MNI EUROPEAN OPEN: Silver Plunges Again, USD Firmer

EXECUTIVE SUMMARY

• SILVER PLUMMETS AGAIN AS 17% SLIDE OVERTURNS TWO-DAY RECOVERY - BBG
• TRUMP SAYS WARSH WOULD’VE LOST FED IF HE PLEDGED RATE HIKE - BBG
• FED’S COOK SEES INFLATION RISK TITLED TO UPSIDE - MNI BRIEF
• US AND IRAN AGREE TO FRIDAY TALKS IN OMAN BUT STILL AT ODDS OVER AGENDA - RTRS
• JAPAN'S 30-YR BOND SALE CALMS NERVOUS MARKET ON FIRMER DEMAND - BBG 

Fig 1:  Gold and Silver Volatility - Still Very Elevated  

Source: Bloomberg Finance L.P./MNI 

UK

POLITICS (BBG): “Keir Starmer is not the first Labour prime minister to be plunged into crisis by Peter Mandelson. It’s not even the first time it’s happened to Starmer. The difference is that members of his own party are now starting to number his days as leader.” 

EU

EUR (MNI POLICY): The European Commission moots the idea of including euro swap lines in trade deals with third countries in a paper on how to promote the international role of the euro which will be discussed by euro area finance ministers on Feb 16 in Brussels, MNI understands.

UKRAINE (MNI BRIEF): The European Council agreed on a legal framework to implement a EUR90 billion loan to Ukraine for 2026-27, it said in a press release on Wednesday.

EU/US (MNI BRIEF): The European Parliament's International Trade Committee has decided to resume work on its trade deal with the U.S., it announced on Wednesday.

US

FED (MNI BRIEF): Federal Reserve Governor Lisa Cook said Wednesday she is keenly focused on ensuring that inflation is returning to the central bank's 2% goal after nearly five years of above-target price growth.

FED (BBG): “ US President Donald Trump said he would have passed on Kevin Warsh as his nominee to lead the Federal Reserve if Warsh had expressed a desire to hike interest rates.” 

SERVICES (MNI INTERVIEW): U.S. service sector growth will persist this year, supported by AI investments and a fiscal boost from the Trump administration, but that will probably not lead to a lot of job growth and could be accompanied by fresh inflation pressures, Institute for Supply Management services chair Steve Miller told MNI.

LABOUR MARKET (MNI BRIEF): The U.S. labor market remains solid despite soft hiring, and steady pay growth should keep consumer spending strong this year, ADP chief economist Nela Richardson said Wednesday. 

MARKETS (BBG): “There have been many AI-driven selloffs in the three years since ChatGPT burst into the mainstream. Nothing, though, quite rivals the rout rippling through stock and credit markets this week.” 

TECH (BBG): “ Alphabet Inc. topped projections for quarterly revenue and outlined an ambitious capital spending plan, far surpassing predictions, leveraging its growth to build out the data centers and infrastructure needed to lead in the AI age.” 

JAPAN

DEBT (BBG): "Japan’s 30-year bonds gained after an auction of that tenor drew stronger demand, easing immediate concerns about longer-maturity debt just days from a closely watched election." 

OTHER

US/IRAN (RTRS): "The U.S. and Iran have agreed to hold talks in Oman on Friday, officials for both sides said, even as they remained at odds over Washington's insistence that negotiations include Tehran's missile arsenal and Iran's vow to discuss only its nuclear program." 

SILVER (BBG): "Silver fell sharply, wiping out a two-day recovery, as the white metal struggled to find a floor following a historic market rout. Gold also declined." 

CHINA

RRR (SECURITIES DAILY): “Analysts expect reserve requirement ratio (RRR) cuts to be unlikely ahead of the mid‑February Spring Festival, though implementation could be possible in the second quarter, according to a Securities Daily report Thursday.” 

