Ichimoku Kinko Hyo CNH/JPY: The CNH/JPY pair is trading above the Kumo…
AUD/JPY: Risk keeps more cautious before NFP
Information is not investment advice
Ichimoku Kinko Hyo
AUD/JPY: The pair is trading below the cloud. A downward pressure would lead the pair to exit further the cloud, confirming a bearish outlook.
XAU/USD: Gold facing a further weakness and touches another full retracement area. Gold continues to touch session lows for another day.
US Market View
U.S. stocks are seen opening mixed Friday, in cautious trading after the previous session’s sharp sell-off, ahead of the closely watched monthly employment report. Stocks could rebound Friday, but any gains look tepid as U.S. Treasury yields remain elevated. Federal Reserve chair Jerome Powell shrugged off investor fears about rising inflation, stating on Thursday that the central bank’s ultra-loose monetary policy was here to stay given the uneven economic recovery.
In the corporate sector, the big tech names will again be in focus as investors think twice about owning high valued companies like Tesla, which is now 30% lower than its record high earlier this year.
Action in stocks and bonds seems likely to remain muted at least until 8:30 AM ET, when the monthly labor market report will be released. Analysts expect the U.S. economy to have added 182,000 nfp in the month through the middle of February, which would represent a second straight monthly improvement in hiring. However, analysts will also be watching what happens to the labor force participation rate, which fell to its lowest since June in January as discouraged workers stopped looking for work.
USA Key Point
- Risk keeps more cautious, Treasuries calmer for now.
- Dollar rallies further on post-Powell momentum.
- The Fed will inevitably move to yield curve control.
- EUR/USD falls to fresh three-month lows as the dollar holds firmer on the day.
- USD/JPY extends upside run to highest levels since June last year.
- OPEC keeps the oil party unstoppable.
- Germany January factory orders +1.4% vs +0.5% m/m expected.
- US futures creep higher ahead of North American trading.
- Cable slumps to three-week low amid dollar strength
The first FOMC meeting comes after a buildup of anticipation from traders and investors alike, as the markets await what posture the Fed will take regarding the interest rates; would there be a hike or a cut in interest rates? Recall that the Federal Open Market Committee had previously ended the year 2022 with a 50bps hike, and an indication from Powell, the committee chairman, that the Fed could consider raising interest rates by 75bps in the course of the year 2023.
Western countries are trying to find other options for oil and gas supplies after a 10th package of sanctions, which will put more pressure on Russian oil and decrease global oil supply. Italy, for example, is in talks with Libya.
Last year was tough for the Japanese yen. USDJPY gained more than 30% over 2022, striking above 150 in October. While anticipation of slower Fed rate hikes pulled the pair below the 130 level at the start of 2023, the speculations over the destiny of BOJ’s yield control policy grabbed the attention of the Japanese assets in the middle of January. What lies ahead for traders of the Japanese yen?