Headlines:
- ECB's Centeno says very low probability of returning to 75 bps rate hikes
- ECB's Holzmann: The choice was between hawkish 50 bps or dovish 75 bps rate hike
- ECB's Rehn: There is quite some way to go with rate hikes
- ECB's Villeroy: Must not speculate on the number of rate hikes
- UK November retail sales -0.4% vs +0.3% m/m expected
- UK December flash services PMI 50.0 vs 48.5 expected
- Eurozone December flash services PMI 49.1 vs 48.5 expected
- Germany December flash manufacturing PMI 47.4 vs 46.3 expected
- France December flash services PMI 48.1 vs 49.1 expected
- ECB bars policymakers from making speculative investments, short-term trades
- Bundesbank sees German recession, higher inflation on the cards
Markets:
- JPY leads, AUD lags on the day
- European equities lower; S&P 500 futures down 1.0%
- US 10-year yields up 4.3 bps to 3.493%
- Gold up 0.4% to $1,783.81
- WTI crude down 2.5% to $74.23
- Bitcoin down 2.2% to $17,005
The hangover continues for risk trades as equities were sold off once again in European trading today, building from the declines over the past few sessions after a more hawkish Fed and ECB ignited widespread economic worries.
European bonds also sold off heavily and that saw yields climb across the board, with Treasury yields also moving up on the session.
Still, that wasn't enough to get USD/JPY moving with the pair pinned down around 137.00-10 levels as the yen also benefited from safety flows as stocks were offered.
The dollar was the other main beneficiary as we saw S&P 500 futures took a quick dive down from flat levels to be down over 1% as we got into European trading earlier.
The greenback was slightly lower in the handover from Asia but has steadied itself to keep little changed against the euro and pound on the day. The latter did fall from 1.2220 to 1.2120 though initially, with overall sentiment not helped by the technical rejection and more dovish BOE from yesterday.
Besides that, major currencies are sitting more mixed as we brace for a volatile end to the week - which should feature plenty of options and positioning plays since this is arguably the final full-fledged trading week of the year.
