Key Overnight Developments
• Australian Inflation Gains But Traders Unconvinced on Rate Hike Outlook
• UK House Prices Rose the Most in Nearly Three Years, Says Rightmove
Critical Levels
The Euro added 0.3% against the US Dollar while the British Pound consolidated below the 1.63 level to yield a flat result ahead of the opening bell in Europe. We remain short EURUSD at 1.4881.
Asia Session Highlights
Australian Inflation rose at an annual pace of 2.6% in December, the fastest in 9 months, according to an estimate from TD Securities. On the surface, the outcome would seem to support the case for another interest rate hike when the Reserve Bank of Australia meets in February. The markets seemed unconvinced, however. Indeed, a Credit Suisse gauge of traders’ priced-in expectations saw the probability of a rate increase at the next policy meeting (69%) remained unchanged while an index representing the 1-year yield change outlook actually declined by 3 basis points.
A report from Rightmove Plc, an online for sale-property listing, said that UK House Prices rose at the fastest annual rate in nearly three years, adding 4.1% in the year to January. However, similar reports from other sources (particularly the Royal Institution of Chartered Surveyors) have routinely suggested that the upswing in property values over recent months has been a factor of shallow supply rather than robust demand, meaning the gains do not necessarily imply much about the improving health of the UK consumer.
Euro Session: What to Expect
The economic calendar is conspicuously bare in European hours, leaving currency markets to take their cues from trends risky assets. European and US equity index futures are trading higher ahead of the opening bell, hinting at a rebound in risk appetite after Friday’s selloff that may prove to weigh on the safety-linked US Dollar and Japanese Yen.
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