Euro, EUR/USD, US Dollar, ECB, Fed, AUD/USD, Crude Oil – Talking Points
- Euro found some support in Asia after US Dollar got an uplift prior
- The Fed have their work cut out for them after solid data lifted Treasury yields
- The ECB are explicitly hawkish. Will EUR/USD resume its uptrend?
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The Euro steadied in Asia after drifting lower into the New York close as the US Dollar took off against other currencies. The Sterling and Aussie Dollar notched the largest declines but have made small gains today.
The greenback was boosted by a blitzing retail sales increase of 3.0% in January which outstripped the 2.0% anticipated and the prior reading of -1.1% was revised up to -0.9%.
The strong data seems likely to be met by further hawkishness from the Federal Reserve. Cleveland Fed President Loretta Mester will be speaking later today.
European Central Bank President Christine Lagarde spelled it out yesterday that they will be raising rates by 50 basis points at their next meeting. This is despite inflation decelerating over the last few months. The issue is that the latest headline CPI rate of 8.5% remains well above their target of 2%.
Walls Street finished on a high note and APAC stocks are pushing higher with Hong Kong’s Hang Seng Index (HSI) leading the way, up over 2%. Futures are pointing to a solid start to the North American session.
Treasury yields are slightly softer today but remain at elevated levels for the week. The benchmark 10-year note is trading near 3.80%.
The 10-year Japanese Government Bond (JGB) continues to test the resolve of the Bank of Japan (BoJ) as it pushes up against 0.50%.
11.5k Australian jobs were lost in January, which was way below forecasts of 20k being added and the unemployment rate jumped to 3.7% against 3.5% anticipated and prior. A lower participation rate contributed to the bump. AUD/USD is slightly firmer on the day, currently trading above 0.6900.
Crude has also steadied with the WTI futures contract near US$ 79 bbl and the Brent contract is eyeing an approach toward US$ 86 bbl. Gold appears comfortable near US$ 1,840 an ounce for now.
There will be a number of ECB speakers today and then the US will see plenty of data with PPI, housing starts, building permits and jobless claims all featuring.
The full economic calendar can be viewed here.
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EUR/USD TECHNICAL ANALYSIS
The Euro has remained in a 1.0655 -1.0805 range for 2 weeks and these levels may provide support and resistance respectively.
The 21-day simple moving average (SMA) lies at 1.0805 and might add weight to the resistance level.
On the downside, nearby support might lie at the previous lows in the 1.0655-70 zone ahead of prior lows at 1.0483 and 1.0443.