Tuesday, February 10, 2015

Dollar weakens on profit-taking

•     Dollar weakens on profit-taking
–    Falls vs most G10 currencies despite higher Fed funds rate expectations, increasing tensions over Greece & Ukraine
–    EUR/USD remains in tight range despite chaos in Greek assets; FX market may be discounting a successful conclusion to the difficult talks

•     French election shows why the EU has to solve Greek problem
–    Hollande’s Socialists win, but far-right National Front wins nearly 49% of the vote
–    Revolt of the voters on the left (SYRIZA) and the right (NF) will force incumbent politicians to reach a successful conclusion lest they be voted out of office

•     China’s disinflation deepens
–    CPI eases to 0.8% yoy, PPI -4.3% yoy
–    Stocks rise though on assumption of further PBOC easing

•     Today:
–    G10:  Meeting will validate current monetary policies, leaving the way open for the “indirect currency wars” to continue
–    Eurozone: French industrial production
–    UK:  Industrial production expected to fall mom; could be GBP-negative


US: NFIB small business optimism expected higher, JOLTS job openings to rise = USD-positive

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