Ichimoku Kinko Hyo CNH/JPY: The CNH/JPY pair is trading above the Kumo…
Aussie and USD among the winners in G10 currency space
Information is not investment advice
Ichimoku Kinko Hyo
USD/JPY: The USD/JPY pair is now trading above the cloud. An upward wave would lead the exchange rate to eliminate to test the previous peak. Alternatively, further drop of the market will lead the pair to test the upper level of the Kumo.
European Market View
Equities dropped yesterday, dragged mostly by US and Latin America while Europe and Asia were higher. The inflation/stagflation trade dominating once again as yields, oil and metals all were trading higher. Value outperforming growth with cheap energy stocks outperforming long duration tech stocks. Since the ECB meeting a month ago the German 10Y yields are 25bp higher and energy sectors have outperformed semiconductors with more than 30% in the Stoxx 600. In US yesterday, major indices ended the day as follows: Dow -0.7%, S&P 500 -0.7% and NASDAQ -0.6%. This morning Asian markets are mostly lower. European and US sentiment is negative as well with futures being 0.5-1% lower.
In the FX space, JPY was the big loser yesterday with USDJPY climbing north of 113.00 which is the highest level since 2018. On the other hand, Aussie and USD among the winners in G10 currency space as rising commodity prices and continued upwards pressure on US rates set the tone.
On Thursday, the 2nd of February, the Bank of England will publish its report concerning interest rates and inflation data for the Eurozone. Professionals and investors anticipate that Andrew Bailey’s lead team of policy makers will likely raise interest rates to 4%; the highest in over a decade, for the tenth time in a row.
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.