FTSE 100 closes at record highs whilst the Topix underperforms

• President-elect Trump gives little detail on fiscal policy
• FTSE 100 closes at record highs whilst the Topix underperforms
• ECB minutes and Fed speakers in focus today

Market News

The USD underperformed against most major peers and the US 10-year treasury yield touched the lowest since November as Trump’s first press conference since election gave limited detail on fiscal policy and infrastructure spending plans. EURUSD, having traded 1.0454 in anticipation of the event, continues to rally and break new highs above 1.0630. Our trader sees further downside pressure for the USD with the “flash spike” high on 30^th December acting as first resistance 1.0690

• In equity markets, the FTSE 100 closed at record-highs of 7,288 but Japanese equity markets suffered. The Topix was the worst underperformer falling c.2.3% after the JPY strengthened and health-care stocks sold-off (following Trump’s comment on forcing the pharmaceutical industry to bid for government business in the world’s largest drug market)

Despite mixed data in the UK yesterday, GBPUSD slipped below the post-flash crash 1.2083 low (Bloomberg) after Bank of England’s Mark Carney told members of parliament that Brexit was no longer the single biggest threat to the UK’s financial stability. Nevertheless, the pair quickly bounced back as the USD softened later in the day

• Our traders see short term support at 1.2000/0.8630 and resistance at 1.2440/0.8765 for GBPUSD and EURGBP, respectively

ECB minutes this afternoon at 12.30 should be a non-event, in our view. Fed speakers will also be in focus, including Harker, Evans and Kaplan. Fed Chair Yellen speaks at midnight UK time (although we do not expect any further monetary policy insight)

Todays’ currency rates: