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  • Presumed terrorist attacks threatens to waiver risk sentiment
  • USD strengthens after Yellen’s continued positive rhetoric
  • BoJ leaves monetary policy intact but upgrades its economic assessment

 

Market News

via Barclays

A series of presumed terrorist attacks in Germany, Switzerland and Turkey threatened to waiver risk sentiment yesterday but equities remained resilient and have since bounced back

In particular, the killing of 12 people at the Berlin Christmas market yesterday could potentially undermine Chancellor Merkel’s domestic political standing going into an election year, however that remains to be seen.

The USD continued to leap higher as Yellen spoke positively about the US outlook at the University of Baltimore yesterday. EURUSD continues to hover above the recent 1.0366 lows and feels ‘vulnerable’, in our traders view. EURUSD resistance comes in at 1.0480 and 1.0520

The Bank of Japan wrapped up its two-day monetary policy meeting with a decision to leave policy intact, as expected. The BoJ revised upward its assessment of the economy, commenting that the economy “…has continued its moderate recovery trend…” alongside upgrades in its view of exports, personal consumption and public investment. During the press conference, Kuroda divulged little new information

Until the next MPM on 30-31 January, the BoJ will: 1) apply an interest rate of -0.1% to the policy rate balances in current accounts held by financial institutions at the BoJ; and 2) purchase JGBs so that 10y JGB yields will remain at around zero percent

Focus also continued to remain on GBP yesterday, as it underperformed vs. most other G10 currencies, with limited catalyst other than the recent USD strength. With scheduled risk events now largely over for 2016, our traders think FX should continue to be led by rates and equities

Today’s currency rates:

GBPUSD = 1.2380

 

GBPEUR = 1.1916

 

EURUSD = 1.0390

 

GBPAUD = 1.7088

 

EURGBP = 0.8392

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