OVERNIGHT NEWS
# Earlier and more aggressive Fed tightening backfires on the dollar. DXY testing 100dma (94.66), break opens potential 1.5% drop to 93.12 (200dma). UST 10y +2bp at 1.72%, Scandis, TRY, BRL, CEE on top this week.
# Day ahead: Lagarde speaks at Conference of Parliamentary Bodies, US retail sales and industrial production. Sweden, Hungary and Poland CPI, and Brazil retail sales.
# China trade surplus balloons to record $94.5bn in December from $71.7bn in November, exports +20.9% yoy and imports 19.5%. UK November GDP +0.9% m/m, above 0.4% forecast. Manufacturing output +1.1%, construction +3.5%, services +0.7%. Trade deficit narrows to £11.3bn.
# BoK raises key rate by 25bp to 1.25%, sees CPI in 3% range for considerable time. USD/KRW flat at 1,187
# Nikkei -1.4%, EUR 10y IRS unch at 0.335%, Brent crude +0.4% at $84.8/b, Gold +0.3% at $1,826/oz
Mostly winners so far this month vs the USD
e see USD and US equity futures close to unchanged. USDJPY traded as low as 113.64 before retracing, and we saw a similar failure to breach 1.1480 in EURUSD. There was more hawkish comments in the form of Waller overnight, but data could be dominating conversations today alongside earnings. There are downside risks to the retail sales print for December, while Michigan inflation expectations are worth a cursory glance.
We flag a number of news reports overnight. It is widely report that Biden’s Fed Governor picks could be confirmed as soon as today while ahead of the BoJ next week, a Reuters report suggested that officials were starting the debate about telegraphing eventual rate hikes. CNH was in focus after breaking 6.35, which we think was driven by flows more than the positive surprise in trade data. Inflation data was underwhelming for SEK, while it confirmed hawkish expectations for HUF. The BoK saw a hawkish rate hike, though KRW saw only marginal gains from this. Looking ahead, CLP will try to continue its gains into the weekend while there will be some central bank headlines for EUR and SEK.
