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Market movers today

With a light data calendar today, markets will remain in wait-and-see mode ahead of tomorrow's FOMC meeting and monitor the Russia-Ukraine developments.

After German PMIs surprised on the upside yesterday, it will be interesting to see whether the German IFO index also signals a rebound in the growth momentum during January.

In the US, consumer confidence for January is due out, which could take a further hit from the Omicron impact.

In Sweden, inflation expectations will be in focus.

The 60 second overview

Global growth: Euro area business activity continued to slow at the start of 2022 according to PMIs, although with diverging trends across sectors and regions. Especially Germany's economy staged a rebound, as services activity remained surprisingly resilient in light of Omicron headwinds and manufacturing momentum picked up as supply bottlenecks continued to ease. US services activity also cooled noticeably in January, while high price pressures remain a concern in both regions.

Markets: risk sentiment took a turn for the worse on Monday and the VIX volatility gauge rose to the highest level since early December. Oil prices retreated to USD 86/bbl and German Bund yields slipped back below -0.1%, after touching positive territory last week. Both upcoming Fed tightening (FOMC tomorrow) and rising geopolitical tensions in the Russia-Ukraine dispute (US putting 8500 NATO troops on alert for deployment) contributed to the risk-off mood.

Equities: While a cocktail of valuation- macro and earnings scare corrected European markets by -5% lower (worst one day performance since March 2020), US markets staged a significant rebound. S&P 500 recovered a -4% correction in the opening hours, to close up 0.3%. Investors bought the dip in growth, but most sectors were higher in risk on-manner. Consumer discretionary and industrials led the market and defensives lagged. Small caps outperformed massively, with Russell 2000 up 2.3% vs Dow 0.3% and Nasdaq 0.6%. However, the rebound is not spilling over to Asia, with markets 1-2% lower and US futures back in red this morning (led by tech).

FI: Yesterday's European session was a traditional flight to safety with risk assets underperforming and safe haven assets performing. Until late in the US trading session, lower yields seemed to be the foregone conclusion of the day, but a sharp reversal, with 10Y US Treasuries up by 5bp, left the 10Y point virtually unchanged on the day.

FX: EUR/CHF moved lower yesterday and EUR/Scandies higher as risk aversion rose.

Credit: Credit markets - and the high-beta segment in particular - saw significant pressure yesterday. iTraxx Xover widened 12bp to 282bp and Main widened 2.7bp to 58bp. HY bonds closed 10bp while and IG held up better and finished unchanged for the day.

Nordic macro

The only item on today's Swedish agenda is Prospera's montly (small, only money market participants) inflation expectations survey. On all horizons (1y, 2y and 5y), expectations are back at 2%, but have yet to surge substantially above the 2%-anchor. We do not expect this to be the case this time around either, although it is possible that especially the shorter ones might continue to climb somewhat, whereas the 5y expectations are likely to remain at, or close to, 2% until there are any signs of more broad-based inflation pressures in Swedish data.

Daily Pivots: (S1) 1.1296; (P) 1.1321; (R1) 1.1350; More...

Outlook is EUR/USD is unchanged and intraday bias remains neutral first. Price action from 1.1185 are seen as corrective move. Break of 1.1284 will argue that larger down trend from 1.2348 is ready to resume. Intraday bias will be back on the downside for retesting 1.1185 low first. Also, in case of another rise, upside should be limited by 38.2% retracement of 1.2265 to 1.1185 at 1.1598 eventually.

In the bigger picture, there are various ways of interpreting the fall from 1.2348 (2021 high). It could be a correction to rise from 1.0635 (2020 low), the fourth leg of a sideway pattern from 1.0339 (2017 low), or resuming long term down trend. In any case, outlook will now stay bearish as long as 1.1703 support turned resistance holds. Sustained break of 61.8% retracement of 1.0635 to 1.2348 at 1.1289 would pave the way back to 1.0635.

Daily Pivots: (S1) 1.3433; (P) 1.3500; (R1) 1.3558; More...

Intraday bias in GBP/USD remains on the downside at this point. Rebound from 1.3158 could have completed at 1.3748 already. More importantly, larger fall from 1.4282 is probably not over yet. Deeper fall would be seen back to retest 1.3158 low. On the upside, though, above 1.3571 minor resistance will turn bias back to the upside for retesting 1.3748.

In the bigger picture, strong support was seen from 38.2% retracement of 1.1409 to 1.4248 at 1.3164. The development suggests that up trend from 1.1409 (2020 low) is still in progress. On resumption, next target will be 38.2% retracement of 2.1161 to 1.1409 at 1.5134. Nevertheless sustained break of 1.3164 will argue that whole rise from 1.1409 has completed and bring deeper fall to 61.8% retracement at 1.2493.

Daily Pivots: (S1) 113.63; (P) 113.82; (R1) 114.16; More...

USD/JPY lost momentum ahead of 113.47 support and intraday bias is turned neutral first. As noted before, considering bearish divergence condition in in daily MACD, it's probably already in correction to whole up trend from 102.58. Break of 113.47 will target 112.52 support first, and then 38.2% retracement of 102.58 to 116.34 at 111.08. For now, risk will stay on the downside as long as 115.05 resistance holds, in case of recovery.

