Despite Monday’s US holiday, the US$ remains under heavy pressure on Tuesday, with the Euro reaching a 3 year high on the growing optimism of tighter monetary policy from the ECB, while also underpinned by the prospect of a pro-European Union coalition in Germany, led by Angela Merkel. Elsewhere, the commodity bloc currencies had a strong session ahead of tomorrow’s Bank of Canada meeting, at which a rate hike is widely anticipated along with hopes of a hawkish outlook on future guidance. Sterling had a good day too, trading above $1.38 for the first time since the Brexit vote. In other markets, WTI is hovering just under 65.00, but looks set to take that level out, while the metals are also underpinned due to the softer dollar. US stocks are at all-time highs, and look set to grind still higher.
The US will be back from holiday today and will find the dollar even weaker than where they last left it after Friday’s steep selloff, although Tuesday will be light on data, with not too much to provide new direction. It will therefore be politics and central bank announcements that will be in focus. Asia will kick the session off with the Australian New Motor Vehicle Sales and the China Foreign Direct Investment, both for December. Europe will focus on the German (CPI, exp 0.6%mm, 1.7%yy; HICP, exp 1.6%yy) and Wage Price Index as well as the UK (CPI, exp 0.6%mm, 3.2%yy; PPI, exp 0.5%mm, 6.0%yy), while the US is pretty empty with just the New York State Empire Mfg Index to provide any directional move. The SNB’s Jordan will be speaking, while Kiwi traders should look out for the Global Dairy Trade Index during European trade.
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|ASX SPI: 6009|