Market Update for February 17th
Here’s what’s happening on this Tuesday.
Safe-haven assets were the focus in financial markets as trading resumed after the U.S. holiday. Key economic reports to watch today include Germany’s ZEW sentiment data, the U.S. ADP employment change report for the past four weeks, and Canada’s January inflation figures.
USD Price Overview
The U.S. dollar led the gains against major currencies today. It was shown to be particularly strong against the British pound.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.13% | 0.41% | -0.41% | 0.11% | 0.21% | 0.04% | -0.00% | |
| EUR | -0.13% | 0.28% | -0.54% | -0.01% | 0.09% | -0.09% | -0.12% | |
| GBP | -0.41% | -0.28% | -0.81% | -0.30% | -0.20% | -0.37% | -0.40% | |
| JPY | 0.41% | 0.54% | 0.81% | 0.53% | 0.64% | 0.45% | 0.43% | |
| CAD | -0.11% | 0.01% | 0.30% | -0.53% | 0.10% | -0.08% | -0.12% | |
| AUD | -0.21% | -0.09% | 0.20% | -0.64% | -0.10% | -0.17% | -0.21% | |
| NZD | -0.04% | 0.09% | 0.37% | -0.45% | 0.08% | 0.17% | -0.03% | |
| CHF | 0.00% | 0.12% | 0.40% | -0.43% | 0.12% | 0.21% | 0.03% |
So, basically, if you’re looking at the U.S. dollar against the yen, for example, the changes indicate a strong dollar…
The Office for National Statistics in the UK reported that the ILO unemployment rate climbed to 5.2% for the December quarter. Interestingly, there was also a rise in employment, up by 52,000 jobs. Meanwhile, annual wage inflation decreased from 4.4% to 4.2%, which some analysts had anticipated. A look at GBP/USD shows bearish trends, particularly below the 1.3600 mark.
The U.S. dollar index remained stable around 97.00, after some slight gains yesterday. Stock and bond markets resumed today, yet U.S. stock index futures were showing a decline of around 0.3% to 0.7%. The 10-year Treasury yield dipped to approximately 4.02%, marking its lowest point since early December. Additionally, the New York Fed is set to release its Empire State Manufacturing Index later today, with several Federal Reserve officials scheduled to speak.
On the USD/CAD front, it closed marginally higher on Monday, trading near 1.3650. Expectations are that Canada’s Consumer Price Index will reflect a consistent annualized increase of 2.4% for January, which matches December’s rate.
As for gold, it faced a slight downturn on Monday, falling below $5,000, and continued to trade under bearish pressure around $4,900 on Tuesday morning, down more than 1.5% for the day.
Looking at the NZD/USD, it has remained fairly quiet, trading within a narrow range above 0.6000. Tomorrow, the Reserve Bank of New Zealand will announce its monetary policy decisions.
After an uptick of about 0.5% on Monday, USD/JPY remains weak early on Tuesday, checking in below 153.00.
The euro continues its downward trend after losses on Monday, trading below 1.1850.
Frequently Asked Questions About Risk Sentiment
“Risk-on” and “risk-off” are terms that describe how much risk an investor is willing to take. In “risk-on” scenarios, there’s optimism, causing investors to lean towards riskier assets. Conversely, in “risk-off” settings, caution prevails, leading to an influx into safer assets. It’s interesting how market sentiment can dictate these trends.
During “risk-on” periods, stock prices typically rise, along with most commodities, while in “risk-off” markets, bonds often gain value, and safe-haven currencies prosper.
The currencies that tend to do well during “risk-on” times include the Australian, Canadian, and New Zealand dollars, as their economies are heavily reliant on commodity exports.
In “risk-off” scenarios, the U.S. dollar, Japanese yen, and Swiss franc generally strengthen, thanks to their perceived safety and economic stability.
