Global Markets:
- Asian stock markets: Nikkei down 0.25 %, Shanghai Composite lost 0.20 %, Hang Seng declined 0.05 %, ASX 200 dropped 0.60 %
- Commodities: Gold at $1243 (-0.15 %), Silver at $16.30 (-0.30 %), WTI Oil at $46.90 (-0.05 %), Brent Oil at $49.25 (-0.15 %)
- Rates: US 10 year yield at 2.26, UK 10 year yield at 1.20, German 10 year yield at 0.54
News & Data:
- Euro at two-year high, Asian shares barely budge – RTRS
- Dollar near two-year lows vs euro after Draghi comments – RTRS
- PBOC sets USD/CNY mid-point today at 6.7415 (vs. yesterday at 6.7464)
Markets Update:
The Euro rallied after the market saw Draghi’s comments during the ECB press conference as hawkish. While he tried to maintain a neutral tone, the market interpreted his positive outlook for the economy as a sign that the ECB will soon its QE programme and signal a shift of its monetary policy. EUR/USD rallied from 1.1490 to a high of 1.1650. In Asia, it retraced some of those gains, but remained well bid overall. Support is now seen at 1.16, followed by 1.1550. EUR/JPY rallied back above 130. In the near-term, a test of 132 resistance seems likely.
The Pound fell back below 1.30 yesterday, and the outlook is rather weak amid the recent decline in inflation and the Brexit uncertainty. Meanwhile, USD/JPY had a solid performance in the past 48 hours, despite broad USD weakness. It bounced once again off 111.50 support and is currently consolidating around 112. A break above 112.50 resistance would then signal a move towards 113.60.
The Aussie Dollar failed to break above 0.80. However, the positive risk sentiment and rising commodity prices should keep the currency supported in the near-term. Intraday, expect good support at 0.79 and 0.7830.
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