FRANCE DATA: IP Rebounds in Jan, Solely Due to Strong Transport Equipment Bounce

ERH6/M6 ~4K given at -1.5

• In the equity space, Monday’s strong gains in S&P E-Minis reinforce a bullish theme and suggest that the recent bear threat merely resulted in a short lived correction. Attention is on key resistance and the bull trigger at 7043.00, the Jan 28 high. A break of this level would confirm a resumption of the primary uptrend and open 7080.92, a 0.764 projection of the Nov 21 - Dec 11 - 18 price swing. Key support and a bear trigger has been defined at 6814.50, the Jan 21 low.
• A bull cycle in EUROSTOXX 50 futures remains intact and Monday’s rally plus today’s early gains, reinforce this theme. Key support lies at the 50-day EMA at 5857.60. A clear breach of this average would signal scope for a deeper retracement. Moving average studies are in a bull-mode position, highlighting a dominant uptrend. The bull trigger at 6072.00, the Jan 14 / 15 high, has been pierced. A clear break would resume the primary uptrend.

• AUD is the main outperformer of the day following the hawkish hike by the RBA overnight. AUDUSD (+0.8%) price action has been supported by risk sentiment following yesterday's blockbuster ISM Manufacturing, leading to e-mini S&P futures rallying back above the 7000 mark. While AUDUSD has rallied back above 0.70, spot remains well shy of the 0.7094 cycle highs.
• From a fundamental perspective, the picture looks quite favourable with NATO turmoil on the backburner for now, Warsh being perceived as a sensible Fed Chair, US fiscal being supportive, growth expectations brightening, and the government shutdown seen to resolve soon. This supports the current strength in high-beta currencies, supportive for the likes of AUD, NZD and EMFX.
• The recent sharp USDJPY selloff continues to be eroded, with the pair now recovering more than 50% of the January pullback. Price action has led USDJPY to breach the 50-day EMA intersecting at 155.75. AUDJPY meanwhile pierced key resistance of the 2024 highs of 109.37, placing the cross at its highest level since 1990.
• Opinion polls suggest PM Takaichi may be successful in securing her power in the February 23 snap elections, which would enable her to proceed with fiscal easing, while Finance Minister Katayama reiterated the MoF will keep close communication with the US about the currency markets.
• While the US is expected to vote later today on a bill ending the government shutdown, BLS data releases are on hold, including today's JOLTS release and Friday’s payrolls report. This may allow markets to soon focus on BoE and ECB decisions scheduled on Thursday.