USD correction continues as Trump presser still fresh in the memory. USD dip buyers coming in though. GBP gets another jolt on news of Tuesday UK PM speech on Brexit.
The aftermath of president elect Trump’s press conference continued as UST yields continued lower, but with Fed members underlining rate hike expectations (albeit mixed between 2-3 25bp hikes this year), there is a limit to just how low they (yields) can go. For this reason we see (and expect USD) dip buyers to step in, and in USD/JPY, we are seeing this coming in below the 114.00 level.
EUR/USD has been sold ahead of 1.0700 also, but despite the ECB meetings throwing little light on potential tapering, we remain well supported here to suggest the market may not be done with the upside just yet. Adding to the bid tone was a EUR/GBP pop higher, generated by a PA notification that the UK PM will make a major speech on Tuesday regarding Brexit.
GBP jitters re-emerged and the cross rate is back above .8700, while Cable is now down in the low 1.2200’s after taking out a round of stops through 1.2300 this morning. No details on what is to be covered, but given recent episodes, it is not hard to see why the market goes on the defensive every time.
Stock markets have stabilised after Wall Street saw a negative start, but notable was the resilience in equities from events in NY, but we may see some ‘catch up’ in play ahead of the weekend with the JPY and CHF set to gain if this transpires.
The risk/commodity currencies could also suffer, but AUD and NZD hold up well but CAD has already given back some gains vs the USD as 1.3000 holds strong (despite steady oil price). Friday sees the only major US data read of the week as attention reverts from politics to economics, with Dec retail sales accompanied by PPIs and Michigan sentiment later in the day.