Market Overview

Dollar rebounds further today as US markets are returning from holiday. Mild strength is seen in US yields with 10 year yield back pressing 2.9 handle. DOW futures point to triple digit loss at open. In the currency markets, Dollar is leading the way higher, followed by Sterling for today. Swiss Franc and Yen are trading as the weakest ones. Technically, there is generally no change in outlook as most pairs are bounded in range. In particular, EUR/USD is held above 1.2205 support while USD/JPY is well below 108.27 resistance. Dollar remains bearish in spite of the rebound.

Dollar trades mildly higher today as risk markets are back on the defensive side. Yen is trading as the weakest one so far even though Nikkei is down -0.9% at the time of writing. Swiss Franc and Kiwi follows closely. Notable strength is seen in Aussie after RBA minutes showed neutral stance. Major forex pairs are crosses are generally stuck in range. Nonetheless, the dip in EUR/AUD is seen as a early sign of near term reversal and will be closely watched.

Commodity currencies are trading generally higher in Asian session, following the rebound in Asian stocks. Meanwhile, weakness is seen in Dollar, Yen and Swiss Franc. But after all, most pairs are confined by Friday's range. The economic calendar is light today, also with US on holiday. So, trading will likely be subdued. Nonetheless, the week ahead if packed with some important events, including minutes of RBA, Fed and ECB meeting. The forex markets will come back to life for certain.

Dollar's broad based weakness continued last week and ended as the worst performing major currency. Stronger than expected consumer inflation reading listed treasury yield and raised the chance of a March Fed hike. Fed fund futures are now pricing in 83% chance of a March hike. But that provided just very brief support to the greenback. Dollar index extended the long term down trend to new three year low, suffering the worst weekly decline since September. Some pointed to Friday's rebound as a sign of reverse in fortune in Dollar. But we'll, for now, take a more cautious stance on it first. Elsewhere, Canadian Dollar and Australian Dollar ended as the second and third weakest ones. Yen, Kiwi and Pound were the strongest.

After initial selloff, dollar regains some growth in early US session. Nonetheless, that's more about pre-weekend profit taking. The greenback is still trading as the weakest one for the week, followed by the Loonie. Yen continues to trade as the strongest one and is picking up some momentum against Europeans. Released from US, housing starts rose to 1.33m annualized rate in January, building permits rose to 1.40m. Import price index rose 1.0% mom in January. Canada manufacturing sales dropped -0.3% mom in December. International securities transactions dropped CAD -1.97b in December. Released earlier, UK retail sales dropped -0.3% mom in December.

Dollar suffers renewed selloff in Asian session with EUR/USD finally taking out 1.2537 near term resistance. The development could trigger more broad based weakness in the greenback before the weekly close. Elsewhere in the currency markets, Yen remains the strongest one for the week after Haruhiko Kuroda's nomination as BoJ Governor again is finally confirmed. Euro is trading as the second strongest for the week and that helps keep EUR/JPY resilient above 132 handle. Dollar and Canadian Dollar are the two weakest ones. Aussie closely follow as the third weakest after RBA Governor Philip Lowe reiterated the neutral stance.

Dollar remains the weakest one and is under broad based selling pressure. Mixed economic data from the US provides little support to the greenback. Headline PPI rose 0.4% mom, 2.7% yoy in January, versus expectation of 0.4% mom, 2.5% yoy. Core PPI rose 0.4% mom, 2.2% yoy, versus expectation of 0.2% mom, 2.1% yoy. Empire state manufacturing index dropped to 13.1 in February, below expectation of 18.0. Philly Fed survey rose to 25.8, above expectation of 21.6. Initial jobless claims rose 7k to 230k in the week ended February 10. 1.2537 is a key level to watch in EUR/USD today.

The moves triggered by stronger than expected CPI in the US proved to be short lived. DOW opened lower overnight to 24490.36 but quickly reversed. Eventually it ended up 1.03% at 24893.49. S&P 500 and NASDAQ also closed up 1.34% and 1.86% respectively. Dollar initially gained after the release but also reversed quickly. More importantly, it now looks like the greenback is ready to resume it's broad based down trend. Staying in the currency markets, Yen is trading as the strongest one for the week on revived speculations of stimulus exit. That's followed by Kiwi and then Euro. The only move that was persistent was the rally in treasury yields with 10 year yield closing up 0.073 to 2.913, resuming recent up trend towards 3.036 key resistance.

Dollar jumps notably in early US session after stronger than expected inflation data. Headline CPI jumped 0.5% mom in January, above expectation of 0.3% mom. Annual rate of CPI was unchanged at 2.1% yoy, above expectation of 1.9% yoy. Core CPI rose 0.3% mom, above expectation of 0.2% mom. Annually, core CPI was unchanged at 1.8%, above expectation of 1.7%. The set of inflation does nothing to alter expectation of a Fed hike in March. More importantly, the resilience in annual reading is raising the chance of three or four hikes this year. Retail sales were disappointing but markets paid little attention. Headline sales dropped -0.3% while ex0auto sales was flat in January.

Yen continues to trade higher in calm markets. DOW closed up 0.16% at 24640.45 overnight as consolidation continued. Nikkei also opened higher initial trading but turns flat since then. Hong Kong HSI is up 0.75% in thin trading ahead of lunar new year holidays. While USD/JPY dip extended recent decline, EUR/JPY and GBP/JPY are held by the temporary lows established earlier. The greenback remains one of the weakest and will look into CPI and retail sales from US today for inspirations.

