FOREX: USD Index Extends Solid Bounce from December Lows
Jan-09 10:13
- USD: FX markets have been characterised by a more constructive US dollar tone to start the year, which has helped the USD index extend the recovery from the December lows to around 1.35%. The DXY’s advance this morning has reached the 50% retracement of the Nov-Dec price swing, just above the 99.00 mark. Markets continue to weigh the ongoing geopolitical developments ahead of key US data later today and a potential Supreme Court ruling on the legality of the Trump tariffs.
- JPY: As noted, this has been led by USDJPY this morning, as broad-based weakness for the Japanese yen persists. BOJ rhetoric over the holiday period was hawkish at the margin, potentially keeping a lid on the depreciating trend. However, given the slow expected pace of BOJ rate hikes, real rates still in negative territory, and ongoing fiscal concerns related to the Takaichi administration, the path of least resistance remains clearly higher for USDJPY. Furthermore, stronger rhetoric on intervention would only become more likely with a move above key resistance at 158.00.
- EUR: EURUSD slipped below 1.1650 in late trade yesterday, extending the pull lower from the 1.1808 high in late December. Spot has moved below support at 1.1659, the Jan 5 low, cancelling a possible reversal signal on Jan 5 - a dragonfly doji candle pattern. For now, a bearish theme appears likely to dominate from a technical perspective.
- AUD: Elsewhere, both AUD and NZD have been slowly edging lower from the mid-week highs. For AUDUSD, weakness back below 0.67 appears corrective and this is allowing an overbought condition to unwind. Initial firm support lies at 0.6677, the 20- day EMA.
- CAD: This week’s extension higher in USDCAD has seen a key breach of 50-day EMA resistance, undermining the current bearish theme and signalling scope for a stronger short-term bull phase. The December 04 low at 1.3925 is the next topside level of note.
- CNH: The main exception to USD upside is USDCNH, which is holding just above 6.9800 in latest dealings (session lows were at 6.9757), after the USDCNY fixing set a fresh low since 2024 earlier. This is aiding CNH outperformance on key crosses and continues to provide a stable backdrop for the emerging market FX basket.
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UK FISCAL: Unlikely new OBR Chair for March forecast
Dec-10 10:08
- Reeves: It is unlikely for the March forecast there will be a new OBR Chair (to replace Hughes).
- Likely start to advertise for the role in the new year.
GILT AUCTION RESULTS: 4.75% Oct-35 Gilt
Dec-10 10:03
| 4.75% Oct-35 Gilt | Previous | |
| ISIN | GB00BTXS1K06 | |
| Amount | GBP4.50bln | GBP4.50bln |
| Avg yield | 4.613% | 4.608% |
| Bid-to-cover | 3.05x | 2.84x |
| Tail | 0.3bp | 0.6bp |
| Avg price | 101.057 | 101.108 |
| Low price | 101.030 | 101.064 |
| Pre-auction mid | 101.016 | 101.087 |
| Previous date | 19-Nov-25 |
ITALY T-BILL AUCTION RESULTS: 12-month BOT Results
Dec-10 10:02
| Type | 12-month BOT |
| Maturity | Dec 14, 2026 |
| Amount | E9bln |
| Target | E9.0bln |
| Previous | E8.5bln |
| Avg yield | 2.181% |
| Previous | 2.063% |
| Bid-to-cover | 1.41x |
| Previous | 1.41x |
| Previous date | Nov 12, 2025 |
