There are quite a few things the markets are at play with right now. For example, the dollar has become firmer as the Fed has indicated that the assumed “base case scenario” is not to cut interest rates in March. EUR/USD is once again testing the 1.0800 level now ahead of European trade. However, Treasuries are doing their own thing with significantly lower yields putting a drag on USD/JPY in particular. The pair fell from 147.80 yesterday and is now little changed today at 146.90.
In stocks, investors are responding to the Fed’s warning with yesterday’s stock sell-off. But in the commodities space, gold is making good progress rising back above $2040 amid lower yields.
So, there are definitely some mixed elements across asset classes this week. However, it was the end of the month yesterday and that may have something to do with more complex flows. If so, we’ll have to see how things play out in the coming days.
Looking at European trading, there will be some big items on the agenda in the next session. The first will be the Eurozone CPI data for January. It is expected to reaffirm slightly lighter price pressures, giving the ECB more flexibility in managing its policy pivot. Well, at least for now.
The next major risk event will be the Bank of England’s monetary policy meeting. I shared some thoughts on that earlier here.
These two things will keep the Euro and Pound in focus before traders get carried away again by the non-farm payrolls calm ahead of tomorrow’s US payrolls report.
0815 GMT – January Manufacturing PMI in Spain
0830 GMT – January manufacturing PMI in Switzerland
0845 GMT – January manufacturing PMI in Italy
0850 GMT – Final January manufacturing PMI in France
0855 GMT – Final January manufacturing PMI in Germany
0900 GMT – Final Eurozone manufacturing PMI for January
0930 GMT – Final January manufacturing PMI in the UK
1000 GMT – Preliminary CPI numbers for January in the Eurozone
1000 GMT – Eurozone unemployment rate for December
1200 GMT – The Bank of England announces its February monetary policy decision
1230 GMT – US Challenger January job cuts and layoffs
That’s it for the next session. I wish you all the best in the coming days and good luck with your trading! Stay safe out there.