Yen and Swiss Franc jump broadly today as the recovery in global stock markets lose steam again. At the time of writing, both DAX and CAC 40 are trading in red even though FTSE is mildly higher. That followed -0.65% decline in Nikkei earlier in the day. US futures also point to another day of loss. Sterling follows as the third strongest one for the day after higher than expected consumer inflation reading. On the hand, commodity currencies, and Dollar, are trading generally lower.

Australian Dollar is lifted mildly today by business condition and confidence data and is trading broadly higher. Nonetheless, the forex markets are generally stuck in consolidation mode. Risk markets further stabilized overnight with DOW closed up 410 pts, or 1.7%, at 24601, responded positively to US President Donald Trump's infrastructure plan. Japan Nikkei follow is s trading up 0.8% at the time of writing. The economic calendar remains rather light today. UK inflation data, in particular CPI, will be the focus.

Global markets are generally in recovery mode today. European indices are all in black at the time of writing. US futures also point to higher open as markets await Trump's infrastructure plan. Major forex pairs and crosses are staying gin Friday's range, except AUD/NZD. But it should be noted that the retreats in Dollar and Yen are shallow and weak so far. There could be renew interests in these two currencies if risk sentiments turn sour again later in US session.

The Asian markets are rather quiet with Japan on holiday. Dollar and Yen are paring back some of last week's gains. Meanwhile, Euro and Aussie are recovering. It now looks like EUR/USD is holding on to 1.2222 key support for the moment. Elsewhere in the Asian Pacific markets are steadily mixed with Hong Kong HSI trading up 1%, South Korea KOPSI up 1.1%, China SSE down -1.3% at the time of writing. The economic calendar is light today, with Swiss CPI as the main feature. Speeches of UK MPC member Ian McCafferty and Gertjan Vlieghe will catch some attention.

Japanese Yen ended as the strongest major currency last week as selloff in global stock markets intensified. Dollar followed closely as the second strongest. Sterling, however, ended as the weakest one despite hawkish BoE announcement which hinted at earlier and faster rate hikes. Euro followed as the second weakest while Aussie was the third weakest. DOW recorded two of the largest single day point drops over the week. And two days of more than 1000 pts decline was definitely historic. Judging from the technical pictures of DOW, FTSE and DAX, while the corrections are not finished, they would enter into "buy zone" of traditional medium term corrections on next fall. That is, we could see the selling recedes soon. However, we'd like to point out a big risk ahead, China stocks, that could make these global selloffs long term corrections.

Sterling tumbles sharply today after EU Brexit negotiator Michel Barnier warned that a transition deal is "not a given". That came as Barnier concludes the week long technical discussion between civil servants of UK and EU. And he pointed out there are three "substantial" disagreements remained over the transition period. Firstly, UK wants the rights of EU citizens coming in during the transition period to be different from those who come in before. Secondly, UK wants to retain the right to object to new EU laws during the period. Thirdly, it's uncertain how UK could have a role in new EU justice and home affairs policies during the transition.

Stocks suffered another round of steep selloff overnight. DOW dropped more than -1000 pts for the second time in just four days, scoring the second biggest point drop ever. DOW lost -1035.89 pts, or -4.15% to close at 23860.46. This week's low at 23778.74 was not breached yet. But it looks vulnerable as two other major indices made new lows already. S&P 500 lost -100.66 pts or -3.75% to close at 2581.0, below prior weekly low at 2593.07. NASDAQ dropped -274.82 pts or -3.9% to 6777.16, also below prior weekly low at 6824.82. That is, recent selloff is resuming and the indices will likely head further lower before closing the week. In Asian markets, Nikkei follows by losing -3.2% at the time of writing, HK HSI is down -3.65%.

Sterling jumps after BoE stands pat and indicates that it may raise interest rates earlier than expected. In the accompanying statement, the central bank noted "were the economy to evolve broadly in line with the February Inflation Report projections, monetary policy would need to be tightened somewhat earlier and by a somewhat greater extent over the forecast period than anticipated at the time of the November Report, in order to return inflation sustainably to the target." That is seen as the main trigger for the buying in the Pound. Other than that, there are many surprises. The votes on keeping the Bank rate at 0.50% and asset purchase at GBP 435b were unanimous. 2018 GDP forecast was raised to 1.8%, up from 1.6%. 2019 GDP forecast was raised to 1.8%, up from 1.7%.

The global markets turned into consolidative mode, digesting recent losses. DOW attempted to rebound to 25293.96 but closed down -0.08% at 24893.35. Nikkei is trading up 0.35% at the time of writing but lacks follow through momentum. An important development to watch is that 10 year yield closed sharply higher by 0.076 at 2.845. Monday's high at 2.862 is now back in radar. And a strong break there will release recent up trend in yields, and could prompt another round of selloff in stocks. In the currency markets, Yen remains the strongest major currency for the week and is back pressing this week's low against Europeans. Dollar follow as the second strongest and has picked up from momentum overnight. New Zealand Dollar trades broadly lower after RBNZ stands pat and maintained a neutral stance. The Kiwi is so far the weakest one for the week.

Dollar is generally firmer today, except versus Yen as global markets stabilized. At the time of writing, DAX is trading up 0.8%, CAC 40 up 0.6% and FTSE up 0.8%. US futures point to a slightly lower open but loss will be limited initial trading. Euro is also mildly firmer as sup[ported by positive news from EU. On the other hand, Aussie and Kiwi are trading as the weakest ones. In particular, Kiwi is back under some pressure ahead of tomorrow's RBNZ rate decision.