Currency pairs have generally been trading within yesterday’s ranges on Tuesday as markets turn into consolidation mode. The US$ made some modest gains in Europe, as profit taking set in following the recent selloff, but that dissipated as during the US session and some choppy trade ensued, with the dollar finishing the day near its previous lows. Earlier in the day, the Euro gave back some of its recent gains after Reuters reported that the ECB is unlikely to change its communication guidance at next week’s meeting on January 25 although that move has since been reversed. In terms of data, Sterling ran out of steam, after its recent rally, when the inflation figure came in slightly lower than expected, showing that UK consumer prices rose by 3%yy in December, down from 3.1% in November, marking the first drop in inflation since June. Late in the US session, US$Jpy has seen a sharp fall and is making a new trend low, currently at 110.24, probably on the back of the selloff in US stocks, which has seen the S+P and DJI make a bearish key-day reversal after earlier making a new all-time high. That move was triggered by lower energy stocks on the back of the move in WTI, which eased back from its three-year high on profit taking, but remained well supported amid expectations that OPEC-led output curbs will further tighten global supplies, offsetting rising US production.
Today will see the Australian WBC Consumer Confidence and Home Loan data and the China Foreign Direct Investment. Europe will focus on the EU CPI for December (exp 1.4%yy; Core, 1.1%yy), while the US will look to the NAHB Housing Market Index, Capacity Utilisation and Industrial Production for guidance as well as speeches from the Fed’s Evans, Kaplan and Mester. The main event of the coming session will be the BOC meeting at which a rate rise is widely expected, with traders also looking to see if there is a hawkish tone to the Monetary Policy Report/Statement.
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|ASX SPI: 5963|