Shutdown Off, Risk On

A deal to avoid a US government shutdown continues to lift risk assets, helping the S&P 500 to close above the 200-day moving average. NZD is the top performer after the RBNZ explicitly stated the odds of a rate cut have NOT increased, defying expectatations that it's changing tack as did the Fed and RBA. US CPI is up next, with the headline figure seen at 1.5% from 1.9% and core at 2.1% from 2.2%. A new update on EURUSD for Premium subscribers will be issued ahead of the NY bell.

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Optimism about global growth and an apparent deal to end the US government shutdown have helped boost sentiment. Trump said he's unhappy there isn't more money for his border wall but hasn't said he will veto it. He could be expected to later use his executive authority to fund additional border measures.

Treasury yields climbed and the S&P 500 surged 35 points to 2744, finishing just above the 200-DMA. SPX futures are now at 2752. That level had called a rally last week. Global stocks joined in the rally and the US dollar, yen and Swiss franc softened in a classic risk-on move.

In the oil market, Saudi Arabia's energy minister said they could cut production by an additional 500k bpd in March and that led to a rally in WTI to $54.00. There's a minor double bottom forming at $51.23 that will be a spot to watch this month. USD/CAD fell back to Friday's post-jobs report lows.

UK CPI slowed to 1.8% in Jan from 2.1%, undershooting expectations of a 1.9% reading. Core CPI held at 1.9% y/y as expected. 

Carney reiterated Tuesday that modest tightening over time is likely to be needed but falling inflation numbers and endless Brexit uncertainty argue against it. On that front, May's latest meaningful vote was delayed until late in the month and there were reports that Boris Johnson could support the current deal with a firm expiration date for the Irish backstop. There was also talk that May could quit in the summer once a deal is struck.