Market wrap: negative sentiment towards USD continues - ANZ

Analysts at Westpac offered a market wrap.

Key quotes:

"Global market sentiment: US holiday (Martin Luther King Day) and limited data releases meant that activity was relatively light, but negative sentiment towards USD continued. Data that was released was positive both EUR and CAD with comments from ECB’s Hansson (Estonia) seen as hawkish on guidance and EUR’s recent strength. Risk sentiment prevailed and EU stocks held steady, despite currency strength. 10yr Bund yields tested their July ’17 highs again and the oil complex also saw Brent testing USD70bbl.

Interest rates: US markets were closed, but the push towards 60bps in 10yr Bund yields suggests that bond prices will be under pressure, especially since ECB’s Hansson commented that wage pressures will develop, that guidance is likely to alter before the summer and their Asset Purchasing Programme is likely to end as scheduled in late Sept.

Currencies: The US dollar index fell another 0.6% with majors gaining around 0.5%. Comments from Hansson maintained the trend, even though currencies had retreated from the highs seen in early EU trading (EUR halted in front of 1.2300, USD/JPY held 110.50 and GBP peaked at 1.3820). NZD (0.7314, +1.0%) outperformed a strong AUD (0.7975) on the back of the Rennie Report (recommending RBNZ committee based policy) and withdrawal of dried milk products by French producer Lactalis. AUD/NZD slipped back to 1.0900."