Euro rally pauses
What happened overnight
– SNB reserves data show no significant reallocation
– Norway reports steep fall in credit growth
– Japan IP grew less than anticipated in December
– Growth surprised strong in Taiwan and the Philippines
– Singapore unemployment rate fell to a five year low
The squeeze on EUR funded risk trades has abated a bit, allowing the ZAR and TRY to regain some ground even as the EUR, SEK and CE3 weaken. EURUSD has so far held below Wednesday’s 1.3587 highs, drifting back below 1.3550, while USDJPY is holding well within Wednesday’s 90.66 to 91.41 range. AUDUSD briefly probed through Wednesday’s lows but is now little changed on net. EURPLN probed to new highs for the year of 4.2140 before pulling back sharply. Equity markets were stable in Asia but have weakened in Europe, and the S&P future is down 0.2%. Spanish and Italian 10-year bond yields have backed up moderately, while German bonds have rallied and Euribor implied yields have slipped 4 to 6bp lower across the 2014 contracts.
Click here to read the full report: FX Daily
Credit Suisse