- US January factory orders -1.6% vs -1.8% expected
- IVEY PMI comes in at 51.6 versus 54.7 last month
- Tight grains markets are a fresh risk to 2023 inflation
- ECB's Holzmann says hopes that peak interest rates will be reached in the next year
Markets:
- Gold down $9 to $1846
- US 10-year yields up 1.4 bps to 3.98%
- WTI crude oil up $0.86 to $80.53
- S&P 500 up 3 points to 4052
- CHF leads, AUD lags
There wasn't much for the market to digest today as the Chinese growth target move was responsible for most of the price action in the day. The market is largely waiting for the comments from Powell, which could be published imminently, or we may have to wait until 10 am ET tomorrow.
In any case, the US dollar softened slightly ahead of Powell, with the market seemingly unworried about comments similar to Daly or Waller. I fear the market is underpricing the hawkish implications of what they said (potential for 6% rates) and we might have gotten some realization of that late in the day as Treasury yields ticked up from earlier lows to finish at the highs of the day.
The dollar didn't follow to any large extent but that could be something to watch. EUR/USD reached the highest since Feb 20 at 1.0694 but couldn't get through the figure and backed off to 1.0675. The calls continue to roll in for a 4.25% terminal rate with Nomura joining the growing chorus today.
Cable continues to hover around 1.20 and traded up to 1.2048 before backing off back to 1.2019.
AUD and NZD were the losers today on worries about China growth as both sagged in Europe and failed to find a footing even with the help of a midday rally in stocks (that later faded).
USD/JPY didn't offer much as it traded in a 20-pip range on the day.
