Action Insight

Sterling is trading broadly lower today as weighed down by weaker than expected services data. Concerns over UK's own internal split regarding Brexit ne got it ion is also weighing down on the Pound. Nonetheless, loss is so far limited. GBP/USD is holding above 1.4, EUR/GBP well below 0.9828, GBP/JPY also well above 151.95 support. The key to Sterling's trend will remain on the BoE Super Thursday. Yen is trading broadly higher today as global stock market rout continues but the Swiss Franc doesn't follow. And indeed, Aussie and Kiwi follow as the next strongest ones

Global stock market rout extends into Asian session today. At the time of writing Japanese Nikkei is down -2.2% and Hong Kong HSI is down -1.6%. The currency markets are relatively mixed, though. Aussie and Yen are both trading mildly higher, but neither one display any sign of conviction. Dollar pares back some of Friday's gain. And the greenback is still looking bearish against Europeans. It's believed the current risk aversion is driven by the increasing expectation of global monetary stimulus withdrawal. And, such expectation intensified after the strong employment data from US. So far, commodities currencies are the biggest victim and Swiss Franc is the largest beneficiary of the theme.

Steep selloff in the global stock markets ended up as the biggest news last week. Some attributed the surge in global yields and stock market declines to the solid non-farm payroll report from US. The headline 200k growth confirmed underlying healthiness in the US job market. And more importantly 0.3% mom rise in average hourly earnings in January, following 0.4% mom rise in December, indicates pickup in momentum in wage growth. The case for Fed to hike three times this year looks more likely than ever. And subject to development, Fed could indeed hike the fourth time in December.

Dollar jumps in early US session after another set of solid employment data. Non-farm payrolls report shows 200k growth in January, above expectation of 180k. Prior month's figure was revised up by 12k to 160k. Unemployment rate was unchanged at 4.1% as expected. Average hourly earnings also grew 0.3% mom, in line with consensus. The recovery in greenback is broad based. But we'd like to point out that firstly, USD/JPY's break of 110.18 resistance is now seen as a sign of near term reversal. AUD/USD has topped out earlier this week and the post NFP decline also affirms the case of near term reversal. However, against European majors, Dollar is just in staying in range and the rebound might just be part of consolidation patterns.

Dollar is trading generally higher in early US session as markets await job data from US. But for the week, Dollar is clearly mixed. In particular, the greenback is under some selling pressure against European majors and Canadian Dollar. EUR/USD, with yesterday's rebound, is back pressing 1.25 handle. Markets are expecting 180k growth in NFP in January. Other employment related data supports this healthy NFP number. Focus will again be on wage growth as average hourly earnings are expected to rise 0.3% mom.

Dollar continues to trade mixed in today as markets are holding their bets ahead of tomorrow's non-farm payrolls report. Data from US today are positive. Initial jobless claims dropped 1k to 230k in the week ended January 27. Challenger job cuts showed -2.8% yoy decline in planned layoffs. But, also despite yesterday's slightly hawkish FOMC statement, there is no sign of sustainably buying in the greenback yet.

Dollar remains generally in range after getting some mild support from FOMC statement. While there was sign of building up of downward pressure prior to FOMC, it seems that traders are holding their bets ahead of Friday's non-farm payroll report. Price patterns in most dollar pairs suggest that they are turning into more prolonged near term consolidation. There is still no clear sign of reversal yet. Elsewhere in the forex markets are also mixed as the actions are mostly consolidative.

The FOMC voted unanimously to leave the Fed funds rate unchanged at 1.25-1.5% in January. There were some minor changes in the accompanying statement but the theme continues to suggest that that gradual removal of monetary stimulus remains on track. Policymakers eventually took out the impacts of hurricanes in its economic forecasts and continued to see 'solid' growth in' employment, household spending and business fixed investment'. Meanwhile, they acknowledged that core inflation has stopped declining, thus allowing them to maintain the view that inflation would strengthen this year then stabilize at around the 2% objective. The Fed reaffirmed the pledge to monitor the development closely. The market viewed the meeting outcome as slightly hawkish, sending Treasury yields modestly higher. CME’s 30-day Fed funds futures suggest that the market has now priced in 80% chance of rate hike in March, up from 74% before the announcement. Other barometers have suggested that chance of a March rate hike has increased to 90%.

Dollar weakens broadly in early US session despite solid employment data. In particular, USD/CAD leads the way with Canadian GDP meeting forecasts. The greenback will look into Janet Yellen's last FOMC announcement today. But it's unlikely for Dollar to get any support from there. The key level to watch is 1.25 handle in EUR/USD. It's close to 1.2494/2516 cluster fibonacci level. A firm break there would likely prompt broad-based selloff in Dollar.

China’s official manufacturing PMI slipped -0.3 point to 51.3 in January, compared consensus of 51.5, as almost all sub-indices dropped during the month. The non-manufacturing PMI added +0.3 point to 55.3, beating expectations of 55, in January. Note that the services sector contributes about 80% and construction sector contributes...

