FOREX: EURUSD Breaches 1.05 Mark, Approaches Key Reversal Trigger
Feb-14 17:22
- The surprisingly weak US retail sales report, with revisions not coming close to offsetting the January miss has prompted a dovish reaction in US rates on Friday. This dynamic has further weighed on an already struggling USD index, which has printed a fresh 2-month low today at 106.57.
- While higher-beta currencies continue to outperform in G10, EURUSD has also made a notable advance above 1.0500, briefly reaching a 1.0514 session peak. Price action today has affirmed the short-term bullish technical theme.
- This week’s rally also strengthens a short-term reversal signal on Feb 3 - a hammer - and suggests scope for an extension near-term. The next important chart point is 1.0533, the Jan 27 high and reversal trigger. Above here, the market’s attention will turn to 1.0630, the Dec 6 high.
- Next week’s regional calendar is headlined by the February flash PMIs (Friday). Early Bloomberg consensus looks for the composite reading to tick up to 50.5 (vs 50.2 prior). This would be a third consecutive increase. Services is seen at 51.5 (vs 51.3 prior) while the manufacturing consensus is 47.0 (vs 46.6 prior).
- Although the ECB has expressed confidence in the medium-term inflation outlook, price components will be keenly watched after the January survey reported the highest level of output charge inflation in five months.
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PIPELINE: $1B Citadel 2Pt Debt Launched
Jan-15 17:19
- Date $MM Issuer (Priced *, Launch #)
- 01/16 $1B #Citadel LP $500M 5Y +170, $500M 7Y +190
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- 01/15 $Benchmark Dexia 5Y SOFR+73a
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- Expected to issue Thursday:
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US: Trump To Begin Presidency "In Delicate Position", NPR
Jan-15 17:17
A new survey from NPR/PBS News/Marist found that President-elect Donald Trump, "will begin his presidency in [a] delicate position,” noting that survey respondents “have high expectations that their personal financial situations will improve under Trump, but more think tariffs will hurt rather than help the economy.”
- NPR notes: “Trump has promised bold action, but, as the NPR poll shows, the politics may be tricky. Presidents often become vulnerable because of overreach. They tend to believe — falsely — that because they were elected, they have a mandate for everything on their agenda. Clearly, that's not the case.”
- Lee Miringoff at Marist notes: "The opening round of the second term is not going well with the public. Americans are not convinced of Trump's agenda pillars, including pardons and tariffs. Mass deportations are only getting mixed reviews."
Figure 1: Support for President-elect Trump's Policy Proposals
Source: NPR, Marist, PBS News
BOE: Taylor sees "small" risk that a downside risk to case 1 may be needed
Jan-15 17:12
One last point on Taylor here before the Q&A starts - he's also talking about potential evolutions of scenario analysis and noting that the cases looked at will change over time.
- He raises the possibility of a potential downside risk to case 1 - in which Bank Rate might need to be "below the neutral level for a time, as in past downturns".
- He notes that "The risk of this case may be small as of now, but the costs, both of undershooting the inflation target and of a recession, could be very high."