CHINA/US (BBG): “US President Donald Trump and President Xi Jinping of China discussed trade and geopolitical flashpoints, including Taiwan, during a Wednesday call ahead of a planned face-to-face meeting in April.” 

CHINA/US (XINHUA): "Chinese President Xi Jinping said on Wednesday that he hopes to work with U.S. President Donald Trump this year to stabilise relations and accomplish more significant issues together, Xinhua News Agency reported following a phone call between the two heads of state."

HOUSING (21st Century Business Herald): "Policy support and rising asset prices are bolstering confidence in the housing market, said 21st Century Business Herald in an editorial on Thursday." 

MNI: PBOC Sets Yuan Parity Higher At 6.9570 Thur; +5.31% Y/Y

MNI (BEIJING) - The People's Bank of China (PBOC) set the dollar-yuan central parity rate higher at 6.9570 on Thursday, compared with 6.9533 set on Wednesday. The fixing was estimated at 6.9451 by Bloomberg survey today.

MARKET DATA

AUSTRALIA DEC TRADE BALANCE A$3373MN; MEDIAN $3500MN; PRIOR A$2597MN 
AUSTRALIA DEC EXPORTS M/M 1.0%; PRIOR -4.0% 
AUSTRALIA DEC IMPORTS M/M -0.8%; PRIOR -0.2%

MARKETS 

US TSYS: Equity Declines See Futs Rise as Yields Remain in Tight Ranges

After a slow start to the trading day in Asia and no movement in the first few trading hours, US bond futures rose in the afternoon as regional markets opened and equities fell.  The 10-Yr US bond futures rose coincided with the pick up in pace of declines in the NIKKEI and KOSPI, both suffering from an AI / tech sell off.  

TYH6 has traded in a 111-18+ to 111-24+ range, and is currently at 111-22+, a gain of +03 today as volumes picked up after lunch.  TYH6 remains below moving averages, and seemingly without a strong bias, with daily volumes light and ranges tight.  

Cash is better bid, with yields 1-1.5bps lower across the curve, with the 5 and 10-Yr outperforming yet markets yields remain in tight ranges, near to recent highs. 

• The 2-Yr is down -0.8bps at 3.549%
• The 5-Yr is down -1.2bps at 3.820%
• The 10-Yr is down -1.2bps at 4.266%
• The 30-Yr is down -1.2bps at 4.907%

Looking ahead to Thursday in the US, focus is on initial jobless claims and the delayed JOLTs openings 

Federal Reserve Governor Cook spoke earlier suggesting that progress on reducing inflation has stalled, emphasizing a "wait-and-see" approach to monetary policy with risks tilted towards higher inflation. Cook noted the labor market is "solid" but is monitoring signs of a "two-speed" economy affecting lower-income households.

Thursday sees a US$105bn 4-week and US$95bn 8-week bill auction.  

JGBS: Sharp Bull-Flattening After Solid 30Y Auction Result

JGB futures are slightly stronger, +5 compared to settlement levels, after surging the back of today’s 3-year auction.

• The 30-year JGB auction delivered a solid result. The low price exceeded dealer expectations of 96.70 (Bloomberg survey) and the cover ratio increased to 3.6352x from 3.1383x. The auction tail also shortened to 0.11 from 0.15, pointing to stronger bidding.
• The standout in the Japan weekly flow update (to the week ending Jan 30, last Friday), was the surge in offshore buying of local bonds. The +2trln in in net buying was the strongest weekly inflow since mid-April last year.
• Near term focus for JGBs rests with today's 30yr auction, then the weekend election, where opinion polls are in favour of PM Takaichi's LDP party.
• Cash US tsys are ~1bp richer in today's Asia-Pac session.
• Cash JGBs have bull-flattened sharply across benchmarks after today's 30-year auction, with yields flat (5-year) to 5.5bps lower (30-year). Nevertheless, the 5/40 yield curve sits in the middle of the range it has traded in since mid-last year (see chart)
• Swaps curve has also bull flattened.
• Tomorrow, the local calendar will see Household Spending and Leading/Coincident Index data alongside a speech by BOJ Board Member Masu in Ehime.

