Much of the biggest action overnight has been in currency markets. USD has rebounded a bit clawing back some of yesterday’s losses. EUR and CAD have given back some of yesterday’s gains both falling about 0.3%. There has been a lot of central bank news and talk today that has sparked a number of significant moves in currencies today. GBP is the top performer of the day on expectations that the Bank of England may yet join the Fed in raising interest rates this year. In the latest meeting minutes two MPC members indicated they could see raising rates this year. A more relatively hawkish tone was reinforced by a stellar UK employment report that saw much stronger than expected job and wage gains. CHF is getting absolutely hammered for a second straight day this time on concerns about the Swiss economy. Last month’s stunning gains in CHF after the EUR peg was abruptly removed has sent investor expectations about the economy’s prospects off a cliff. SEK has taken another turn lower today after Riksbank Deputy Governor Skingsley indicated in a speech that downside risks to the Swedish economy have increased in December, increasing speculation that the central bank could drive interest rates even deeper into negative territory. AUD is down slightly against USD but in line with its resource currency peers indicating that the street has taken comments from RBA board member Edwards that a lower AUD would be helpful, as more of the same line of rhetoric we have seen from Governor Stevens for some time now. RUB is on the rebound today gaining over 1.5% even though oil is down on speculation that the ceasefire in Ukraine may stick this time, paving the way for some sanctions to be removed or at least for some of the political risk to ease. JPY has stabilized as the Bank of Japan essentially stayed the course on monetary policy for now. USD may be active through the day particularly around 2:00 pm EST when minutes from the last FOMC meeting are due. Traders may look to the minutes for signs of whether the Fed is still thinking about raising interest rates this year and if so, when? Stock markets are mixed today with European indices trading slightly higher on hopes that a new Greek debt deal can be reached in the coming days while US indices are slightly lower waiting for a catalyst for action with earnings season winding down. Corporate News Garmin $0.77 vs street $0.78, guides 2015 year EPS to $3.10 below street $3.26, 6% dividend increase Economic News Economic reports released overnight and this morning include: Bank of Japan decision no changes to interest rate or QE as expected, 8-1 vote, exports picking up, inflation low but expected to rebound along with oil price, UK Bank of England minutes 9-0 votes in favour of continuing interest rates and QE at current levels. Two MPC members think interest rate may need to be raised this year. Canada drill rigs 317 vs 331 last week and 576 a year ago Canada drill rig utilization 41% vs 71% a year ago Switzerland ZEW expectations (73.0) vs previous (10.8) UK jobless claims (38K) vs street (25K) and previous (29K) UK 3M employment change 103K vs street 50K UK average weekly earnings 2.1% vs street 1.7% UK unemployment rate 5.7% vs street 5.8% US housing starts 1,065K vs street 1,070K US building permits 1,053K vs street 1,069K US producer prices 0.0% vs street 0.3% US PPI ex food and energy 1.6% vs street 2.0% Economic reports due later today include: 9:15 am EST US industrial production street 0.3% 9:15 am EST US manufacturing production street 0.4% 2:00 pm EST US FOMC minutes
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