Risk on ahead of Janet Yellen speech tomorrow

<p>Global equities look to have stabilised, allowing FX risk trade to catch a slight bid. This is despite another weak US jobs report that, like […]</p>

Global equities look to have stabilised, allowing FX risk trade to catch a slight bid. This is despite another weak US jobs report that, like last month, had Fed officials remind us that the data is weather distorted.

Taper is looking to continue at $10 billion per month. The market seems to be waiting for Fed Chairwoman Janet Yellen’s assessment of the economy at her testimony to Congress on Tuesday. Most were expecting her to echo the comments of Eric Rosengren last week that they are willing to risk some longer term inflation in order to restore balance to the labour markets.

The euro shrugged off negative weekend press articles suggesting Italy has rejected the idea of setting up a ‘bad bank’ and that European banks are facing a potential €50 billion capital shortfall as the CFTC showed a reversal in positioning from long to a $2.3 billion short.

Elsewhere, Toyota motors have, like Ford and Holden, announced that they will stop production in Australia by 2017, shedding a further 2500 jobs, although the reaction to AUD has been muted.

There are no data releases today apart from Canadian housing starts. My highlights this week will be Janet Yellen’s testimony along with the UK inflation report, where I expect a small amendment to forward guidance.

 

EUR/USD

Supports 1.3600-1.3550-1.3475 | Resistance 1.3680-1.3700-1.3740


USD/JPY

Supports 102.20-101.60-101.45 | Resistance 102.60-102.85-103.55

 



GBP/USD

Supports 1.6350-1.6300-1.6250 | Resistance 1.6450-1.6485-1.6520

 

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