Markets remain risk-averse early Monday as investors keep an eye on geopolitics while refraining from taking large positions ahead of this week’s key events. In the absence of high-tier data releases, risk perception should continue to drive the market action in the remainder of the day.
On Friday, the data published by the University of Michigan revealed that the year-ahead inflation expectation component of the Consumer Sentiment Survey rose to 4.2% in early February from 3.9% in January. This data helped the US Dollar preserve its strength against its rivals late Friday and the US Dollar Index (DXY) closed the second straight week in positive territory. In the European morning, DXY clings to small daily gains near 103.70 and the benchmark 10-year US Treasury bond yield holds steady above 3.7%. Reflecting the cautious mood, US stock index futures are down between 0.25% and 0.35%.
Meanwhile, the US military reportedly shot down an unidentified object, the third one since the downing of the Chinese balloon, flying above Michigan on Sunday.
EUR/USD lost over 100 pips last week and stays in a consolidation phase below 1.0700 on Monday. On Tuesday, Eurostat will publish the Employment Change and Gross Domestic Product data for the fourth quarter.
Following last week’s sharp decline, GBP/USD moves sideways at around 1.2050 to start the week.
AUD/USD holds steady slightly above 0.6900. In the early trading hours of the Asian session on Tuesday, National Australia Bank’s Business Confidence data will be watched upon for fresh impetus alongside Westpac Consumer Confidence Index.
Despite the broad-based US Dollar strength, USD/CAD fell over 100 pips on Friday. The monthly data published by Statistics Canada showed that Net Change Employment was up 150,000 in January, compared to the market expectation of 15,000, and provided a boost to the Canadian Dollar.
Following Friday’s volatile action, USD/JPY gathered bullish momentum early Monday and was last seen trading near 132.20, where it was up more than 0.5% on a daily basis. Reuters reported on Monday that Japan’s Upper House of Parliament has scheduled confirmation hearings on government nominees for the new Bank of Japan (BoJ) governor and his two deputies on February 27. Markets widely expect the Japanese government to formally nominate Kazuo Ueda on Tuesday, February 14.
Pressured by rising US Treasury bond yields, Gold price stayed on the back foot ahead of the weekend and failed to stage a rebound. In the early European morning, XAU/USD fluctuates in a tight range slightly above $1,860.
Bitcoin stayed relatively quiet over the weekend but ended the second straight week in negative territory, losing around 5%. BTC/USD trades up and down in a narrow channel below $22,000 early Monday. Ethereum stays in a consolidation phase and trades at around $1,500.