Wednesday, February 24, 2016

Daily FX Update, 24 February 2016

OVERNIGHT MARKET UPDATE:
·         US – Consumer confidence fell to 92.2 in February, a sharp decline from January's (downwardly revised) 97.8. The decline in the Conference Board's measure of consumer sentiment was most notable in those under 35 years old, and in household income groups under USD50k.
·         US – Existing home sales saw a modest increase in the month of January, with sales climbing to their highest rate in six months. The existing home sales rose 0.4% on monthly basis to a seasonally adjusted annual rate of 5.47 million in January from a downwardly revised 5.45 million in December.
·         US – Home prices in major US metropolitan areas increased in line with market expectations in the month of December. The S&P/Case-Shiller 20-City Composite Home Price Index rose by a seasonally adjusted 0.8% in December after climbing by 1.0% in November.
·         Euro area – The German IFO business sentiment took a bigger than expected tumble in February, easing to 105.7 from 107.3 in January. The expectations series drove the entire decline, with the current assessment 0.4 points higher at 112.9 in February.
·         Currencies – GBP was weighed down by the BoE. EUR/USD continues to test support, as does the USD/JPY.
·         Equities – Softness in Asia, weak US data and falling oil prices resulted in European equity markets closing around 1.5%, while the major US bourses were down 1.0-1.3%.
·         Rates – US Treasury yields closed lower amid weaker oil prices and soft US dataflow. European sovereign bond yields were mixed.
·         Energy – Crude oil prices fell sharply on signs of OPEC non-cooperation. The Iranian oil minister stated the agreement by Saudi Arabia and Russia for an oil production freeze was ridiculous. The lack of geopolitical cooperation will keep OPEC production high.
·         Precious Metals – Gold prices gained on the back of heightened risk aversion. High-cost gold miners are taking advantage of the price spike to lock in profit margins, with a number of companies having hedged production.

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