Equity markets climbed in Europe yesterday
Ichimoku Kinko Hyo CNH/JPY: The CNH/JPY pair is trading above the Kumo…
EUR/USD : continues to flirt with drop below post-FOMC low
Information is not investment advice
Ichimoku Kinko Hyo
USD/JPY: The pair is trading above the cloud. An upward pressure would lead the pair to exit further the cloud, confirming a bullish outlook.
Fibonacci Levels
XAG/USD: Silver continuous to stand above 50% retracement area. Bullish pressure is growing during the last hours and before NFP.
EU Market View
Global shares held near their record high on Friday as investors looked to U.S. jobs data for signs of balanced economic growth with tame inflationary pressure, while Chinese shares dropped a day after China's Communist Party celebrated its centenary. Gold was up on Friday morning in Asia, but investors avoided big bets ahead of the release of critical U.S. employment data that could sway the U.S. Federal Reserve’s recent hawkish stance on monetary policy.
Jobless claims continued their downward trajectory, touching their lowest level since the pandemic shutdown. Monthly nonfarm payroll data, due out later on Friday, is expected to show a 700,000 increase in June, and economists expect wage growth in June of around 0.4%. While the prospects of a strong economic recovery underpin equity markets, investors remained nervous that a sharp recovery from the pandemic could push up inflation to an uncomfortable level for the U.S. Federal Reserve.
Worries over the spread of the Delta coronavirus variant are emerging in various corners of global financial markets, even as U.S. stocks hover near record highs. The Delta variant is now present in over 90 countries and has become the most prevalent variant among new COVID-19 cases in the United States, according to California-based genomics company Helix. So far, however, it is hard to tell how much the new strain will disrupt the global growth rebound that has helped power risk assets higher in recent months.
The dollar has given back some of its recent gains in early European trade Friday, but remains near multi-month peaks against its major peers ahead of the release of the widely-watched monthly payrolls report. The dollar has been supported over the last couple of days by strong U.S. employment data, bringing into question the assumption that U.S. interest rates can stay at ultra-low levels for years.
Oil was up Friday morning in Asia, retaining its gains from the previous session after a disagreement within the Organization of the Petroleum Exporting Countries and allies (OPEC+) delayed a decision on output levels, which might cause an inflationary spike in prices if not resolved.
EU Key Point
- The drop below 1.3800 spells out some danger for cable.
- EUR/USD continues to flirt with drop below post-FOMC low.
- Australia will cut international arrivals by 50% due to COVID-19 delta strain risk.
- South Korea is likely to be the first Asian economy to start normalising monetary policy.
- Morgan Stanley expect the NPF (specifically the unemployment rate) to trigger a stronger US dollar.
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Brutal session in the equity markets yesterday
Ichimoku Kinko Hyo EUR/JPY: The EUR/JPY pair is now trading within the Kumo…
The U.S. economy added 390,000 jobs in May
Ichimoku Kinko Hyo USD/JPY: The USD/JPY pair is now trading above the Kumo…
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European Currencies Ahead of the Banks' Statements
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.
Will the FOMC Surprise the Markets?
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.
What awaits the Oil Market in February?
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.
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