The forex markets remain generally in consolidation mode today. US President Donald Trump's State of Union address provides little inspiration. Nonetheless, the soft tone of Dollar in Asian session suggests that it might be ready to resume recent decline, probably subject to FOMC statement. In other markets, DOW dropped -362 pts overnight to close at 26076.89. The index has likely started the long overdued near term correction and should head lower, possibly back to 25000 handle. 10 year yield extended recent rally to 2.726, up 0.030, but again, provides little support to Dollar.

Dollar's recovery once again loses momentum today. Overall the markets are staying in consolidative mode. Eurozone GDP came in meeting expectations but provides little boost to Euro. It's seems that solid growth data from the region is becoming a norm. Meanwhile, Sterling also rebounds notably today even though political and Brexit news continue. For the moment, the markets are likely holding their breaths, waiting for US President Donald Trump's State of Union address in the upcoming Asian session, as well as tomorrow's FOMC announcement.

Dollar recovered overnight with the help of surging treasury yields. 10 year yield hit as high as 2.725 before paring gains to close at 2.696, up 0.034. That's also the highest level since April 2014. Nonetheless, the lift to the greenback would likely be temporary as Dollar and yields would likely go back to the "decoupled" relationship fairly quickly. British pound is trading as the weakest for the week. Renewed Brexit uncertainty is seen as a factor weighing on Sterling. But it's actually more about returning to reality after last week's utopic rally. For today, New Zealand Dollar is trading mildly higher after trade balance data.

Dollar's recovery continues in early US session and is gathering some extra momentum against Sterling and Euro. But still, there is no clear indication of near term trend reversal yet. Meanwhile, Sterling is under broad based selling pressure. Profit taking after recent strong rally is one of the reasons. Additionally, the pound is weighed down by re-emerging political uncertainties in the UK. Elsewhere in the FX markets, Euro is following as the second weakest one. Kiwi and Aussie are also soft.

The forex markets are pretty steady in Asian session today as markets are preparing for an extremely busy week ahead. Dollar is trying to recovery. While the greenback is trading broadly higher, it's kept in Friday's range. There is no realistic sign of short term bottoming yet. There are countless important data to be released this week, including PCE, ISM and NFP from the US. FOMC is also expected to deliver a hawkish twist to prepare the markets for March hike. But US President Donald Trump's tone regarding Dollar in the State of Union address could be the trend defining moment.

Dollar ended the week broadly and deeply lower as recent selloff intensified. It should be noted again that the current fall is the continuation of the down trend that started back in January 2017, that is, since US President Donald Trump took office. And that happened despite Fed's three rate hikes last year. DOW gained more than 30% in the period. 10 year yield struggled in most of 2017 but finally surged through a key resistance level at 2.621. Data released during the period showed solid underlying momentum in the economy, except sluggish inflation. Even though Q4 GDP missed expectation, 2.6% annualized growth is still respectable. Fed is more on track for three hikes this year, starting March.

Dollar stays steadily in range in early US session after mixed economic data. Q4 GDP showed only 2.6% qoq growth, missing expectation of 3.0% qoq. Though, GDP price index rose 2.4%, above expectation of 1.3%. Headline durable goods orders rose 2.9% in December, well above expectation of 0.9%. Ex-transport orders rose 0.6%, inline with consensus. Trade deficit widened to USD -71.6b in December. Wholesale inventories rose 0.2% mom in December.

After being pressured for most of the week, Dollar is trying to stabilize after US President Donald Trump said he wants a strong Dollar. But so far, there is little sign of sustainable rebound yet. The greenback is still vulnerable to another selloff. The key to whether Dollar could reverse recent fortune might lie in Q4 GDP. Sterling remains one of the strongest one this week and will also look into UK GDP for more strengthen. Euro jumped overnight after ECB President Mario Draghi's comment but there was no follow through buying.

ECB left the policy rates unchanged, with the main refinancing rate, the marginal lending rate and the deposit rate staying at 0%, 0.25% and -0.40% respectively. The pace of asset purchases also stayed unchanged at 30B euro per month until September, or beyond, if necessary. President Mario Draghi attempted to downplay speculations that the central bank would soon adjust the forward guidance, as interpreted by many following the December meeting minutes. Meanwhile, he stressed that any rate hike would be 'well past' the end of asset purchases. Draghi also warned of the impacts of the strong euro on growth and complained about the US for talking down the greenback at the World Economic Forum.

Euro surges as being boosted by ECB President Mario Draghi's comment. In his remarks, Draghi said that "incoming information confirms a robust pace of economic expansion, which accelerated more than expected in the second half of 2017." And, "the strong cyclical momentum, the ongoing reduction of economic slack and increasing capacity utilisation strengthen further our confidence that inflation will converge towards our inflation aim of below, but close to, 2%".