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Summary: The benchmark US 10-year treasury yield kept climbing, finishing another 4 basis points higher to 1.88% from 1.84% yesterday, and 1.78% Monday. In thin New York trade, a favoured gauge of the US Dollar’s value against a basket of 6 foreign currencies, the Dollar Index (USD/DXY) jumped 0.48% to 95.72 from 95.30 yesterday. Global equity markets slid with the DOW losing 1.4% to 35,470 (35,865). The Euro finished as worst performing FX, tumbling 0.72% against the Greenback (EUR/USD) to 1.1330 from 1.1395 yesterday. Despite better-than-expected Eurozone and German ZEW Economic Sentiment readings, the shared currency fell with as tensions between Russia and the Ukraine grew. Sterling slid 0.37% to 1.3597 from 1.3635 despite an improvement in UK Employment data. The market’s risk-off stance weighed on the British currency and lifted the US Dollar against most of its Rivals. Resource currencies dipped. The Australian Dollar settled at 0.7187 from 0.7197 while the Kiwi (NZD/USD) was last at 0.6770 (0.6780 yesterday). Against the Canadian Loonie, the Greenback finished marginally lower to 1.2507 (1.2513). Many traders are expecting the Bank of Canada to raise interest rates at its policy meeting next week. Risk-off saw USD/JPY ease marginally to 114.60 from 114.85 yesterday. The Bank of Japan kept its policy rate unchanged yesterday, with a dovish bent. The Dollar was mostly higher against the Asian and Emerging Market currencies. The USD/CNH pair (US Dollar vs Offshore Chinese Yuan) soared to 6.3605 from 6.3465 yesterday while USD/SGD (US Dollar vs Singapore Dollar) was last at 1.3509 (1.3482). The USD/THB pair (US Dollar vs Thai Baht) rallied to 33.15 from 33.05.
Data released yesterday saw Japan’s Revised Industrial Production ease to 7.0% from a previous 7.2%. The UK’s Average Earnings Index (3m/y) matched expectations at 4.2%. UK Claimant Count Change (Claims for Unemployment Benefits) eased to -43,300 from an upward revised previous 95,100. Swiss December PPI dipped to 0.1! from 0.4%. The Eurozone ZEW Economic Sentiment Index climbed to 51.7 from 29.9, beating estimates at 32.1. Germany’s ZEW Economic Sentiment climbed to 49.4 from a previous 26.8. Canada’s Housing Starts eased to 236,000 from an upward revised 304,000, missing expectations at 268,000. US Empire State Manufacturing Index fell to -0.7 from a previous 31.9 and forecasts at 25.0.
On the Lookout: Today’s economic calendar kicked off with Australia’s Westpac Bank Consumer Confidence Change for January which fell to -2% from a previous -1.0%. Australia’s Westpac Bank Sentiment Index follows (no forecast, previous was 104.3). There are no Asian economic data releases scheduled for today. Germany starts off Europe with its Final December Inflation Rate (m/m f/c 0.5% from a previous -0.2%; y/y f/c 5.3% from 5.2%). The UK follows next with its December Inflation Rate (m/m f/c 0.2% from previous 0.5%; y/y f/c 5.2% from 5.1%). The Eurozone releases its November Construction Output (no f/c, previous was 4.4%). Canada kicks off North American with its Inflation Rate (m/m f/c -0.1% from 0.2%; y/y f/c 4.8% from 4.7%). Canada’s December Core Inflation Rate (y/y no f/c, previous was 3.6%). The US rounds up today’s reports with its December Housing Starts (f/c 1.65 million from 1.679 million) and US December Building Permits (f/c 1.701 million from previous 1.712 million).
Trading Perspective: The US Dollar continued to gain ground against its Rivals boosted by the continuous climb in US treasury yields. Benchmark US 10-year treasury rates rose 4 basis points overnight to 1.88%. At the end of last week, ten-year bond yields were at 1.70%. While other global treasury rates have also risen, they are nowhere near to the extent of the US climb. Risk appetite has also waned in the past couple of days. This will keep the Greenback supported for today. We can also expect more choppy trade ahead.
Have a good Wednesday ahead all. Happy trading.
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