Forex Exchange Morning Report

 

Market wrap

 

Risk markets probed higher. Much of the London session was driven by reports (from Germany's FTD for example) that a broad agreement between Greece and bondholders had been reached and negotiations were now focussed on detail, such as the level of the coupon on the swapped debt. A level of 4.0% is supposedly agreeable, although the IMF troika and Germany are pressing for closer to 3.0%. The S&P500 rose to a fresh post-July high of 1322 but then fell later in the NY morning by 0.9%, and is currently down 0.2%, after Dow Jones News reported a rumour that the IMF and EU will refuse to contribute any further towards Greece's rescue. The latest on this saga is a comment from an anonymous Greek official who said a final off er will be tabled on 13 February. Other asset classes were more resilient, the CRB commodities index up 1.2%. US 10yr treasury yields are 5bp higher at 2.07%, earlier at 2.09% and breaking above a five-week range. Eurozone peripheral yields are lower, the Greek 10yr down 59bp, Portugal down 18bp and Italy down 14bp.

The US dollar index continued its downward correction, losing around 0.5%. EUR rose from 1.2892 to 1.3053 and only slipped to 1.3005 after the negative DJ report. USD/JPY gyrated in a narrow 76.87-77.08 range. AUD rose from 1.0485 to 1.0573, a 2 month high, slipping in NY to 1.0517 with US equities. NZD rose from 0.8065 to 0.8142 - also a 2 month high, and then slipped to 0.8092. AUD/NZD firmed slightly from 1.2980 to 1.3010.

Economic wrap

 

Canadian leading indicators declined to 0.8% in December from an upwardly revised 0.9% (previously 0.8%) in January. Eight of the ten components were positive over the month with only the stock market and furniture sales negative.

The advanced estimate for the EC Eurozone consumer confidence survey revealed a modest increase in confidence to -20.6 in January from -21.3, the first increase in six months.

French Business confidence indicator slipped to 91 in January from 94 the previous month. This was the second consecutive monthly decline in the survey having peaked at 110 in June. There were particularly notable falls in both overall (to -32) and foreign (to -26) orders. Production outlook ticked lower to -37 while own-company production declined to -6 from -1..

Market outlook

 

AUD/USD and NZD/USD outlook next 24 hours: The local calendars are quiet. AUD momentum remains positive, now targeting above 1.0600. NZD has a similar upward bias with trend channel resistance at 0.8135.