• USD (USDIndex 96.36) testing 2021 highs; rallied on Powell’s re-nomination and Brainard as Vice FED Chair. Commodity & EM Currencies pressured particularly. Stocks weaker partic. Tech stocks, Banks hold up. (Nasdaq -1.26%). Yields bid and gold and Oil crashed further. Covid concerns grip Europe as winter dawns.
• US Yields (10yr trades at 1.620%, down 28 bps from yesterday’s rally  
• Equities lower NASDAQ -1.26%  USA500 -15 (-0.32%) at 4682– Big movers. USA500.F trades lower at 4665.
• USOil – struggles but up from below $75.00, after the discussions to release global strategic reserves to cool prices and OPEC talk of raising output.
• Gold crashed over 2.5% losing over $45.00 following Powell news, next support $1800.
• FX markets – EURUSD down to 1.1225 earlier, lifted to 1.1255, USDJPY over 115.00, earlier now at 114.75 & Cable back to 1.3400, from 1.3380. USDMXN at 21.00, USDTRY at ATH 12.00, RUB at 75.00.  

European Open – The December 10-year Bund future is down -28 ticks, underperforming versus US futures and suggesting a further rise in European yields, which already spiked sharply yesterday. The Covid situation may be weighing on the growth outlook, but investors are increasingly convinced that the ECB is indifferent to the spike in inflation and long yields are backing up as central bankers keep a lid on tightening expectations and ECB officials play down the risk of second round effects. DAX and FTSE 100 futures meanwhile are down -0.5% and -0.4% respectively, as the rise in yields and Covid jitters remain in focus.

Today – EUR & US Flash PMIs, BoE’s Bailey & Haskel, ECB’s de Guindos

Biggest FX Mover @ (07:30 GMT) EURNZD (+0.42%)  Bounced from 1.6070 yesterday to 1.6150 now rallied to breach 1.6200 Faster MAs aligned higher,  MACD signal line & histogram risning but under 0 line, RSI 53 & neutral. H1 ATR 0.00081, Daily ATR 0.0052.

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Stuart Cowell

Head Market Analyst

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