Source: Bloomberg Finance LP

AUSSIE BONDS: Subdued Data-Light Session, RBA Gov Testimony Tomorrow

ACGBs (YM +1.0 & XM +0.5) are modestly stronger after a subdued rangebound session.

• MNI Techs: Prices were pressured to new lows on the back of the Q4 CPI print, quickly printing 95.560 before a swift recovery. This puts prices net higher and may signal a near-term bottom for the curve, even as markets continue to price in some rate hike optionality in the coming months. For now, prices remain well below prior resistance at 96.615, the Sep 12 high, and refocuses attention on 95.480 as the next major support.
• Cash US tsys are ~1bp richer in today's Asia-Pac session.
• Cash ACGBs are 1-2bps richer with the AU-US 10-year yield differential at +59bps.  
• The bills strip is slightly mixed.
• RBA-dated OIS pricing is slightly softer today across meetings, after the recent post-RBA decision firming. Currently, pricing is 6-9bps firmer across meetings than pre-RBA levels. That leaves RBA-dated OIS showing tightening across all meetings, with the probability of a 25bp hike rising from 16% for March to 98% by June and 159% by December 2026.
• Tomorrow, the local calendar will see Foreign Reserves data and RBA's Bullock-Parliamentary Testimony.
• The AOFM plans to sell A$800mn of the 1.00% 21 December 2030 bond on Friday.

Bloomberg Finance LP

BONDS: NZGBS: Modestly Richer, Global Bonds Bid With Risk-Off

NZGBs closed showing a modest bull-flattener, with benchmark yields flat to 2bps lower. 

• Today’s weekly supply auctions delivered strong demand metrics, with bid to cover ratios ranging from 3.79x (May-54) to 4.29x (May 30).
• NZ-US and NZ-AU 10-year yield differentials were little changed on the session, with cash US tsys ~1bp richer in today’s Asia-Pac session. Nevertheless, the NZ-US differential is some 10bps tighter than late January levels (see chart).
• US economic data to resume with stop-gap funding bill through September signed by Pres Trump late Tuesday, JOLTS expected Thursday at 1000ET, NFP on Feb 11, CPI pushed to Feb 13.
• Swap rates closed flat to 2bps higher, with a flatter 2s10s curve and wider implied swap spreads.
• RBNZ-dated OIS pricing closed slightly softer across meetings. No tightening is priced for February, while December 2026 assigns 43bps.
• Tomorrow, the local calendar will be empty. 

Bloomberg Finance LP

FOREX: USD - BBDXY Challenging 1193-1195 Resistance As Silver Collapses

The BBDXY has had a range today of 1191.07 - 1193.47 in the Asia-Pac session; it is currently trading around 1193, +0.15%. Risk has come back under pressure with the catalyst being Silver collapsing over 15% in very quick time, this has seen the USD bounce and look to try and test the 1193-1195 resistance. I suspect that bounces will continue to find sellers in the short-term as the USD still has few friends, but the caveat being if we do have some sort of a deeper correction in Stocks and Metals will the USD safe haven bid come back ? The market is not positioned for this. On the day, we are challenging the first resistance between the 1193-1195 area, if this breaks we could move back toward 1200-1205 where I suspect sellers could return.

