In the wake of yesterday’s weaker employment report, the AUD/USD jagged down from around 7182 to 7140 and that’s proven to be a base overnight in a 30 point range, with no particular new ground broken on the top or the low side. LME base metal prices were practically unmoved, the VIX index is down slightly notwithstanding what’s proven to be a flat-to-softish session in US equities, while the iron ore spot price rose $0.79 yesterday in China to $47.14.

It’s been a similarly contained session for the remainder of the major FX rates, though commodity currencies have in the latter part of the NY session given back earlier gains in the wake of signs of renewed oil price weakness (or at least enthusiasm for production cuts waning).  Earlier strength in the commodity-linked FX rates helped to support the Aussie. US Treasury yields in net terms have eased, 2s by 4 basis points and tens by 7 basis points as US data showed no new clear direction with a virtually steady Philly Fed index in February and somewhat lower again levels of weekly jobless claims at 262k, down from 269K into the week of the February payrolls survey, a turn back down in oil investor sentiment in energy and other stocks and supporting bonds.

Both WTI and Brent are, in net terms, little changed from where they were in late Asia trade yesterday when the market was getting bulled up short-covering and hopes of a deal to limit production but have pulled back in afternoon trade. In late New York trade, WTI is back at $30.77, giving back most of the gains made in late Asian trade yesterday with oil at one stage having looked like it could test $32 a barrel. Surprise, surprise, the Saudi Foreign Minister has said that other nations can freeze production but the Saudis will not take part, all but scuttling hopes of cobbling together a deal to restrict global production.  Also dampening sentiment, the OECD cuts its global growth forecasts by 0.3% to 3%, warning of markets at risk and FX volatility.

It’s been something of a whippy night for Sterling as the EU Leaders Summit started its two day meeting.  This scribe heard one political commentator describe this summit as genuinely “exciting” with the UK’s membership of the EU at stake (and of course discussion of the refugee crisis).   Various leaders have been providing semi-optimistic media grabs ahead of the Summit that a deal with the UK can be struck to satisfy the political aspirations of Europe and the UK, one that UK PM Cameron will get the concessions on he is seeking and then be able to campaign for a “yes/stay in” vote in a UK Brexit referendum.  More volatility on this front ahead we’d suggest.  Sterling did get a kick on hopes of a deal at the Summit but there’s lots of water still to go under the bridge ahead of a possible June UK referendum.

Coming Up

That’s it for local data this week, with a quiet start to next week, apart from a speech from the RBA’s Guy Debelle on Monday morning. Wages, construction work done, and Capex are due Wednesday-Thursday next week.

First up this morning is an outlook speech from San Francisco Fed President John Williams 7.30 a.m. who, although not a voting member on the FOMC this year, has views that the regarded as being closely aligned with Fed chair Yellen’s thinking about US economy. Japan’s all industry activity index this afternoon might draw a half glance from the market.  More interest in the UK tonight not only with the EU leaders Summit but with their January retail sales report, the market expecting a bounce back after December’s 0.9% decline.  In the US Fed President Mester (voter) is speaking along with the release of January CPI, not the Fed’s absolute preferred measure of consumer inflation, though one that is showing underlying CPI at 2.1% for December (towards the top of the various underlying measures), an annual rate that is expected to carry over into January on the basis of expected 0.2% gain. For CAD watchers, there is the December retail sales report due, along with the January CPI.

Overnight

On global stock markets, the S&P 500 was -0.30%. Bond markets saw US 10-years -6.73bp to 1.75%. On commodity markets, Brent crude oil -1.07% to $34.13, gold+2.1% to $1,236, iron ore +1.7% to $47.14. AUD is at 0.7154 and the range was 0.7133 to 0.7185..

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• Markets Today: 19 February 2016 (PDF, 1MB)

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