Ichimoku Kinko Hyo CNH/JPY: The CNH/JPY pair is trading above the Kumo…
EUR/GBP : vulnerable for further downside
Information is not investment advice
Ichimoku Kinko Hyo
CAD/JPY: The pair is trading below the cloud. A downward pressure would lead the pair to exit further the cloud, confirming a bearish outlook.
XAG/USD: Silver continuous to stand on 23.6% retracement area. Bears have returned during the last hours and send price lower.
EU Market View
Asian equity markets were subdued following the losses on Wall St; US equity futures traded flat overnight. Asian shares retreated slightly on Wednesday with investors wary of any hint of hawkishness from the U.S. Federal Reserve given lofty asset valuations rely so heavily on an endless supply of super-cheap money. A looming data dump on Chinese retail sales and industrial production offered another reason for caution, with some modest slowdown in annual growth expected.
The dollar edged marginally lower in early European trade Wednesday, but remained near a one-month high as traders warily await the latest communications from the Federal Reserve following the recent jump in U.S. inflation. The U.S. Federal Reserve concludes its latest two-day meeting later Wednesday. Although the two-day meeting is expected to culminate in an unchanged decision on interest rates and monthly bond purchases, the backdrop of sharply rising inflation as the country’s economy makes a solid recovery appears to be keeping traders on edge. Further evidence of these inflationary pressures, and thus raised fears of a hawkish surprise, emerged Tuesday, with data showing wholesale inflation jumped to record levels, just a week after consumer price rose to their highest level since 2008.
Balancing this out, to a degree, May’s retail sales data came in weaker than expected on Tuesday, pointing to softer consumer spending, the backbone of the economy, even if April’s release was revised higher.
Still, even if there are some concerns over the Fed turning hawkish, the moves in the foreign exchange market have been limited of late, suggesting many still have faith in the Fed's commitment to provide clear signaling before making a move on monetary policy. The dollar held near a one-month high against a basket of currencies on Wednesday as investors tried to ascertain if the Federal Reserve might alter the language on its stimulus following a recent jump in U.S. inflation. The Federal Open Market Committee has "indicated it will first offer ample notice to the market before beginning the taper conversation and furthermore give ample warning before formally announcing intentions to taper, a process which itself will take quite some time.
Looking ahead, highlights include Chinese Industrial Output and Retail Sales, UK inflation, Canadian CPI, FOMC Policy Decision and Fed Chair Powell, US-Russia Summit, UK Economic Update (Treasury), ECB’s Elderson, de Guindos.
EU Key Point
- China retail sales, industrial production data due at the top of the hour
- UK May CPI +2.1% vs +1.8% y/y expecte
- UBS raises Brent oil forecast for September from $75 to $7
- Germany reports 1,455 new coronavirus cases, 137 deaths in latest update today.
- China said to order state enterprises to limit exposure to overseas commodities market
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.