Forex news from the European trading session - 12 January 2021
Headlines:
- US December NFIB small business optimism index 95.9 vs 100.2 expected
- China December M2 money supply +10.1% vs +10.7% y/y expected
- German chancellor Merkel expects lockdown to last until early April - report
- BOE's Bailey: Too soon to reach any conclusion about the need for future stimulus
- BOE's Bailey: Negative rates are a controversial issue
- Tokyo governor Koike says urged central government to tighten border controls
- ECB's Schnabel: Inflation is not dead
- Germany reports 12,802 new coronavirus cases in latest update today
Markets:
- GBP leads, USD lags on the day
- European equities lower; E-minis up 0.3%
- US 10-year yields up 2.4 bps to 1.17%
- Gold up 0.9% to $1,861.10
- WTI up 1.6% to $53.10
- Bitcoin up 3.2% to $35,044
It was a rather quiet session with there being decent moves in some spaces in the market but major currencies were mostly subdued overall.
The dollar kept steadier in a mixed mood as it kept little changed against the euro, yen and franc but observed declines against the pound and commodity currencies.
European equities saw early gains tempered with as Germany prepares for a lockdown until Easter while US futures kept a slight advance and Treasury yields extended its climb, with 10-year yields hitting 1.17% - the highest level since March last year.
In some way, the market is switching the mood from yesterday but yields are still climbing regardless as the breakout continues in Treasuries.
EUR/USD was quiet around 1.2150-70 levels for the most part while USD/JPY hovered around 104.10-20, with the key trendline resistance levels still keeping a lid on things.
The notable mover was the pound as EUR/GBP fell from 0.8970 to 0.8933 and GBP/USD rose from 1.3550 to 1.3600 as BOE's Bailey labelled negative rates "controversial" and said it had "a lot of issues".
That prompted some light repricing in money markets on a BOE rate cut this year and led to some modest gains in the quid.
AUD/USD did push a little higher from 0.7710 to 0.7740 only to see sellers regain near-term control on a push back below its 200-hour moving average @ 0.7728.
USD/CAD also kept some modest downside pressure from 1.2760 to 1.2733 as oil prices climb to fresh ten-month highs on the session.
Elsewhere, precious metals were notable movers as gold climbed from $1,850 to $1,863 while silver posted a 2% advance to $25.60 after the recent slump.
There's still plenty of soul-searching going on in the market to start the new week, with some hints of turnaround Tuesday playing out today.