• EUR/USD -  Asian range 1.1783-1.1808, Asia is currently trading 1.1790, -0.15%. Price action has left an ugly bearish shadow on the weekly chart, but we are approaching levels that should start to see some buyers return. On the day, we are challenging the support between the 1.1760-1.1790 area, a move through here could signal a deeper reversion back to the 1.1700 area where I suspect buyers would again be around.
• GBP/USD - Asian range 1.3619-1.3663, Asia is currently dealing around 1.3625, -0.20%. The pair like everything else had an ugly weekly close leaving a clear rejection of the 1.3850 area. On the day, the first support back toward 1.3600 is currently being challenged. If this does not hold it could signal a deeper pullback towards the 1.3500 area.
• Cross asset : SPX -0.05%, Gold $4880, US 10-Year 4.265%, BBDXY 1193, Crude Oil $63.80
• Data/Events : Italy Retail Sales, France Industrial Production MoM, Germany Factory Orders/HCOB Germany Construction PMI, EZ Retail Sales/ECB

Fig 1: GBP/USD Spot Daily Chart

Source: MNI - Market News/Bloomberg Finance L.P

JPY: USD/JPY-Takes A Breath Toward 157.00 As Market Positions For The Weekend

The USD/JPY range today has been 156.69 - 156.98 in the Asia-Pac session, it is currently trading around 156.85. USD/JPY has continued its steady march higher as we head into the weekend's elections. A large portion of the leveraged short Yen positions being built up heading into the elections would have been washed out thanks to the Fed/MOF rate check after the BOJ rate decision. This large move lower was more down to overextended positioning than fundamentals and as we head toward this weekend's election all the reasons for the Yen short have come back to the fore. This should see USD/JPY which looked like it had lost its immediate upward momentum remain well supported on dips now as the market looks toward the 160.00 area once again. It moved very easily back through 156.00-156.50 overnight as its upward momentum looks to be rebuilding, first support on the day is back toward 156.00 then 155.00.

• MNI AU - Offshore Investors Buy Most Japan Bonds Since April 2025 : The stand out in the Japan weekly flow update (to the week ending Jan 30, last Friday), was the surge in offshore buying of local bonds. The +2trln in net buying was the strongest weekly inflow since mid April last year.
• “Japan’s voters look set to back PM Sanae Takaichi’s bold fiscal and China stances — an assertive style decades in the making. Markets are wary.” - BBG
• Options : Close significant option expiries for NY cut, based on DTCC data: 156.00($1.39b). Upcoming Close Strikes : 156.00($891m Feb 6), 157.00($784m Feb 6), 157.00($754m Feb 10) - BBG.
• The USD/JPY Average True Range(ATR) for the last 10 Trading days: 141 Points

Fig 1 : USD/JPY Spot Daily Chart

Source: MNI - Market News/Bloomberg Finance 

AUD/USD - Falls Back To 0.6950 As Silver Drags Risk Lower

The AUD/USD has had a range today of 0.6959 - 7007 in the Asia- Pac session, it is currently trading around 0.5965, -0.50%. The AUD got hit hard as traders looked for a proxy as Silver collapsed over 15%. The AUD has been outperforming across the board recently but leveraged funds who have no doubt added to their longs after the RBA’s hawkish hike will not be appreciating the pullback.  On the day, price is testing the first buy-zone in the 0.6950-0.6980 area, if this does not hold we could see a deeper pullback toward 0.6850-0.6900 where I suspect buyers could be lining up first up. Should this first support give way the test of the pivotal 0.7100-0.7200 area will be delayed somewhat.

• Bloomberg - “The Reserve Bank of Australia may be forced to raise interest rates for a second consecutive time in March, according to Westpac Banking Corp. Chief Economist Luci Ellis, as the central bank embarks on the world’s first tightening cycle of 2026.”
• "AUSTRALIA DEC. EXPORTS RISE 1.0% M/M,  IMPORTS FALL 0.8% M/M. TRADE SURPLUS A$3.373B; EST. A$3.500B" - BBG
• Options : Closest significant option expiries for NY cut, based on DTCC data: 0.6850(AUD886m). Upcoming Close Strikes : 0.6900(AUD1.74b Feb 9), 0.6900(AUD1.22b Feb 10), 0.7100(AUD1.09b Feb 10) - BBG
• The AUD/USD Average True Range for the last 10 Trading days: 82 Points

Fig 1: AUD/USD spot Daily Chart

Source: MNI - Market News/Bloomberg Finance L.P

NZD/USD - Testing Support Below 0.6000 As Risk Turns Lower

The NZD/USD had a range today of 0.5977-0.6010 in the Asia-Pac session, it is currently trading around 0.5985, -0.30%. The NZD has been dragged lower as the move in Silver sees the USD go bid particularly against commodity currencies. On the day, the NZD is challenging its first support between the 0.5970-0.6000 area, a break below this support could signal a deeper pullback toward 0.5900 and put the test of 0.6100 on hold for now. 

