ForexLive European FX news wrap: Dollar falls amid better risk appetite, PBOC cuts RRR

<p>Headlines:</p><ul><li><a href="">Cable extends gains as UK PMI reaffirms economic resilience</a></li><li><a href="">Lower yields add to the drag in the dollar so far today</a></li><li><a href="">PBOC to cut reserve requirement ratio from 5 February</a></li><li><a href="">France January flash services PMI 45.0 vs 46.0 expected</a></li><li><a href="">Germany January flash manufacturing PMI 45.4 vs 43.7 expected</a></li><li><a href="">Eurozone January flash services PMI 48.4 vs 49.0 expected</a></li><li><a href="">UK January flash services PMI 53.8 vs 53.2 expected</a></li><li><a href="">UK January CBI trends total orders -30 vs -23 expected</a></li><li><a href="">US MBA mortgage applications w.e. 19 January +3.7% vs +10.4% prior</a></li><li><a href="">German economy to take a further knock on China struggles – Bundesbank</a></li><li><a href="">Ifo slashes Germany 2024 growth forecast to 0.7% from 0.9% previously</a></li></ul><p>Markets:</p><ul><li>JPY leads, USD lags on the day</li><li>European equities higher; S&amp;P 500 futures up 0.4%</li><li>US 10-year yields down 3.7 bps to 4.105%</li><li>Gold up 0.2% to $2,033.14</li><li>WTI crude down 0.4% to $74.05</li><li>Bitcoin up 2.5% to $40,154</li></ul><p>It was an active session in Europe today with the dollar slipping across the board, not helped by a drag lower in bond yields and better risk appetite. The latter was helped by news from China as the PBOC announced a hefty 50 bps reduction in the RRR starting from 5 February. That's not quite the $268 billion stock market backstop that was promised but it is still something at least.</p><p>As a reminder, the Chinese central bank only reduced the RRR twice last year – once in March and the other in September – with 25 bps reductions each in those months.</p><p>In any case, the dollar saw early losses translate into some heavier selling with USD/JPY in particular falling from 148.00 to 147.25 and hanging at the lows currently. Meanwhile, EUR/USD extended higher from 1.0860 to 1.0907 and is holding just under that with large option expiries marked at 1.0900 for today.</p><p>A more buoyant UK PMI data was helpful to see GBP/USD rise from 1.2700 to 1.2770 before paring some of that advance to 1.2730-40 levels now. At the balance, EUR/GBP is kept little changed at around 0.8550-55 for the most part on the session.</p><p>The antipodean currencies are also enjoying modest gains with AUD/USD up 0.2% to 0.6595 while NZD/USD is up 0.4% to 0.6125 on the day. As for USD/CAD, it is trading little changed at 1.3455 with the BOC coming up later on in the day.</p><p>In other markets, US futures are staying underpinned as tech shares are leading the charge once again. Netflix topping revenue estimates and seeing a jump in subscribers in Q4 is helping with the mood on the day. At the same time, we're seeing a rebound back in Bitcoin as well to just above the $40,000 mark for now.</p>

This article was written by Justin Low at

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