Sterling and the commodity bloc currencies took centre stage on Wednesday, with Sterling initially rallying strongly on speculation that Brexit may be scrapped if a second referendum is held, as alluded to earlier this week by former UKIP leader, Nigel Farage, before reversing sharply late in the day. The commodity bloc headed higher after the BOC raised rates but also gave up some ground late in the US session as the US$ found new legs on the back of higher US bond yields. In other currencies, after running stops in Asia, the Euro then turned down and drifted off towards support ahead of the EU CPI, which caused a minor blip higher despite it coming in right on expectations, but had little overall effect. It has since moved sideways with much of the action being driven by Cable through the cross. Late in the day, the dollar has caught a bid tone as US yields headed higher, with US$Jpy heading back above 111.00.
In other markets, US stocks ignored the potential technical weakness seen in the charts yesterday and are closing, once again, at all time highs, led by technology and industrial stocks as well as a recovery in the financial sector. The metals and WTI have been mostly rangebound although the #api figure will be released shortly and will provide WTI with the next directional move..
Thursday will be a big day for the Aud$, with the release due of the following data: New Home Sales, Consumer Inflation Expectation, Unemployment (exp 5.4%, +9K, PR: 65.4%), China Retail Sales (exp 10.1%yy), Industrial Production(exp 6.0%yy), House Price Index(exp ?%yy), Q4 GDP(exp 1.6% qq, 6.7%yy), Fixed Asset Investment(exp 7.1%yy) and the NBS News Conference. Alongside this, the Japanese Industrial Production and Capacity Utilisation for December are also due. From the EU, speeches from the Buba’s Weidmann and the ECB’s Coeure will be the focus ahead of the US session when the December Housing Starts/Building Permits and the Philadelphia Fed Mfg Survey will provide any directional bias.
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