Ichimoku Kinko Hyo CNH/JPY: The CNH/JPY pair is trading above the Kumo…
Equity markets kept declining on Tuesday
Information is not investment advice
Ichimoku Kinko Hyo
NZD/JPY: The NZD/JPY pair is trading between the Tenkan sen and Kijun sen level. An upward wave would lead the rate above the Tenkan sen level, targeting the previous peak. A drop of the market below the Kijun sen level will push prices to find support at the upper level of the Kumo.
Equity markets kept declining on Tuesday, driven mostly by hawkish tone from the Fed and gloomy vaccine outlook from a major vaccine company. Cyclicals held up the best, especially long duration/growth. Tech, autos and retail were among the best sectors, while telecom and utilities sold off -3% each. Major indices such as the S&P500 and Dow Jones closed down -1.9% while NASDAQ -1.6%. The sentiment is reversing in Asia this morning though and US futures have turned positive.
In FX space EURUSD reversed some of the recent gains and risk sensitive currencies such as NOK or the SEK came under pressure. The market volatility this week underlines the market uncertainty that gets created by the combination of Omicron, Fed rhetoric and recent data surprises like European inflation.
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.