EURJPY TECHS: Key Medium-Term Support Remains Exposed

• A steady session for the Dollar overnight, similar to what has been witnessed in Govies, looking at multi Assets.
• The Early story is squarely on the Equity spike overnight, this has been led by the Tech sector and the Dutch ASML recording a beat in early.
• Looking at the Dollar against G10s, it is mixed, the Pound is up 0.24% and at the other end of the spectrum, the Aussie is down 0.16%.
• Equities are always a potential driver for the Dollar, and besides the Tech sector, Luxury Goods will also be watched on the open, since LVHM's earnings disappointed last night.
• In Terms of Dollar Technical, most pair/crosses still trade within ranges, the most traded EURUSD pair trades in a very tight 18 pips range, although it is testing session low now.

• Chancellor of the Exchequer Rachel Reeves due to deliver a speech regarding how the government intends to boost economic growth this morning, with Politico reporting a time of around 10:00GMT.
• Markets remain sensitive to anything fiscal at present, but there is likely to be little of huge significance for markets in the speech today.
• The government has already released some excerpts from the speech (see here), where Reeves says "I am going further and faster to kick start the economy" with plans "boost the UK economy by up to £78 billion by 2035."
• There is expected to be a focus on planning reforms to boost house construction with the potential for Reeves to announce the construction of a third runway at Heathrow airport, mooted as a long-term boost for the UK economy by proponents but opposed by many local MPs and environmentalists. Investment in water infrastructure and a redevelopment of Old Trafford are likely to feature too, alongside plans to boos the Oxford-Cambridge corridor.
• Note that the OBR will deliver the first round of its updated forecast to the Treasury on Tuesday next week (4 February).

This morning’s growth and lending data won’t affect the outcome of today’s Riksbank decision, where a 25bp cut is widely expected. The Q4 flash GDP indicator was 0.2% Q/Q (vs 0.3% cons and prior) and 1.1% Y/Y (vs 1.1% cons, 0.7% prior). This was below the Riksbank’s 0.4% Q/Q and 1.2% Y/Y forecast from the December MPR. 

• As always, the flash GDP reading should be taken with a generous pinch of salt – it has been prone to large revisions in recent quarters.
• Following a weak October, the November and December readings helped growth inch into positive territory in Q4. The December monthly GDP indicator was 0.7% M/M (vs 1.3% in Nov, -0.3% Oct).
• No details are provided with the flash releases, with December consumption and private sector production data due on Feb 10.
• Riksbank policy rate cuts have started to feed through to household and business lending. In December, household lending (the majority of which is mortgage lending) grew 1.6% Y/Y for the second consecutive month. Meanwhile, business lending was -0.8% Y/Y (vs -1.4% prior), the highest reading since December 2023.
• See here for MNI’s preview of the Riksbank decision at 0830GMT/0930CET