The December CPI report came in as advertised, indeed even better than expected for the headline. Treasuries saw strong gains, while there were more moderate gains on Wall Street. Overall inflation continues to come down & Fed Harker & Bullard comments boosted expectations the FOMC will further downshift rate hikes with a 25 bp increase seen in February. Yields dropped measurably. Futures markets have priced in 25 bp and several rate cuts this year.
- The USDIndex slumped to 101.79 yesterday. Today eased at 102.00.
- EUR – held above 1.0800.
- JPY – rallies to 7-month high as JGB yields also remain on bid on the anticipation of a potential policy shift. Nikkei down by 1.3%. USDJPY down by 2.7% last night.
- Reuters: A newspaper report flagging the possibility of more flexibility has redoubled bets on a coming shift out of ultra-easy policy that seeks to pin yields near zero.
- GBP – settled at 1.2200. UK GDP rose 0.1% in November. Figures showed that in the three months to the end of November, the economy shrank by 0.3%. If two consecutive quarters of contraction are confirmed then that could count as a recession.
- Stocks – Wall Street rallied too, with the US30 and US100 up 0.64%, and the US500 0.34% firmer. Strength in energy supported.
- USOil – held above $78.
- Gold – retests $1900.
- BTC surged 5% to break above $19,000.
Today – University of Michigan sentiment. Earnings: Bank of America, Citigroup, JPMorgan, Wells Fargo, BlackRock and Delta Air Lines.
Biggest FX Mover @ (07:30 GMT) NZDJPY (-0.93%). Plummets to 81.95, from 84.36 high yesterday. Fast MAs aligned lower & RSI at 17, MACD histogram & signal lines extended lower. H1 ATR 0.203, Daily ATR 1.157.
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