Global Stock exchanges recovered somewhat on Tuesday, but as Asia closes, its equity markets are ending the session on the lows of the day, with the Japan 225 down to the 21600.00 area from a high of 22350.00. Whether this pattern continues into Europe remains to be seen. This switch back to risk-off mode has led to a demand in Yen, with USDJPY topping out at 109.708 before slipping to 109.131. Gold has recovered from a low of 1320.10 to 1330.30. Today, the focus of traders will be on Central Bank Decisions in New Zealand this evening and Central Bank speakers through the day. The economic calendar is light on market-moving data today, so expect another day of emotional trading.
US Fed’s Bullard spoke at an event in Kentucky on Tuesday. He noted that the link between the jobs market and inflation has broken down. He said that monetary policy today was closer to neutral. The Phillips curve effects are weak and the latest jobs report was good. The inflation scare triggered some of the market selloff. He said the Fed doesn’t need to do much now on key interest rates. Nominal wages aren’t good at predicting inflation. According to him, valuations look high compared to historic norms, especially in the tech sector. The market selloff was fast, possibly aided by technical trading and this was the most predicted market selloff of all-time. The Fed doesn’t need to do much now on interest rates. He also said, in relation to the Fed, the dot plot may be less useful now. USD crosses could experience volatility around this time in reaction to his comments.
US Trade Balance (Dec) was $-53.1B v an expected $-52.0B, from a previous $-50.5B, which was revised up to $-50.4B. EURUSD went to a high of 1.23469 and then sold off to 1.23251 when this data came out.
Canadian International Merchandise Trade (Dec) was $-3.19B v an expected $-2.20B, from a prior reading of $-2.54B, which was revised down to $-2.71B. USDCAD reached a high of 1.25663 before selling off to 1.25046 following this release.
Canadian Ivey Purchasing Managers Index (Jan) was 51.3 from 49.3 previously. Ivey Purchasing Managers Index s.a. (Jan) was 55.2 against an expected 61.0, from a previous 60.4.
New Zealand Unemployment Rate (Q4) was 4.5% v an expected 4.6%, from a prior 4.6%. Employment Change (Q4) was 0.5% v an expected 0.2%, from a prior 2.2%. Participation Rate (Q4) was 71.0% v an expected 70.8%, from a prior 71.1%. NZD can see a spike in volatility after this data is released.
Australian AiG Performance of Construction Index (Jan) was 54.3 from 52.8 previously. AUD can move to test key levels with this data acting as a catalyst.
Japanese Leading Economic Index (Dec) was 107.9 v an expected 108.1, from 108.3 previously. Coincident Index (Dec) was 120.7 v an expected 118.2, from 117.9 prior.
EURUSD is up 0.14% overnight, trading around 1.23942.
USDJPY is down -0.33% in the early session trading at around 109.200.
GBPUSD is up 0.13% to trade around 1.39630.
USDCAD is up 0.13% overnight, trading around 1.25064.
AUDUSD is down -0.41% overnight at around 0.78732.
Gold is up 0.49% in early morning trading at around $1,330.70.
WTI is unchanged this morning, trading around $63.71.
Major data releases for today:
At 08:00 GMT, ECB Non-monetary policy meeting.
At 09:00 GMT, ECB’s Lautenschlager will be speaking with his comments having the potential to influence trades on Euro and European assets.
At 13:30 GMT, US Fed’s Dudley will be speaking at an event about Banking Culture, jointly hosted by Thomson Reuters and the European American Chamber of Commerce in New York. USD crosses could experience volatility around this time in reaction to his comments and audience questions.
At 20:00 GMT, US Consumer Credit Change (Dec) is expected to be $20.00B from a previous $27.95B.
At 20:00 GMT, Reserve Bank of New Zealand Interest Rate Decision is expected to be left unchanged at 1.75%. The Rate statement and the Monetary Policy Statement will be released at the same time. NZD could see a spike in volatility after this data is released.
At 21:00 GMT, there will be a New Zealand RBNZ Press Conference discussing the rate decision and monetary policy statement.
At 22:20 GMT, US FOMC Member Williams will be speaking at a community leader’s luncheon in Honolulu, Hawaii. USD crosses and US assets may experience volatility around this time in reaction to his comments and audience questions.
At 22:30 GMT, Japanese Foreign Bond Investment (Feb 2) will be released, with a previous value of ¥41.1B. Foreign Investment in Japanese Stocks (Feb 2) was ¥-300.5B previously. JPY could move to test key levels with this data acting as a catalyst.