Global risk appetite continues to be influenced by equity markets following the Nvidia bumper earnings report which pushed stock indices across three continents to all time highs. The US S&P index, Japan’s Nikkei and UK FTSE all hit record highs after the latest jump in Nvidia shares added a record setting USD 277 billion to the companies’ market cap. The US dollar however was little changed with the greenback consolidating as traders continue to assess remarks from Fed officials regarding the timing of potential rate cuts from the central bank. Wary Fed speak continued with Christopher Waller saying January’s jump in consumer prices warrants caution in deciding when to start cutting rates, although he still expects reductions to start this year. In a speech yesterday when talking about inflation and the economy he used words such as careful, patient deliberate and methodical – adding, “Whatever word you pick, they all translate to one idea – what’s the rush?” Just a few short weeks ago, swap markets were pricing in up to 7 cuts from the Fed commencing at the March policy meeting. However, after solid jobs reports and above consensus price gains, markets have significantly dialled back on early cuts, with the first moved now priced in for June or maybe even July.
EURUSD remains in consolidation mode, holding steady above 1.08 as markets await this morning’s German Ifo survey, which is typically one of the more reliable measures of growth in the euro areas largest economy. The business expectations balance will be closely scrutinised, after a larger than expected rise in the ZEW expectations survey.
Data released yesterday showed that the composite PMI index for the UK increased to 53.0 from 52.9 the previous month. The data helped GBPUSD to temporarily breach 1.27 yesterday, however we are back on a 1.26 handle this morning trading within the recent range.
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