Headlines:
Markets:
- NZD leads, USD lags on the day
- European equities higher; S&P 500 futures up 0.7%
- US 10-year yields down 3.7 bps to 3.599%
- Gold up 0.4% to $1,883.82
- WTI crude down 0.2% to $78.29
- Bitcoin down 1.3% to $22,656
After risk appetite soured in US trading yesterday, we are seeing things run back the other way in European trading today instead.
The push and pull feeling is playing out and that is now weighing on the dollar, as equities and bonds are more bid on the day.
Things started off with a bit of drama in the Japanese yen, as USD/JPY whipsawed by around 100 pips in the handover from Asia to Europe after a report suggested that the Japanese ruling party is said to be divided if prime minister Kishida is seeking a BOJ policy pivot.
If anything else, it highlights how sensitive the currency is right now to any talk on Kuroda’s successor and policy outlook, with reports now suggesting we will get some names on the board on 14 February.
After that, we saw German headline inflation came in softer than estimated but still holding on the high side but the EU-harmonised reading did fall to a five-month low. That is helping to at least keep the market in a better mood as risk trades picked up in European morning trade.
S&P 500 futures were up 0.3% before extending that to 0.9% and is holding near the highs now as European stocks are also posting solid gains currently.
The bid in risk is weighing on the dollar as it is down across the board against the major currencies bloc. EUR/USD is up 0.5% to 1.0760-70 levels with GBP/USD up 0.7% to 1.2155 at the moment. Meanwhile, USD/JPY was holding around 131.50 after the whipsaw earlier but is now trading to fresh lows on the day at 130.70.
The commodity currencies are strong performers amid the better risk mood with AUD/USD up 0.9% to 0.6990 as buyers look to test the 0.7000 mark and NZD/USD up 1.0% to 0.6370 currently.
That said, most dollar pairs are still leaving a lot to be desired in terms of the technical outlook and we might not get much change in that until the US CPI data next week.