ForexLive European FX news wrap: Dollar mostly firmer, pound woes continue

Headlines:

• The British Pound extends the selloff
• Reminder: It is a pseudo market holiday in the US today
• Weekly update on interest rate expectations
• Eurozone November retail sales +0.1% vs +0.4% m/m expected
• Germany November trade balance €19.7 billion vs €14.8 billion expected
• Germany November industrial production +1.5% vs +0.5% m/m expected
• Bavaria December CPI +3.0% vs +2.4% y/y prior
• US December Challenger layoffs 38.79k vs 57.73k prior
• PIMCO remains positive on UK gilts despite selloff
• BOJ raises assessment for 2 of Japan’s 9 regions in latest quarterly report
• Many Japanese firms see need to keep hiking wages, says BOJ

Markets:

• JPY leads, GBP lags on the day
• European equities mixed; S&P 500 futures down 0.2%
• US 10-year yields down 3.4 bps to 4.658%
• Gold up 0.4% to $2,673.22
• WTI crude up 0.3% to $73.56
• Bitcoin down 1.1% to $93,409

The dollar is holding firmer at the balance in European morning trade, only down against the yen on the day. Meanwhile, the major laggard is the pound as it continues to suffer in the early stages of the year.

Cable slumped to hit 1.2300 early on before falling further to a low of 1.2240 before recovering slightly to 1.2275 now. The pair is still down 0.7% on the day though.

Elsewhere, the dollar is holding slight gains despite lower bond yields. The slight bounce in bonds is helping to pin USD/JPY back down as it drops back under 158.00 to 157.70 currently.

In other markets, equities remain more tentative in general but European indices are continuing to hold modest gains to start the new year. As for commodities, gold continues to shine brightly as it creeps up above $2,670 to its highest in nearly four weeks. $2,700 next?

With it being a pseudo market holiday in the US, there won’t be too much for traders to really work with. All the focus and attention instead now turns to the US jobs report tomorrow. So, that will be the key risk event for broader markets to round off the trading week.

This article was written by Justin Low at www.forexlive.com.