Forex news from the European trading session - 8 February 2021
Headlines:
- Eurozone February Sentix investor confidence -0.2 vs 2.0 expected
- SNB total sight deposits w.e. 2 February CHF 704.3 bn vs CHF 704.6 bn prior
- US Treasury 30-year yields hit 2% for the first time in almost a year
- Risk trades brush aside vaccine setback for now
- Switzerland January unemployment rate 3.7% vs 3.7% expected
- Germany reports 4,535 new coronavirus cases, 158 deaths in latest update today
Markets:
- USD leads, GBP lags on the day
- European equities higher; E-minis up 0.3%
- US 10-year yields up 2.6 bps to 1.19%
- Gold up 0.4% to $1,820.51
- WTI up 1.2% to $57.51
- Bitcoin up 1.9% to $39,325
The reflation narrative is the key talking point as we get things going in the new week, as inflation bets jump with yields climbing alongside oil prices.
30-year Treasury yields clipped 2% for the first time in over a year, with Brent crude trading above $60 for the first time since late February last year.
Meanwhile, equities maintained modest gains throughout the session and the dollar kept a firmer footing after having retreated in Friday trading last week.
EUR/USD eased from 1.2045 to 1.2023 and is trading thereabouts currently, with GBP/USD easing from 1.3740 to 1.3680 levels and testing its 200-hour moving average.
Commodity currencies aren't enjoying a good time either as they fail to get a lift from the better mood in the market. AUD/USD fell from 0.7670 to 0.7650 while USD/CAD moved higher from 1.2760 to 1.2780 despite higher oil prices on the day.
USD/JPY is a key pair in focus as it is threatening a break higher above its 200-day moving average of 105.57 as it trades just above 105.60 currently.
The shove higher in yields is also helping to underpin the pair in general.
The market is working with a few themes here to start the new week. The return of the reflation narrative is one of that, alongside the possible continuation of the short dollar squeeze, and adding to that is the continued euphoria in equities.
There might come a point when the first two may cause trouble for the third but for now, the market is saying that we're not there yet and the party continues.
