21 Feb: US$ up, stocks down as yields head higher. Flash PMIs in focus ahead of the FOMC Minutes, late in the day.

By | February 21, 2018


Stock markets are lower while the US$ bounced on Tuesday as US markets return from their long weekend, with the Euro leading the way down after a rather disappointing ZEW release. The German ZEW economic sentiment dropped to 17.8 in February, down from 20.4 record high but beat expectation of 17.9, while the current situation gauge dropped to 92.3, down from 95.2 and missed expectation of 94.0. Eurozone ZEW economic sentiment dropped to 29.3, down from 31.8, but above expectation of 28.4. Sterling managed to hold its ground after the surprise headline that the EU Parliament will call for the UK to have privileged single market access after Brexit. Sterling did head higher but has since given up some of its gains as the dollar found new legs. On the day, the Yen, Aud and the Chf are also at weaker levels than seen for a few days.

In other markets, US stocks are down, not helped by higher US yields or by disappointing results from Walmart, which weighed on the major indexes. Treasuries fell amidst a heavy slate of US debt issuance, with short-end auctions drawing some of the highest yields in almost a decade. Gold is lower, possibly hinting at further US$ strength, while WTI was choppy either side of 62.00.

Wednesday will begin with the Asian session with the WBC Australian Leading Economic Index, the Australian Wage Price Index for Q4 and the Japan Nikkei Flash Mfg PMI, the All Industry Activity Index and a speech from BOJ Board Member, Funo. Europe and the US will look to the Flash Manufacturing/Services/Composite PMIs for February, while the UK will contend with the December Unemployment data (exp 4.3%, +4.1k) and PSBR (Jan). It could be a busy day for Sterling as most of the BOE board appear to be speaking, so stay nimble! Speakers include Carney/Haldane/Broadbent/Tenreyro, who will be answering questions about the BOE February Inflation Report from Parliament’s Treasury Committee. The main focus of the day will be on the FOMC Minutes, which traders hope will give some guidance as to when to expect the next Fed rate hike, in what will be Jeff Powell’s first meeting as Chair. Ahead of the Minutes, the FOMS’s Harker will be speaking. Also due today will be the January Existing Home Sales and the API weekly Crude Oil Stock Inventory. Have a good day.

EURUSD: 1.2334
Res  1.2360  1.2385  1.2410
Sup  1.2320  1.2300  1.2275
USDJPY: 107.28
Res  107.40  107.55  107.90
Sup  107.00  106.80  106.50
GBPUSD: 1.3982
Res  1.4000  1.4025  1.4050
Sup  1.3960  1.3930  1.3900
USDCHF: 0.9359
Res  0.9375  0.9410  0.9440
Sup  0.9330  0.9300  0.9275
AUDUSD: 0.7876
Res  0.7890  0.7910  0.7935
Sup  0.7860  0.7840  0.7825
NZDUSD: 0.7342
Res  0.7360  0.7380  0.7400
Sup  0.7335  0.7315  0.7285
S+P: 2715
Res  2725  2735  2745
Sup  2700  2690  2680
DJ30.fs: 24900
Res  25010  25100  25215
Sup  24850  24800  24700
SPI200.fs: 5871
Res  5885  5910  5935
Sup  5850  5835  5810
GOLD: 1329
Res  1340  1350  1360
Sup  1325  1315  1305
XAGUSD: 16.45
Res  16.55  16.75  16.95
Sup  16.40  16.25  16.10
OIL (WTI): 61.54
Res  62.10  62.60  63.30
Sup  61.30  60.70  60.05