Forex news from the European trading session - 26 February 2021
Headlines:
- BOJ purchases ETFs for the first time this month amid market rout
- Japan to end state of emergency in six prefectures at the end of this month
- ECB's Schnabel: ECB may need to add support if rise in yields hurt growth
- Are things getting a little too 'real' for central banks?
- Spain February preliminary CPI 0.0% vs +0.6% y/y expected
- Switzerland Q4 GDP +0.3% vs 0.0% q/q expected
- France February preliminary CPI +0.4% vs +0.3% y/y expected
- France Q4 final GDP -1.4% vs -1.3% q/q prelim
- Nikkei 225 falls by 4% on the day to end February trading
- BOE's Bailey: We do expect a negative quarter in Q1
- Germany reports 9,997 new coronavirus cases, 394 deaths in latest update today
- BOJ's Kuroda: No intention of pushing 10-year JGB yield target from around 0%
Markets:
- USD leads, AUD lags on the day
- European equities lower; E-minis up 0.1%
- US 10-year yields down 5.3 bps to 1.467%
- Gold down 0.5% to $1,762.70
- WTI down 1.7% to $62.43
- Bitcoin down 2.0% to $47,061
The end of Asian trading saw the market keep more defensive with risk on retreat as the Nikkei posted its biggest daily decline since April last year.
But as European trading kicked off, things were calmer as German bunds were bid on the long-end and that helped to spark a bit of a turnaround in sentiment.
Treasury yields were largely lower throughout but not didn't really take on fresh lows in European morning trade, with 10-year yields hovering around 1.46% to 1.48%.
That said, European stocks pared a sharp decline at the open with US futures also turning around losses into gains and things kept more choppy during the session.
In FX, the dollar was bid throughout with EUR/USD slumping from 1.2160 to 1.2093 while AUD/USD fell from 0.7840 to 0.7731 and is keeping nearer to the lows.
USD/JPY stuck higher though as the pair kept a narrower range around 106.20-40.
GBP/USD also kept a retreat back below 1.4000 after buyers failed to push back up above its 200-hour moving average at the start of the session.
It's all about the bond market still and how the shake up in nominal yields, real yields, negative-yielding debt, is impacting the market as a whole.
It might just be the best excuse for equities to come off frothy levels to start the new year but the big question remains, is there actually more to that?
As we look towards North American trading, it's gut check time now.
