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Markets remained steady early Tuesday morning as investors awaited the US CB Consumer Confidence Data. This comes at a time when investors are feeling the Inflation heat. The Euro-Area Bonds Tumbled following an unexpected rise in Spanish and French CPI data, suggesting mounting pressure on the ECB to continue with tightening. The US Goods Trade balance, weekly crude oil stock, and Canadian GDP data will be released later in the New York session. BoE MPC members Pill and Mann will be speaking.
USDJPY surged by +0.40% as the dollar extended gains amid higher interest rate expectations. The US dollar gained ahead of Tuesday’s CB Consumer Confidence data as investors price in further tightening by the Fed. The interest rate divergence between the Fed and BoJ remains a major tailwind for USDJPY bulls in the near term. The Japanese Yen suffered selling pressure as Industrial Production preliminary data for January dropped to -4.6% versus -2.6% surveyed. Bulls broke above the 136.50 level leaving room to challenge the 137.80 level, a 3-month high.
GBPCAD rose by +0.14% as the Brexit deal lifts sentiment ahead of Canadian GDP data. UK PM Rishi Sunak is left to sell his breakthrough to sceptical Northern Ireland Politicians which could help end years of EU Acrimony. On the other hand, upside gains could be capped by a rally in oil prices and Canadian GDP data. The bulls broke above the 1.6420 resistance before giving in earlier gains. A failure to hold above that level could cause a short-term retracement towards the 1.6240 level.
EURAUD extended a rally by +0.14% boosted by ECB hike bets. The Euro advanced as French and Spanish inflation came in better-than-expected leaving room for further tightening by the ECB. The French CPI rose to 6.2% vs 6.1% surveyed, while Spanish CPI YoY rose to 6.1% against the 5.9% forecasted. The Australian Retail sales MoM for January rose to 1.9% against the 1.5% anticipated while Current Account grew to 14.1B vs 6.5B in Q4. The bulls parred earlier losses following a bounce above the 1.5700 level, a previous resistance-turned-support. Upside gains remain capped by the 1.5800 level.
European stocks slumped as ECB rate hike bets grew on France, Spain Inflation surprise. FTSE100 plunged by -0.44% as 7950 remained a key resistance level. On the downside, 7850 is a near-term support level. CAC40 was steady at -0.02% and critical levels to watch out for are 7350 high and 7200 low. DAX sank by -0.18% towards the 15200 support. A hold above that level could make bulls challenge the 15500 near-term resistance.
US stock futures were steady ahead of Key US economic data. US500 futures were slightly up by +0.01% as bulls remained range bound between the 4000 resistance and 3950 support level. US100 futures gained by +0.02% paring their earlier losses and upside gains are capped by the 12200 level. On the downside, 12000 remains a key support level. US30 futures added +0.05% of gains as bulls hold above the 32500 level. Bulls need to challenge the 33000 to reinforce their outlook.
In commodities, oil markets rallied on hopes of a Chinese economic rebound. USWTI crude oil futures surged by +1.56% following a bounce above the 74.00 near-term support. Upside gains are capped by the 80.00 resistance level. Brent Crude oil added +1.41% and key levels to watch out for are 80.00 support and 86.50 resistance level.
