Forex news from the European trading session - 9 February 2021
Headlines:
- US January NFIB small business optimism index 95.0 vs 97.0 expected
- Italian 10-year bond yields fall to record low as Draghi government eyed
- China January M2 money supply +9.4% vs +10.1% y/y expected
- Germany December trade balance €14.8 billion vs €14.0 billion expected
- Bitcoin hits $48,000 as the Tesla breakout continues
- Is the short dollar squeeze turning the corner?
- Germany reports 3,379 new coronavirus cases, 481 deaths in latest update today
Markets:
- JPY leads, USD lags on the day
- European equities lower; E-minis down 0.1%
- US 10-year yields down 1.9 bps to 1.152%
- Gold up 0.7% to $1,843.80
- WTI up 0.1% to $58.04
- Bitcoin up 3.7% to $46,370
The dollar is one of the key focal points in the market today as the tide is starting to turn against the greenback, following much resilience to start the new year.
The greenback slid across the board, with the dollar index also threatening to break below a key broken trendline resistance level in trading today.
EUR/USD climbed from 1.2070 to just above 1.2100 where gains are stalling a little while GBP/USD kept around 1.3770-80 levels for the most part on the session.
USD/JPY eased lower from 104.90 to 104.55 as Treasury yields are also tracking lower ahead of 10-year and 30-year T-bond auctions tomorrow; that is helping to exacerbate gains in the yen in trading today as it is the top performer among the majors.
Meanwhile, commodity currencies only posted a slight advance against the greenback as the risk rally takes a breather ahead of North American trading.
European equities are keeping a little lower while US futures are looking more tepid ahead of the open, with S&P 500 futures down a little by 0.1%.
In short, the reflation narrative is being cut short a little as the market searches for more evidence to back the recent bets while equities are still looking poised but are hitting the pause button - at least for the time being.
In FX, the dollar is perhaps starting to show signs of weakness again and with the Fed put still very much in play, this could mark the time when risk correlations start to make sense again when looking at the outlook for the greenback this year.
