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FOREX: EURJPY Posts Strong Reversal Higher amid Equities Bounce

FOREX
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  • With Punchbowl reporting that Cantor Fitzgerald CEO Howard Lutnick is to be nominated as President-Elect Trump's Commerce Secretary, he is considered to be out of the running for the higher-profile and more influential position of Treasury Secretary.
  • The US dollar index extended losses to session lows (and lowest levels since last Wednesday) on the back of the news, continuing a correlation we pointed out last week between Lutnick's Treasury nomination odds and the USD.
  • Overall, however, the ICE Dollar index remains close to unchanged on the session as we approach the APAC crossover, with the moderate pull lower in recent sessions generally seen as corrective amid the broader dollar positive trend.
  • The early theme on Tuesday was one of Euro weakness and JPY strength amid an upturn in geopolitical risk and escalated tensions between Russia and the West. The Kremlin have formally approved a further tweak to their nuclear doctrine, allowing for use of nuclear weaponry in the case of long-range missiles used to strike inside Russian territory.
  • EURJPY's risk-off triggered slide made light work of yesterday's lows on the headlines, putting the cross at the lowest level since mid-October around 161.50. However, the late bounce for equities has assisted an impressive 200 pip reversal into the close.
  • EURUSD’s inability to recapture the 1.06 handle is now bolstering the relative weakness for EUR crosses, with the likes of EURAUD (-0.38%) and EURCAD (-0.46%) pressing towards fresh session lows in recent trade.
  • Canadian dollar outperformance comes in the wake of the firmer-than-expected inflation data in Canada, somewhat bolstering the chances of the BOC stepping the easing pace down to just 25bp in December.
  • UK inflation data headlines the Wednesday docket, as markets then turn their focus to Eurozone flash PMIs on Friday.
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  • With Punchbowl reporting that Cantor Fitzgerald CEO Howard Lutnick is to be nominated as President-Elect Trump's Commerce Secretary, he is considered to be out of the running for the higher-profile and more influential position of Treasury Secretary.
  • The US dollar index extended losses to session lows (and lowest levels since last Wednesday) on the back of the news, continuing a correlation we pointed out last week between Lutnick's Treasury nomination odds and the USD.
  • Overall, however, the ICE Dollar index remains close to unchanged on the session as we approach the APAC crossover, with the moderate pull lower in recent sessions generally seen as corrective amid the broader dollar positive trend.
  • The early theme on Tuesday was one of Euro weakness and JPY strength amid an upturn in geopolitical risk and escalated tensions between Russia and the West. The Kremlin have formally approved a further tweak to their nuclear doctrine, allowing for use of nuclear weaponry in the case of long-range missiles used to strike inside Russian territory.
  • EURJPY's risk-off triggered slide made light work of yesterday's lows on the headlines, putting the cross at the lowest level since mid-October around 161.50. However, the late bounce for equities has assisted an impressive 200 pip reversal into the close.
  • EURUSD’s inability to recapture the 1.06 handle is now bolstering the relative weakness for EUR crosses, with the likes of EURAUD (-0.38%) and EURCAD (-0.46%) pressing towards fresh session lows in recent trade.
  • Canadian dollar outperformance comes in the wake of the firmer-than-expected inflation data in Canada, somewhat bolstering the chances of the BOC stepping the easing pace down to just 25bp in December.
  • UK inflation data headlines the Wednesday docket, as markets then turn their focus to Eurozone flash PMIs on Friday.