Credit Agricole

Asia overnight

While equity markets in North America were rattled by a sell-off in technology stocks following a hawkish turn by the ECB and BoE, strong earnings from Amazon helped bolster market sentiment in Asia. At the time of writing, S&P 500 futures were up by over 1% and Asian bourses were trading mixed in light trade around the Lunar New Year holiday period. Ahead of US non-farm payrolls data later today, G10 FX traded tight ranges in the Asian session with the EUR, NZD and SEK modest outperformers against a slightly weaker AUD and USD.

Citi

European Open

Markets were relatively quiet ahead of NFP. However, the influence of yesterday’s decisions by the ECB and BoE continued to reverberate in markets. DXY was down a tad, while UST bear flattened modestly. The effects were mostly seen in the rates space, where JGB futures lower sharply, while Aussie 10y yields were up by 10bps to 1.97%. Equity markets were interesting, with S&P Eminis and Nasdaq100 futures recovering in Asia hours, after a slump closer to the NY close. Asian equities were higher, with HSI leading gains at 3.30%. Oil held onto its gains from the NY session, with prices above 90 for both WTI and brent. There was little new in the Statement of Monetary Policy from Australia. Meanwhile in EM, KRW was up 0.75% back under the 1200 handle, with a CPI print of 3.6% (above market expectations of 3.4%). THB similarly saw support from a hot CPI print to gain +0.6%.

Looking ahead, payrolls are top of mind. Non-farm payrolls for USD and CAD payrolls will be seen simultaneously at 13:30 GMT. Meanwhile in the UK, we will see BOE's Broadbent and Pill speak at 12:15 GMT, which we will watch closely for additional hawkish comments. EUR will see Germany Factory Orders at 07:00 GMT.

G10 In Focus

A macro lens

USD continued its dip into the Asia session, as G10 currencies gained following yesterday’s hawkish surprise from ECB and BoE, and as we head into Non-farm payrolls. UST bear flattened today, led by gains in the front end. Our trader Hideyuki Liu writes the following:

–ECB Lagarde's shocking pivot yesterday where she remarked the "situation has changed" and the ECB is "ready to adjust all of our instruments, as appropriate" has clearly had a profound impact on market participants. JGB futures opened lower sharply this morning, despite no particular news out, as any prior dovish messaging by central bankers have now been shown to flip shockingly swiftly. Global bond futures have all traded lower in today's Tokyo session, including treasuries, with desk flows seen from both FM and RM in 10y to 30y; selling has also been seen going through broker screens in 5s as well, and the curve has bear flattened. The central bank policy tightening has once again pushed itself to the forefront thanks to the dual hawkish deliveries by both the BOE and ECB yesterday.