The U.S Dollar goes into reverse this morning, while the Yen bounces in response to BoJ Governor Kuroda’s comments this morning. Draghi will be the area of focus this afternoon, with the economic calendar on the lighger side for the day.
Earlier in the Day:
There were no material stats released through the Asian session this morning, leaving the markets to respond to the U.S session on Friday, which saw 10-year U.S Treasury yields ease back from Wednesday’s bounce.
While there were no material stats, BoJ Governor Kuroda stirred the Yen, which had been down in early trade, by standing by the BoJ’s view that there would be no shift in the Bank’s current policy stance and that it would continue to target 2% inflation. The Yen was up 0.36% to ¥106.50 against the Dollar, with the Aussie Dollar up 0.42% to $0.7877 and the Kiwi Dollar up 0.45% to $0.7335.
In the equity markets, the Nikkei and ASX200 closed out the day with 1.19% and 0.71% gains, while the Hang Seng and CSI300 were up 0.79% and 1.33% respectively, supported by Friday’s gains in the U.S markets and the U.S futures market this morning, with the Dow mini up 114 points at the time of writing.
The Day Ahead:
There are no material stats scheduled for release during the European session today that can provide direction for the EUR, leaving the EUR in than hands of ECB President Draghi, who is scheduled to speak later this afternoon and market sentiment towards this coming Sunday’s Italian General Election and likely outcome of the SDP party ballot on whether to go ahead with the Grand Coalition under the terms agreed.
Ahead next Sunday’s Ballot result announcement, the CDU Party are scheduled to meet today to approve the terms of the coalition, with a favourable outcome leaving the SDP ballot as the last piece of the coalition jigsaw and a Merkel 4th term.
At the time of writing, the EUR was up 0.24% to $1.2325, with Draghi likely to be the only major influence on the EUR later this afternoon.
For the Pound, economic data out of the UK this morning is limited to mortgage approval figures that are unlikely to have a material impact on the Pound. Sentiment towards Brexit has turned a corner ahead of next month’s return to the negotiating table, with the markets expecting the British government to garner both, a favourable transition agreement and a trade agreement.
Politics and Brexit will certainly take centre stage this week, with both the British Prime Minister and opposition party leader scheduled to deliver speeches. The clarity from the UK side will provide some direction for the markets, but it is an altogether different question whether the EU will be agreeable to the British negotiators demands.
At the time of writing, the Pound was up 0.38% to $1.4024, with MPC member Cunliffe’s speech, scheduled for later this evening needing, one to look out for on a relatively quiet day on the calendar.
Across the Pond, economic data is limited to January’s new home sales, which should provide some support to the Dollar this afternoon, though FOMC member Bullard could dampen any upward moves should he continue to downplay any shift in policy in the wake of the recent uptick in inflation.
The Dollar Spot Index was down 0.27% in what is a relatively quiet start to a very busy week from an economic data perspective, with data scheduled for the week including consumer confidence and the FED’s preferred Core PCE Price Index figures, wage growth and nonfarm payroll numbers.