Momentum in the driver’s seat again
What happened overnight
– Italian, Swedish business confidence weaker than expected
– Spanish Q4 GDP contracted 0.7.%, weaker than -0.6%
– Swiss KOF weaker than expected
– Korea deputy finance minister warns on capital controls
USDJPY and EURUSD have pushed to new highs for the year again, as momentum remains very much in the driver’s seat. EURUSD has extended Tuesday’s rally up to 1.3563 highs today, while USDJPY has reached 91.41. EURGBP has also reached new highs, clearing 0.86 for the first time since December 20011 and EURSEK has bounced back following weak Swedish industrial confidence after briefly falling below 8.57. The commodity bloc is underperforming once again, likely suffering from pressure on EUR-funded risk positions and AUDUSD has reversed most of Tuesday’s rally. Asia currencies have lost ground again, with 1-month USDKRW reversing Tuesday’s drop following comments from the Korean Deputy Finance Minister. Equity markets
rallied strongly in Asia but have moved sideways in Europe, with the S&P future flat on the day. Italian and Spanish bond yields are up modestly after an Italian auction, while Euro front-end rates are up a few basis points, reversing Tuesday’s rally.
Click here to read the full report: FX Daily
Credit Suisse