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Wednesday, February 3

3rd Feb - USD loses on Dudley's dovish comments

Previously on MoreLiver’s:

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The Economic Cost of Rolling Back SchengenFrance Stratégie
The economic consequences of re-establishing permanent border controls within the Schengen Area.

European political risk is here to stayABN AMRO
European political risk is likely to continue to linger…given political fragmentation across the continent * Portugal might be particularly vulnerable to fiscal slippage * Meanwhile, there is a significant risk of UK exit from the EU

EU draft deal on Britain not a euro zone veto: Tusk letter – Reuters
Cameron’s EU deal blasted by British press – Politico
The UK’s renegotiation: Keeping up appearances – Europp
Cameron’s draft deal – how does Europe see it? – Open Europe
Cameron Grilled on Europe Deal – By His Own Party – BB

Resisting Change?Tim Duy
A substantial part of their policy still appears directed by a pre-conceived notion of "normal" policy. This I think is the Fed's largest error; the fact that the yield curve stubbornly resists being pushed higher suggests that the Fed's estimates of the terminal fed funds rates is wildly optimistic. There appear to be limits to which the Fed can resist the global pull of zero (or lower) rates.

G20 plays by the book as unnerved markets crave succorReuters
A “grand bargain” might soon be needed, but things would first have to get worse.

Tumbling Oil Prices Are Wiping Out Saudi Arabia’s Budget EffortsWSJ

Harold James: The Death Throes of OilProject Syndicate
Policymakers in industrialized countries need to stop thinking about falling oil prices as representing risks to the economy and start considering their geopolitical implications.

Dollar Suffers Worst Day in 7 Years as Traders Face Fed RealityBB
Fed’s Dudley says outlook could be changed.

Morning MoneyBeat AsiaWSJ
Oil Prices Fall Again, Dragging Stocks Down

Morning MoneyBeat USWSJ
Wall Street sours on stocks

Danske DailyDanske Bank

Euro rates updateNordea

Risk-off despite better China PMI, EUR and JPY gain, US ISM to give clue on jobs * Hopes that US ISM will signal solid jobs growth on Friday * Market pricing in less tightening/more easing as stocks drop * EUR and JPY still the safe havens

Morning MarketsTF
Equity markets took a hammering across Asia with sharp falls in Tokyo Shanghai Hong Kong Sydney and Mumbai on the Wall Street selloff and falling crude prices. Stocks in Tokyo lost gains made on the back of the recent BoJ interest rate surprise. One of the few bright spots in the Asia region was India where the Nikkei India Services PMI for January came in at 54.3 up from 53.6 in December – signalling robust expansion in a key corner of Asia's third largest economy.

Daily FX Comment Marc Chandler
Dollar Edges Lower, Markets Trying to Stabilize

Daily ShotTF
Good news from the Eurozone, namely Spain, Greece and Germany * But despite improving labor market fundamentals and QE inflation is still lacking * China's services sector activity surprised to the upside * US stocks might be overvalued

Matt Levine’s Money StuffView / BB
Yahoo, Drugs and Argentina

Daily Press Summary Open Europe
Tusk tabled draft deal for the UK as May hints she will back remaining in the EU * Proposed UK-EU deal gets mixed welcome from European politicians * German press reaction to draft deal: “Cameron is putting into action what other EU states want” * Proposed deal met with scepticism by UK press * End to Schengen would cost Europe €110bn French think tank warns * Spanish Socialist leader faces uphill struggle as he is asked to try and form government * EU and US reach breakthrough in data protection talks

Brussels PlaybookPolitico
UK deal fallout — The Italian Job — Trailing Trump

Europe Falls, U.S. Futures Rise As Oil Halts Two-Day Plunge


FX UpdateTF
We’re seeing dramatic gyrations in world bond and equity markets this week but so far this has seen little transmission into the major currency exchange rates as traders seem to lack conviction on what the market turmoil means for currencies.

From the FloorTF
FX markets perplexed and hungry for a new direction after BoJ rate cut  * China could print the biggest monthly drop ever in FX reserves * Markets now pricing in only one half of a US rate hike up through Jan 2017 * Garnry still believes in Michael Kors * WTI under more pressure than Brent in anticipation of new US inventories increase

Suomen ja Itävallan lainat menettävät edelleen asemaansa * USA:n palvelusektorin luottamusindeksi antaa viitteitä perjantain työllisyysluvuista * Kiinan palvelusektori teki korjausliikkeen * Raakaöljyn jyrkkä hinnanlasku heilutti valuuttamarkkinoita

Toivoton tilanne – yritykset eivät odota suhdanteen elpyvänVerkkouutiset
EK:n suhdannebarometri paljastaa, että yritykset eivät odota tuotannon elpymistä vielä lähiaikoina.

Jan Hurri: Outo tilanne: Suomi tienaa nyt ottamalla velkaaTalSa
Politiikan paineet vaativat hallitusta karttamaan ja paheksumaan valtion velkaantumista. Talouden tosiasiat kannustavat kuitenkin ottamaan lisää velkaa, sillä miinuskorko on valtiolle ilmaista rahaa.

"Meillä on ongelmia"MTV
Presidentti Niinistön pysäyttävä puhe sanasta sanaan