- ECB's De Cos: Rates to continuing going up 'significantly' at future meetings
- ECB's Rehn: Rates will still have to rise significantly
- US EIA weekly oil inventories for the week ending Jan 6 +18,962K vs -2243K expected
- U.S. Treasury auctions of $32 billion a 10 year note that a high yield of 3.575%
- FTX bankruptcy officials have recovered more than $5 billion in assets
- FAA lifts US nationwide grounding of airplanes
Markets:
- WTI crude oil up $2.49 to $77.61
- US 10-year yields down 8.3 bps to 3.53%
- Gold down $1 to $1876
- S&P 500 up 48 points to 3988
- AUD leads, CHF lags
The big mover in Wednesday's trade was the Swiss franc as EUR/CHF broke out of a multi-month range and shot above the 200-day moving average and parity. There wasn't anything on the Swiss side for this trade but the market is certainly warming up to the eurozone on better weather and strong gains in European equities. The signal is that the looming recession won't be harsh and might not even materialize. A soft US CPI number could kick off another big rally in the euro.
Otherwise it was more of a chop in the FX market even as commodity and equity markets ran higher.
USD/JPY finishes the day 25 pips higher to 123.49. The pair had been an additional 40 pips higher early in North American trade but falling yields pulled it back in choppy trade.
Cable finished the day slightly lower and buying in EUR/GBP might have been a factor here as well. However there were bids on a test of 1.2100 and a quick bounce from there to 1.2150.
The commodity currencies were largely quiet. Some selling early in New York was contained but the Canadian dollar didn't get much help from a rally in oil that was a bit of a mystery given huge inventory builds.
Overall, this is a market that appears to be waiting for the signal from CPI but if equities are any indication, there's a major bias towards a softer number. The meme stocks are beginning to run again and that's been a red flag in the past.