In the bigger picture, no change in the view that rise from 102.58 is the third leg of the up trend from 101.18 (2020 low). Such rally should target a test on 118.65 (2016 high). Sustained break there will pave the way to 120.85 (2015 high) and raise the chance of long term up trend resumption. This will remain the favored case as long as 55 week EMA (now at 110.91) holds.

Daily Pivots: (S1) 0.7095; (P) 0.7142; (R1) 0.7192; More...

AUD/USD recovered quickly after hitting 0.7089 and intraday bias remains neutral first. Risk will stay on the downside as long as 0.7313 resistance holds. Corrective rebound from 0.6992 should have completed there. Below 0.7089 will target 0.6991/2 support zone. Further break there will resume larger down trend from 0.8006, and carries larger bearish implication. Next target will be 100% projection of 0.7555 to 0.6992 from 0.7313 at 0.6750.

In the bigger picture, strong rebound from 0.6991 key structural support will retain medium term bullishness. That is, whole up trend from 0.5506 is still in progress. Firm break of 0.7555 resistance will target 0.8006 high and above. However, sustained break of 0.6991 will argue that the whole up trend from 0.5506 might be finished at 0.8006, after rejection by 0.8135 long term resistance. Deeper decline would then be seen back to 61.8% retracement of 0.5506 to 0.8006 at 0.6461.

Daily Pivots: (S1) 1.2560; (P) 1.2631; (R1) 1.2707; More...

Intraday bias in USD/CAD remains mildly on the upside at this point. Pull back from 1.2964 should have completed with three waves down to 1.2448. Further rally would be seen to 1.2812 resistance first, and then 1.2963. On the downside, below 1.2553 minor support will mix up the near term outlook and turn intraday bias neutral.

In the bigger picture, focus stays on 38.2% retracement of 1.4667 (2020 high) to 1.2005 (2021 low) at 1.3022. Sustained break there should confirm that the down trend from 1.4667 has completed after defending 1.2061 long term cluster support. Further rise would then be seen towards 61.8% retracement at 1.3650. However, rejection by 1.3022 will maintain medium term bearishness. Break of 1.2005 will resume the down trend form 1.4667 and that carries larger bearish implications too.

Daily Pivots: (S1) 1.5765; (P) 1.5855; (R1) 1.5941; More...

EUR/AUD spiked higher to 1.5944 but quickly retreated. Intraday bias stays neutral first. On the upside break of 1.5944 will resume the rise from 1.5559 to 1.6168 first. On the downside, break of 1.5559 will resume the fall from 1.6168 to retest 1.5250/5354 support zone.

In the bigger picture, rise from 1.5354 is seen as the third leg of the corrective pattern from 1.5250 low. Further rise cannot be ruled out, but even in that case, strong resistance should be seen at 38.2% retracement of 1.9799 to 1.5250 at 1.6988. Larger down trend from 1.9799 is in favor to extend through 1.5250 at a later stage.

Daily Pivots: (S1) 0.8356; (P) 0.8390; (R1) 0.8427; More...

Intraday bias in EUR/GBP remains mildly on the upside at this point. Rebound from 0.8304 is still in progress. Sustained break of 55 day EMA (now at 0.8421) will pave pave the way back to 0.8598 key structural resistance next. On the downside, however, break of 0.8349 will turn bias back to the downside for 0.8304 low instead.

In the bigger picture, price actions from 0.9499 (2020 high) are still seen as developing into a corrective pattern. Deeper fall could be seen as long as 0.8598 resistance holds, towards long term support at 0.8276. We'd look for bottoming signal around there to bring reversal. Meanwhile, firm break of 0.8598 will now be an early sign of medium term bottoming and bring stronger rebound. However, sustained break of 0.8276 will argue that the long term trend has reversed.

Daily Pivots: (S1) 1.0315; (P) 1.0337; (R1) 1.0374; More....

EUR/CHF's down trend resumed by taking out 1.0324 and hit as low as 1.0298. But a temporary low was quickly formed and intraday bias is turned neutral again first. Upside of recovery should be limited below 1.0510 resistance to bring another fall. Break of 1.0298 will resume the down trend from 1.1149 and target 161.8% projection of 1.1149 to 1.0694 from 1.0936 at 1.0200 next.

In the bigger picture, long term down trend from 1.2004 (2018 high) is still in progress. Next target is 61.8% projection of 1.2004 to 1.0505 to 1.1149 at 1.0223. On the upside, firm break of 1.0505 support turned resistance is needed to be the first sign of medium term bottoming. Otherwise, outlook will remain bearish even in case of rebound.

Daily Pivots: (S1) 128.61; (P) 128.89; (R1) 129.36; More....

Intraday bias in EUR/JPY remains on the downside for the moment. Consolidation pattern from 134.11 is extending with another leg. Deeper decline would be seen to 127.36, and possibly further to 126.58 fibonacci level. On the upside, above 130.07 minor resistance will turn bias back to the upside to 131.59 resistance instead.

In the bigger picture, price actions from 134.11 are currently seen as a consolidation pattern only. As long as 38.2% retracement of 114.42 (2020 low) to 134.11 at 126.58 holds, up trend from 114.42 is still in favor to continue. Break of 134.11 will target long term resistance at 137.49 (2018 high). However, sustained break of 126.58 will raise the chance of medium term bearish reversal. In this case, deeper decline would be seen to 61.8% retracement at 121.94, and possibly below.