EUR trades under moderate pressure on the back of further concerns over the passage of the debt brake proposals in Germany. The leader of the Greens Party confirmed this morning that no progress has been made in the talks with the CDU and SPD, meaning no concessions have been agreed, and we're no nearer the passage of the legislation. The old Bundestag convenes today at 1200CET (0700ET, 1100GMT) to begin debate on the package.
- Antipodean currencies are underperforming as this week's bounce in risk faded off highs. Core European indices have consolidated a recent bounce, with yesterday's soft Wall Street close filtering into European trade this morning.
- AUD/USD has faltered on the approach to tried-and-tested resistance at 0.6352, the 100-dma. Meanwhile,
AUD/JPY is showing through Y93.00, as risk off grips equity markets again. Recent lows in the pair, around 91.80/85 were seen in the first part of March. AUD/USD is back under 0.6300 as well, the weakest performed in the G10 space. - Following yesterday's CPI print, near-term focus shifts to the PPI numbers due later today, alongside the weekly jobless claims numbers. Russian President Putin has cryptically confirmed he may hold an international phone call later today - for which speculation runs high that it may be with President Trump, concerning an imminent ceasefire in Ukraine.
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EQUITIES: EU Bank call option trade
Feb-11 09:33
SX7E (20th Jun) 175c, bought for 2.90 in 6k.
NORWAY: Offsetting Productivity and Compensation Impacts From Q4 GDP Report
Feb-11 09:28
The Q4 GDP print had mixed implications for the March MPR rate path from an income/productivity perspective. Although mainland real productivity per hour growth was -0.5% Q/Q (vs 0.5% prior), annual wage growth was below Norges Bank’s December MPR projection at 5.0% Y/Y (vs 5.2% forecast, 5.7% prior).
- Whole-economy employment growth was 0.2% Q/Q (in line with the Q4 Regional Network Survey) and 0.6% Y/Y (in line with the December MPR projection). Meanwhile, hours worked grew 0.1% Q/Q on a whole-economy and mainland basis.
- These productivity, compensation and hours worked dynamics have offsetting impacts on overall unit labour cost growth.
- The weak productivity reading takes some of the shine off last quarter’s upward productivity revisions going back to 2022, but we don’t want to overstate its impact. We noted earlier that headline GDP weakness (-0.6% Q/Q) was largely due to a pullback in inventory investment, and a good deal of that would’ve bled into the mainland GDP reading too (and thus weigh on productivity growth).
- Taken alongside the GDP expenditure breakdown covered earlier, with think the Q4 GDP report should still be a dovish factor in the March MPR rate path. Governor Wolden Bache will likely reaffirm guidance for a 25bp March cut at her annual address on Thursday.
CROSS ASSET: New session lows for Bond Futures
Feb-11 09:27
- New lows for the Bund, and German Govie futures lead the way to the downside, Supply Delta hedging needs has been weighing since the Cash open.
- Tariffs announcement has also played its part, although the move in the US Treasuries lags, with the 109.01 level still holding in TYH5, this was the Post NFP printed low.
- As noted on the Bund open, 132.95 is the first downside hurdle, the NFP printed low, but better support is seen at 132.72.
- The move in Yields could keep the USDJPY underpinned.