• “Silver Plummets More Than 16%, Erasing a Two-Day Recovery. Markets are weighing the policy implications of Kevin Warsh’s nomination as Federal Reserve chair, with President Donald Trump saying he would not have nominated him for the role had he expressed a desire to hike interest rates.” - BBG
• Options : Closest significant option expiries for NY cut, based on DTCC data: 0.5910(NZD399m). Upcoming Close Strikes : none - BBG
• The NZD/USD Average True Range for the last 10 Trading days: 63 Points

Fig 1: NZD/USD Spot Daily Chart

Source: MNI - Market News/Bloomberg Finance L.P

ASIA STOCKS: AI Lead in Drags Bourses Lower

• A tough day for AI / tech stocks in the region with key names down heavily.  In Korea Samsung was down -5.4%, whilst SK Hynix fell -5.6% and in Japan Softbank led falls of nearly -7%.  Taiwan's TSMC CEO met with Japanese PM today to confirm that the company's second Japanese manufacturing plant currently under construction will be upgraded to produce cutting-edge 3nm chips. This is a significant jump from the original plan for 6nm and 7nm technology and a boost for the company and Japan AI ambitions.  The news shieled the stocks fall, down just -1.1% .
• US Iran tensions aren't helping either as oil and gold fell again, highlighting that the volatility isn't over and silver had a huge decline of over 12%.  Market sentiment in Japan is influenced by upcoming general elections and concerns the PM's spending ambitions and added to the uncertainty dragging the NIKKEI down -0.9%, breaking below 54,000.  The move lower for the KOSPI was more drastic, with declines of -3.3%  wiping out weekly gains.  
• China's bourses are all down 1% -1.5% with the HSI down -1.2% and tech heavy Shenzhen down -1.5%.  
• The Jakarta composite posted early gains ahead of their GDP release, but quickly saw sellers emerge and has dipped into the red, following regional trends.  
• The US tariff reprieve has given the NIFTY 50 a boost this week, posting strong gains.  However it too has seen profit takers emerge and is down -0.55% in morning trade.
• Looking ahead, futures across Europe and the UK are mixed, as are US where investors will look for follow on for AI / tech declines

Oil Prices Decline Further as US Iran Negotiations Confirmed

• WTI declined again Thursday in the Asia trading day, having started with earlier modest gains.  Following an earlier peak of US$64.65, it moved lower and is currently at $63.77, a loss of -2.10%.  Momentum indicators are broadly neutral for WTI with it above all EMAs, as US Iran headlines pose more of a driver for prices.  
• Reports that U.S.-Iran negotiations were collapsing drove concerns early on in the day as tensions flared after an Iranian drone was shot down near a U.S. aircraft carrier and a U.S.-flagged tanker was hailed in the Strait of Hormuz. Headlines  from the Iranian Foreign Minister saying that nuclear talks with the US are set for Friday in Muscat.
• Brent is down -2.1% at US67.99 bbl, having reached highs of $68.76 earlier.  
• Whilst the longer term supply dynamic is expected to see prices lower by year end, the short term geopolitical risks have seen shorter term volatility rising.  Expect oil prices to fluctuate on US Iran headlines overnight, as US President says that Iran's leaders should be 'very worried'.  

