Ichimoku Kinko Hyo CNH/JPY: The CNH/JPY pair is trading above the Kumo…
Equity markets around the world were broadly lower yesterday
Information is not investment advice
Ichimoku Kinko Hyo
USD/JPY: The USD/JPY pair is now trading within the cloud. Any decisive movement to the south will push the exchange rate to exit the Kumo. On the other hand, if the buyers manage to withstand the sellers’ pressure, the currency pair will attempt to test the upper level of the cloud.
European Market View
Equity markets around the world were broadly lower yesterday with the energy sector going against the trend. One very big change from the movements observed on Monday is that risk appetite took a big hit yesterday and the cyclical value trade change to a defensive value trade as yields continued higher. Risk off move also seen in the VIX index rising to 23. In US FANMAG broadly lower while European tech companies took the biggest beating yesterday. In the U.S. major markets ended with the Dow -1.6%, S&P 500 -2.0% and NASDAQ -2.8%.
The negative tone has continued in Asia this mooring with most indices down 1-2%. Futures in Europe are flat this morning while optimism is creeping back in US with futures being up roughly 0.5%.
In the FX space, the broad-based risk-off mood as well as the spike in market volatility weighed heavily on risk-, commodity- and USD-rate sensitive currencies yesterday. Most heavily hit in G10 space was the GBP but also AUD, NZD and NOK posted large losses.
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.