The Greenback closed in positive territory for the second day in a row as risk aversion seems to be present. Equities ended up in the red while commodity currencies also took hits.
In contrast, the pound managed to stay resilient as traders shrugged off Brexit-related jitters and may be positioning ahead of top-tier U.K. events.
- Canadian wholesale sales fell by 0.5% instead of posting 0.3% uptick
- New Zealand GDT auction yielded 0.5% dip in dairy prices
- Euro zone consumer confidence index fell from 1 to 0
- Australia’s MI leading index posted 0.2% dip in January
Risk-off flows take hold?
Higher-yielding assets were already on weak footing in the earlier trading session and the selloff in commodities continued during the New York hours.
- Gold is down to $1,328.71 per troy ounce (-1.30%)
- Silver fell to $16.46 per troy ounce (-1.21%)
- WTI crude oil is down to $61.60 per barrel (-0.30%)
- Brent crude oil fell to $65.06 per barrel (-0.27%)
U.S. equity indices also started the shortened trading week in the red, although the blame is being pinned on the slide in Walmart shares.
- Dow 30 index is down 254.63 points to 24,964.75 (-1.01%)
- S&P 500 index is down 15.96 points to 2,716.26 (-0.58%)
- Nasdaq is down 5.16 points to 7,234.31 (-0.31%)
Treasury yields are also higher on the first of the week’s debt auctions, bringing yields on short-term bills to their highest levels since September 2008.
Brexit “lines” drawn
The tension is heating up in the Brexit situation as Eurosceptic lawmakers reportedly sent a letter to PM Theresa May to set firm requirements on post-breakup conditions.
This letter was reportedly signed by four ex-Cabinet ministers and nine other former ministers, reviving doubts on No. 10’s ability to steer the U.K. through Brexit.
In it, MPs declared that they want the U.K. to retain “full regulatory autonomy” when it leaves the EU, adding that Brits should be free to sign any trade deal with other countries even during the transition period.
Meanwhile, British Foreign Secretary Boris Johnson admitted to senior German officials that Brexit negotiations have been a mess. Environment Secretary Michael Gove even dubbed negotiators David Davis and Boris Johnson as the “Ronaldo and Messi” of the discussions, but surely he could have picked a better comparison?
Major Market Mover(s):
The pound managed to keep calm and carry on despite the Brexit squabbles as it drew from strong bullish momentum in the London session.
GBP/USD rose from a low of 1.3969 to a high of 1.4023, GBP/JPY kept climbing to a high of 150.45, EUR/GBP is down to .8815, and GBP/AUD is up to 1.7746.
The dollar got a boost from the debt auction, which buoyed yields to record levels, as well as a bit of risk aversion when equities slid lower.
EUR/USD dipped to a low of 1.2319 then consolidated, USD/JPY is up to a high of 107.28, USD/CHF advanced to .9365, and USD/CAD is up to the 1.2650 mark.
Watch Out For:
- Chinese markets still closed for the week-long holiday
- 12:30 am GMT: Australian construction work done q/q
- 12:30 am GMT: Australian wage price index q/q (0.5% expected)
- 12:30 am GMT: Japanese flash manufacturing PMI (rise from 54.8 to 55.2 expected)
- 4:30 am GMT: Japanese all industries activity index (0.5% expected, 1.0% previous)