Volatility was the word of the session in NY as initial risk aversion was shrugged off and risky trades rocketed higher. US stocks recouped some of yesterday's losses and rallied more than +4% in broad terms. Bonds were sold in size and the US 10-year saw its yield shoot up more than +15 bps to 2.53%. The risk appetite in the latter part of the session was also prevalent in FX land and this was a recipe for a weaker USD overall.
EUR/USD ended the session about +150 pips higher into the 1.3060 area after holding key support near 1.2840/30 earlier in NY trading. The yen crosses saw accentuated price action and EUR/JPY moved more than 450 points from hi to low and closed about +65 pips higher near the 116.70/80 zone. USD/JPY sank as low as 87.10, meanwhile, but recovered impressively and was sitting just about -50 pips below the NY open around the 89.40 level.
Risk appetite saw oil prices catch a good bid and the commodity rallied more than $3 to a close just above the $44/bbl mark. This saw USD/CAD shed about -120 pips towards the 1.2550 pivot. Expect weakness to accelerate if we see below 1.2500 here in the near-term. Cable was the other major story, with GBP/USD up more than +250 pips to the critical 1.40 upside barrier. News reports that the G-7 will discuss the pound's weakness at their upcoming February meeting led to speculation that intervention may be waiting in the wings.
Upcoming Economic Data Releases (Asia Session) prev est
* 1/21 22:30 GMT NZ Business NZ PMI DEC 35.4 - -
* 1/21 23:50 GMT JN Adjusted Merchnds Trade Bal. DEC -¥367.6B -¥322.5B
* 1/22 0:00 GMT AU Consumer Inflation Expectation JAN - - - -
* 1/22 3:00 GMT JN BOJ Target Rate 22-Jan 0.10% 0.10%