Ichimoku Kinko Hyo CNH/JPY: The CNH/JPY pair is trading above the Kumo…
EUR/USD: Targets significant higher prices
Information is not investment advice
Ichimoku Kinko Hyo
AUD/JPY: The pair is trading above the cloud. An upward pressure would lead the pair to exit further the cloud, confirming a bullish outlook.
XAG/USD: Silver continuous to stand above 23.6% retracement area. Silver has entered a consolidation phase.
EU Market View
Asia-Pac stocks traded higher after taking the impetus from the encouraging performance in the US. Looking ahead, highlights include German IFO, US Consumer Confidence, Fed's Evans, Barkin, Quarles, ECB's Lane, BoE's Tenreyro speeches.
The dollar floated at the bottom of its recent range on Tuesday, as softer-than-expected U.S. data and fresh insistence from Federal Reserve officials that policy would stay on hold allayed investor fears about inflation forcing interest rates higher.
The British pound rose, inching back toward the three-month high reached at the end of last week. The Turkish lira edged slightly lower, largely unfazed by the removal of one of the central bank's four deputy governors.
Investors are heavily short dollars in the belief that low U.S. rates will drive cash abroad as the world recovers from the pandemic. They have become leery of adding to positions after an April leap in inflation cast doubt on the policy outlook, but seemed to find reassurance in data and Fed remarks overnight. Traders have a laser-focus on inflation, the policy response to it and any data or remark that could shed light on either since huge bets on stocks, bonds and currencies are all predicated on the assumption that low rates are here to stay for a while.
The German economy shrank by a bigger than expected 1.8% on the quarter in the first three months of the year as coronavirus curbs crushed private consumption in Europe's largest economy, data showed on Tuesday.Ahead on Tuesday is a German business survey, a series of U.S. housing updates and a handful of policymaker speeches in Europe, Britain and the United States, which will all be parsed for a reading on inflation.
Gold was down on Tuesday morning in Asia, but remained near its highest level in more than four months, as investors digested comments by U.S. Federal Reserve officials that sought to assuage inflation concerns. Fed Governor Lael Brainard, Atlanta Fed President Raphael Bostic and St. Louis Fed President James Bullard said a surge in prices, due to bottlenecks and supply shortages as the number of COVID-19 cases continue to fall, would not be surprising. However, they also reiterated that any price gains are likely to be temporary.
EU Key Point
- Economic data coming up in the European session.
- Fed speakers stick with the theme that inflation should be temporary.
- Germany reports 1,911 new coronavirus cases, 33 deaths in latest update today.
- China State Planner once again says will address abnormal fluctuations in commodities such as iron ore, copper, corn.
- Turkey has removed (replaced) one of four central bank deputy governors.
- Japan finance minister Aso confirms extension of zero-interest loan scheme.
- Brexit - EU's von der Leyen says there is no alternative to Irish protocol.
- EU sanctions Belarus - says Belarus attacked the EU.
- Japanese media report that the period of zero-interest loan program is to be extended.
- US Republican Senator says he is disappointed with infrastructure discussions.
- Fed's George says she is not dismissing the risk of higher inflation.
- US Dollar Index challenges monthly lows near 89.70.
- AUD/USD: Off intraday high below 0.7800 as US dollar marks corrective pullback.
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.
Last year was tough for the Japanese yen. USDJPY gained more than 30% over 2022, striking above 150 in October. While anticipation of slower Fed rate hikes pulled the pair below the 130 level at the start of 2023, the speculations over the destiny of BOJ’s yield control policy grabbed the attention of the Japanese assets in the middle of January. What lies ahead for traders of the Japanese yen?