Gold's Declines Resume as Bearish Bias Remains

• Gold's two days of gains ended Thursday falling -2.2% to US$4,855.  Gold started the trading day on a positive note, reaching US$5,023 before profit takers emerged, driving gold to lows of  $4,791.55 before stabilizing.  
• The falls reflect a weakening backdrop for the precious metal as silver fell sharply Thursday also.  Equities were weak across the region, often a positive for gold, yet the bias for now seems lower as the shakeout in markets from last week's dramatic falls continue.  
• At $4,855 gold is near the 20-day EMA of $,4847 and a break below sees downside resistance from the 50-day EMA at $4,593.  For now, gold's volatility will remain elevated as the impact of last week continues to impact sentiment.  Gold remains neutral on the 14-day relative strength index, though the moving average convergence divergence indicator sees the MACD (white) line, below the Signal (red) line, a sign that the bearish trend remains for the precious metal.  

UP TODAY (TIMES GMT/LOCAL) 

Date	GMT/Local	Impact	Country	Event
05/02/2026	0700/0800	**	DE	Manufacturing Orders
05/02/2026	0745/0845	*	FR	Industrial Production
05/02/2026	0830/0930	**	IT	S&P Global Final Italy Construction PMI
05/02/2026	0830/0930	**	DE	S&P Global Final Germany Construction PMI
05/02/2026	0830/0930	**	EU	S&P Global Final Eurozone Construction PMI
05/02/2026	0900/1000	*	IT	Retail Sales
05/02/2026	0930/0930	**	GB	S&P Global/CIPS Construction PMI
05/02/2026	1000/1100	**	EU	EZ Retail Sales
05/02/2026	1200/1200	***	GB	Bank Of England Interest Rate
05/02/2026	1200/1200	***	GB	Bank Of England Interest Rate
05/02/2026	1230/1230		GB	BOE Press Conference
05/02/2026	-		EU	European Central Bank Meeting
05/02/2026	1315/1415	***	EU	ECB Deposit Rate
05/02/2026	1315/1415	***	EU	ECB Main Refi Rate
05/02/2026	1315/1415	***	EU	ECB Marginal Lending Rate
05/02/2026	1330/0830	***	US	Jobless Claims
05/02/2026	1330/0830	**	US	WASDE Weekly Import/Export
05/02/2026	1345/1445		EU	ECB Press Conference
05/02/2026	1400/1400	***	GB	BOE Decision Making Panel
05/02/2026	1500/1000		US	Treasury Secretary Scott Bessent
05/02/2026	1500/1000	***	US	JOLTS jobs opening level
05/02/2026	1500/1000	***	US	JOLTS quits Rate
05/02/2026	1530/1030	**	US	Natural Gas Stocks
05/02/2026	1550/1050		US	Atlanta Fed's Raphael Bostic
05/02/2026	1630/1130	*	US	US Bill 08 Week Treasury Auction Result
05/02/2026	1630/1130	**	US	US Bill 04 Week Treasury Auction Result
05/02/2026	1725/1225		CA	BOC Governor Macklem speech in Toronto, release time TBC.
05/02/2026	1900/1400	***	MX	Mexico Interest Rate
06/02/2026	2330/0830	**	JP	Household spending
06/02/2026	0645/0745		EU	ECB Cipollone on Digital Euro at Association of Cyprus Banks
06/02/2026	0700/0800	**	DE	Trade Balance
06/02/2026	0700/0800	**	DE	Industrial Production
06/02/2026	0700/0800	***	SE	Flash Inflation Report
06/02/2026	0700/0800	***	SE	Flash Inflation Report
06/02/2026	0745/0845	*	FR	Foreign Trade
06/02/2026	0800/0900	**	ES	Industrial Production
06/02/2026	0800/0900	**	CH	Unemployment
06/02/2026	1200/1200		GB	BOE Market Participants Survey
06/02/2026	1215/1215		GB	BOE Pill at National MPC Agency Briefing
06/02/2026	-		GB	BOE MPG Agenda Published
06/02/2026	1330/0830	***	CA	Labour Force Survey
06/02/2026	1330/0830	***	CA	Labour Force Survey