Headlines:
- Another week of central bank bonanza coming up
- Month-end action in focus
- Spain January preliminary CPI +5.8% vs +5.7% y/y prior
- Germany Q4 preliminary GDP -0.2% vs 0.0% q/q expected
- Eurozone January final consumer confidence -20.9 vs -20.9 prelim
- BOJ's Kuroda: Must continue easy policy, maintain 2% inflation target
Markets:
- EUR leads, AUD lags on the day
- European equities lower; S&P 500 futures down 0.9%
- US 10-year yields up 3.3 bps to 3.551%
- Gold down 0.1% to $1,925.43
- WTI crude up 0.1% to $79.77
- Bitcoin down 0.3% to $23,016
It was a quiet session but there were some headlines and market moves to take note of, with equities in particular steadily dropping during European morning trade. There was already a hint of caution early on in Asia but that turned into heavier selling as European traders got to their desk with regional indices posting losses around 0.3% to 0.5% while S&P 500 futures are seen down 0.9%.
There was also some selling in bonds, which came after Spanish CPI data showed that inflation might be more sticky than anticipated after the recent drop over the past few months. Core inflation even jumped higher to 7.5% (7.0% previously) and that helps to vindicate the ECB's more hawkish stance.
That said, there is a caveat to the report with there being a change in methodology in terms of inflation weightage by INE as seen here. The change sees more weight in some expensive items, which may be responsible for pushing inflation higher in January. (h/t @ fwred)
In any case, markets are taking the data at face value with the euro holding slightly firmer with EUR/USD pushing close to around 1.0900 while the dollar is seen steady across the board. The changes on the day are light with USD/JPY recovering from its Asia low of 129.20 to 130.00 and AUD/USD holding slightly softer around 0.7075 on the session.
It's now over to month-end trading in the next few sessions before we start to gather all the focus and attention on to the Fed decision on Wednesday.
