Equities had another positive session overnight. The trump trade is back, for now. The S&P500 has rallied 9% since Trumps election in November, and recent tax breaks for business has sparked the markets momentum. Slow global economic improvements have seen equities worldwide move higher, European markets advancing overnight, reaching 2 week highs.
US 10-Year Treasuries gained again, rising to 2.431% yield, with the market only pricing in a 13% chance of the Fed hiking rates in March. Look for Yellens testimony later tonight to see which direction she’s headed. Particularly important will be Yellen’s views on Trumps push to change banking regulations (‘Dodd-Frank’) – unlikely targeting a return to risky pre GFC banking practices, rather a number of compliance and rule changes to let the industry breath.
Supply concerns hitting the base metals market have driven prices higher. Copper surging 5% yesterday, with Nickel, Tin and Lead up 0.33-1.78%. Bulk commodities including iron ore and coking coal have also traded higher.
Those trading the CBOE Volatility Index (VIX) should know the current price of 11.07 sits well at the bottom of the 52 week range of 9.97-29.72.
EUR/USD was under pressure, falling below 1.0600 during the session. The daily chart shows this pair reversing January strength due to broad based US dollar index strength and continued uncertainty across the EU.
The 90 pip range in the AUD/USD since 2 Feb continues, ranging between 0.7606 – 07696. Look to retail sales later in the week and the market moves to Yellens comments tonight to potentially move this pair out of its range.
Crude Oil trading 55.70 this morning, down 1.76%. Yesterday’s OPEC report confirmed a 93% level of compliance across the participating members to throttle market supply.
Upcoming data today includes
- China CPI y/y The last four years has seen a CPI range of 0.8 – 3.2. The expected 2.4% sits at the higher end of that range, look for a beat to influence the AUD/USD in today’s session, a pair which has been range bound in recent days.
- 8:30PM British CPI y/y
- 12:30AM US PPI m/m
- 2:00AM Fed Chair Janet Yellen speaks
