FOREX: Greenback Loses Ground, USDCHF Extends Intra-Day Decline to 1%
Feb-13 18:16
- The USD index has weakened around 0.5% on Thursday, as a multitude of factors produced further questions over the greenback’s dominant uptrend in the aftermath of the US election. The market analysed some notably soft details within the PPI data report, translating that into a more negative read for the Fed’s preferred measure of inflation (PCE).
- With this dynamic weighing on US treasury yields, the USD remained marginally on the back foot. Dollar weakness then picked up momentum as headlines crossed from CNBC suggesting that new reciprocal tariffs to be announced by President Trump would not go into effect today. With a possible start date of April 1 being proposed, risk sentiment was boosted as equity indices extended higher which in turn weighed broadly on the dollar.
- EURUSD has made a bullish development today by breaching the 50-day EMA, rising to a high of 1.0445. A clear breach of the average would strengthen a bullish condition and signal scope for stronger recovery and open 1.0533, the Jan 27 high.
- USDJPY is down 0.80% on the session, and although this is a sizeable daily adjustment, the pair has only pulled back to around mid-range for the week following the significant recovery seen on Wednesday.
- Lower core yields, a softer greenback and the hotter-than-expected core CPI print in Switzerland are all contributing to the ongoing weakness for USDCHF on Thursday. The pair has traded as low as 0.9036, extending session losses to ~1% and narrowing the gap to an area of key support. USDCHF has continually failed to close below the 50-day EMA, which currently intersects at 0.9024. Below here, the January low resides at 0.8965.
- China loans data and the second estimate of Eurozone GDP will be released on Friday, before the focus turns to the January US retail sales report.
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FOREX: Dollar Index Pulls Back 0.5%, EURGBP Prints Four-Month High
Jan-14 18:07
- The ICE USD index sits half a percent lower on the session Tuesday, as the greenback extends a moderate retreat ahead of the key CPI data tomorrow. Softer-than-expected PPI data helped the greenback consolidate overnight weakness, with higher long-end US yields and lower equities unable to support the dollar.
- It is clear that the Fed will hold in January, with the first plausibly “live” meeting not until March. But with pricing having shifted so quickly away from 2025 cuts, it’s a good juncture to assess whether markets have gotten too hawkish, with the greenback potentially vulnerable to a deeper correction.
- Price action has seen EURUSD briefly climb back to the 1.0300 handle, rising 0.5% on the session. Higher German yields have been supportive of the single currency at the margin, further evidenced by EURGBP rising to a 4-month high of 0.8451.
- As noted, a sustained breach of 0.8448 resistance would signal scope for a move towards 0.8494, the August 26 high. Separately, the August highs reside at 0.8625, which could garner attention should UK fiscal concerns/uncertainty deteriorate further. Both the 20-day and 50-day EMA’s represent initial support for the cross, currently intersecting around 0.8325. UK CPI is due early Wednesday.
- Overall, broad pressure on core fixed income continues to weigh on the Japanese yen, with EURJPY extending its intra-day advance to 0.8% and now 260 pips above the Monday lows around the psychological 160.00 mark. USDJPY has also risen back to 158.00, as market participants continue to weigh rhetoric from Japanese officials ahead of the January BOJ decision.
US: Americans Give Biden Negative Assessment On Economy And Foreign Policy
Jan-14 18:03
A new survey from Gallup found that Americans “offer a largely negative assessment” of the progress made during the administration of President Joe Biden on 18 economic, national and international issues.
- Semafor notes on the survey: “Majorities said they believe the US lost ground over the past four years in addressing the federal debt, immigration, the wealth gap, the economy, the US’ place in the world, and crime... Meanwhile, pluralities said they think the US has fallen behind in other areas like infrastructure, despite Biden presiding over the passage and implementation of a sweeping bipartisan infrastructure law.”
- Yesterday, Biden defended his legacy in his final foreign policy speech, arguing he oversaw the rehabilitation of US multilateralism and enacted policies that will bolster the US’ global standing in the future.
- Biden: “...thanks to our administration, the United States is winning the worldwide competition. Compared to four years ago, America is stronger, our alliances are stronger, our adversaries and competitors are weaker.”
- On China, Biden said: “Today, I can report to the American people we’re in a better strategic position for long-term competition with China than we were when I took office… According to the latest predictions, on China’s current course they will never surpass us.”
Figure 1: Progress Report in 18 Areas During President Biden’s Four Years In Office
Source: Gallup
PIPELINE: Corporate Issuance Update: $3.5B British Colombia 3Y SOFR Priced
Jan-14 17:58
- Date $MM Issuer (Priced *, Launch #)
- 01/14 $3.5B *British Colombia 3Y SOFR+45
- 01/14 $3B *KFW +5Y +40
- 01/14 $2.5B #BNG Bank 5Y SOFR+47
- 01/14 $2.5B *CADES 5Y SOFR+68, upsized from $2B
- 01/14 $2B *CAF 5Y SOFR+82
- 01/14 $2B *IFC 3Y SOFR+29
- 01/14 $500M #Hyundai 3Y +80
- 01/14 $Benchmark Blackstone Private Cr Fund 7Y +190a
- 01/14 $Benchmark Adobe 3Y +30, 5Y +40, 10Y +55
- 01/14 $Benchmark BFCM 5Y +95, 5Y SOFR+123
- 01/14 $Benchmark LifePoint Health 7NC3
