The improvement in risk appetite from early this week continues. As US Treasury yields have rolled over in recent days, the USD rally has moved into reverse. Lower yields also mean that NASDAQ is performing well once more. Strong earnings from Apple and now Google are also helping this move. 

The Eurozone inflation data will be watched this morning. A decline is anticipated purely on base effects. Any surprises will be viewed in the context of the ECB meeting which is tomorrow. For US data, the ADP Employment Change is expected to moderate back towards 207,000 (from over 800,000 last month). However, after last month’s huge number dramatically failed to steer markets for the subsequent Nonfarm Payrolls data, there may be a pinch of salt taken with any ADP surprise today.  


Risk appetite continues to improve: Indices are higher again; USD is once more the underperformer on major forex; oil is consolidating ahead of the OPEC+ decision.

Yields slipping again: Treasury yields are once more edging lower this morning. There was a jump back higher on the much higher than expected Prices Paid component in the ISM Manufacturing data yesterday, but this appears to have been relatively short-lived. [Risk positive] 

Russia/Ukraine, no new developments: Russian President Putin hopes that “dialogue will continue”. This suggests a degree of stability, at least in the near term [Risk supportive] 

FOMC’s Bullard talks down 50bps hikes: The FOMC’s most hawkish speaker (and 2022 voter) supports a rate hike in March and May but does not see +50bps hikes as helpful. Believes 5 hikes in 2022 are a good bet. [USD neutral] 

RBA’s Lowe on rate rises: Lowe has said that there are scenarios that a rate rise could be seen this year if faster wage growth comes in. [AUD supportive] 

OPEC+ meeting today: According to sources, OPEC+ is expected to stick with its existing +400,000 barrels per day monthly increase to production [Oil neutral] 

Economic Data:

  • Eurozone inflation (at 1000GMT). Headline CPI is expected to fall to 4.4% (from 5.0% in December) and core CPI is expected to drop to 1.9% (from 2.6%). 
  • ADP Employment Change (at 1315GMT). ADP is expected to drop back to 207,000 in January from 807,000 in December).


Broad outlook: A risk recovery continues. USD continues to slip back. Indices are solidly higher. 

Forex: USD is broadly underperforming, although AUD and NZD are a little mixed.

  • EUR/USD continues to recover following the “Morning Star” reversal (a positive signal). Resistance at 1.1270/1.1300 is now being tested. This is a crossroads moment for the pair, with daily RSI nearing 50. A move above 1.1300 opens 1.1370 as the next resistance. Initial support is at 1.1235 today.
  • GBP/USD continues its recovery with this morning’s breakout above 1.3525 and is now approaching 1.3570 as the next resistance. We now see any supported weakness into 1.3460/1.3525 as a chance to buy.
  • AUD/USD has rebounded well, but the move has just stalled slightly this morning. This is around what is important resistance 0.7125/0.7180. With RSI having unwound towards 50 but just slipping back this morning, this is a key moment in the recovery. Losing support at 0.7080/0.7100 would be negative. 

Commodities: Gold and silver are struggling in their recoveries. Oil is still consolidating ahead of today’s OPEC+ meeting decision.

  • Gold is once more hovering around $1800 which we see very much as a neutral territory within the medium-term range. Initial resistance is now at $1808, with support at $1780. We are subsequently still neutral on gold between $1780/$1810. 
  • Silver is edging higher back towards $22.80 again, but yesterday’s bull failure is a warning. This is still simply an unwinding move within a two-week downtrend, with resistance mounting at $22.80/$23.00. Initial support is at $22.50.
  • Brent Crude oil is once more consolidating after another very small-bodied daily candle reflecting the building uncertainty. For now, Brent Crude is still finding buyers and forming support into intraday weakness around $88.50, but stretched daily momentum (RSI above 70) is a concern. The OPEC+ meeting could be the next key move today.

Indices: A recovery on Wall Street is developing. European indices are also improving too.    

  • S&P 500 futures completed the third consecutive strong bullish daily candle and the market is now above old resistance around 4550. The implied recovery is still towards 4625. The old pivot around 4492/4520 isis now initial support.
  • DAX broke out through 15,585 resistance to taking the next step in the recovery. The market is just easing back slightly this morning, but we see supported weakness as a chance to buy now. There is good intraday support 15,490/15,585. The next resistance band is 15,720/15,920. 

German DAX

  • FTSE 100 has moved higher and is now testing the reaction high at 7604. Although the market is just stalling around the resistance initially, there is a good basis of support above 7540 now to make the move. Momentum is improving and we look to buy into weakness. 

Support and Resistance levels