Stocks around the world rallied on reports from Russia that it has pulled back some its troops from the Ukrainian border. Global bond yields have edged higher, the UST 10Yr is up 4 bps and back up to 2.03%. FX safe havens - US dollar and Japanese yen - have declined in value. This morning’s release of US PPI for January showed a jump in inflation for US producers, as they struggle with supply chain and labor restraints. Traders will be listening closely to Fed speakers this week.
“Russia constantly makes various statements. That’s why we have the rule: We won’t believe when we hear, we’ll believe when we see [troops pulling out].”
February 15, 2022
EUR/USD 1.1335 GBP/USD 1.3506 USD/CAD 1.2762 AUD/USD 0.7120 USD/JPY 115.8 USD/CNH 6.3388 USD/ILS 3.2319 USD/MXN 20.4214 USD/CHF 0.9263 USD/INR 75.3375 USD/BRL 5.1869 USD/SGD 1.3466 USD/DKK 6.5742 USD/SEK 9.3067 USD/NOK 8.9364
Reports that Russian troops may be pulling back from Ukraine’s border is fueling an upbeat, risk-on mood in the markets. Stocks are higher, bond yields are higher, the US dollar is lower. This morning’s higher-than-expected January PPI for Final Demand rose by 9.7% YoY, higher than Bloomberg’s median forecast of 9.1%. Other PPI categories also showed much higher than expected figures.GBP
The UK pound is up slightly versus the USD, but is one of the weakest of the G-10 currencies, as it continues to trade within the $1.35-$1.36 range over the last two weeks. UK unemployment in December of 4.1% was as expected, and traders await tomorrow’s CPI and PPI inflation data.EUR
The euro is trading at its highs of the day and in a position to reverse a week-long decline following positive reports of Russian troops pulling back from the Ukraine border. The Eurozone’s Trade Balance for December was in greater deficit than expected and 4Q GDP QoQ of +0.3% was as expected.CAD
The Canadian dollar is slightly weaker, as crude oil prices drop from yesterday’s high at $95.82 per barrel (WTI), the highest level since 2014. The value of CAD has not been affected by PM Trudeau’s decision yesterday to invoke emergency powers to ban public assembly in certain locations in response to protests by truckers over vaccination requirements. The Royal Canadian Mounted Police seized a cache of weapons at a border blockade in Alberta.ASIA/PACIFIC
The Chinese yuan rallied to its best level this month against the USD following reports that China’s central bank has supported its slowing economy by injecting significant cash into China’s banking system for a second straight month.
The Japanese yen is slightly lower on the day, as demand for safe havens has been reduced following upbeat news of Russian troops pulling back.
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