In what could be termed a relief rally, equities are higher this morning after a devastating start to the year. The dollar turned slightly lower and US Treasury yields are soft, but the 10yr is still high at 1.87%. Upbeat Q4 earnings by Morgan Stanley and Bank of America drove their share prices higher and helped drive broad gains in the financial sector. Oil prices remain firm on the back of an International Energy Agency report that said demand was stronger than expected with WTI trading above $86 a barrel. This morning’s US housing data for December was better than expected.
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January 19, 2022
EUR/USD 1.1343 GBP/USD 1.3643 USD/CAD 1.2496 AUD/USD 0.7235 USD/JPY 114.33 USD/CNH 6.3457 USD/ILS 3.1331 USD/MXN 20.3994 USD/CHF 0.9161 USD/INR 74.4313 USD/BRL 5.4739 USD/SGD 1.3474 USD/DKK 6.5611 USD/SEK 9.1183 USD/NOK 8.7538
The dollar is broadly lower, but not significantly so – the NOK showing the biggest gain overnight of only 0.60%. Upbeat earnings by two big US banks – Morgan Stanley and Bank of America – is helping turn equities higher. Released this morning, US Housing Starts and Building Permits for December were both much higher than expected.GBP
The UK pound is higher, in line with the strong dollar. UK inflation is soaring, with more than 10% of consumer goods and services rising at a double-digit pace. Traders are focusing less on PM Boris Johnson and his potential resignation from the “partygate” scandal, and more on the Bank of England’s plans to hike rates to fight rising inflation.EUR
The euro edged higher overnight in line with the weak dollar. European stocks are all in the green. Weak Eurozone Construction Output data for November had no impact, but traders will focus on tomorrow’s EZ CPI data for clues on what the dovish European Central Bank may do this year.CAD
The Canadian dollar gained versus the USD on the back of higher oil prices and rising inflation. CPI for December of 4.8% was expected and higher than the previous month’s 4.7%. The Bank of Canada meets on Jan. 26, and expectations are for a 25 bps rate hike.ASIA/PACIFIC
The Chinese yuan gained a bit overnight, and USD/CNY continues to trade below 6.35 and not far from 6.3380, its lowest level since early 2018.
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