Equity markets climbed in Europe yesterday
Ichimoku Kinko Hyo CNH/JPY: The CNH/JPY pair is trading above the Kumo…
EUR/USD: US data and fear of the Delta variant to push the pair lower
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 gains but continuous to stand above the key 50% retracement area.
EU Market View
European stock markets are seen opening mixed Friday, stabilizing after the previous session’s sharp losses ahead of the release of Eurozone inflation data for June. European markets struggled on Thursday, with the main indices all dropping around 1%, weighed down by concerns that rising Covid cases will stunt global growth just as central banks start to fret about soaring inflation.
Earlier Friday The Bank of Japan cut this fiscal year's growth forecast on Friday but maintained its view the economy was headed for a moderate recovery, a sign monetary policy will be in a holding pattern for some time. The BOJ also released an outline of its new scheme aimed at boosting funding for activities combating climate change, which will offer banks long-term loans at zero interest. The climate scheme will be launched this year and last until fiscal 2030. The BOJ will offer funds to banks that extend green and sustainability-linked loans, as well as invest in green bonds and sustainability-linked bonds. Transition finance loans will also be applicable for the scheme.
The dollar was headed for its best weekly gain in about a month on Friday, supported by investors' drift toward safety as rising COVID-19 infections loomed over the pandemic recovery, while a hot inflation reading sharply lifted the New Zealand dollar. Solid U.S. data and a shift in interest rate expectations after the Federal Reserve flagged sooner-than-expected hikes in 2023 have put a floor under the greenback over the past month and made investors nervous about shorting it. The dollar was broadly steady elsewhere on Friday but heading for weekly gains, with a rise over the week so far of roughly 0.5% against the euro and sterling and 0.7% against the risk-sensitive Australian dollar.
Treasuries have rallied for a third week in a row with no obvious catalyst but in tandem with worries that the new infections could dent recovery progress, that slowing Chinese growth puts the brakes on global growth and that U.S. inflation looks transitory, or at least under central bankers' control.
EU Key Point
- Western Germany floods reportedly claims 81 victims, more than 1,000 missin
- Japan banking regulator creates new section overseeing digital currencie
- RBNZ's core inflation measure for Q2 2.2% (prior 2.0%).
- BOJ statement - No change to main policy setting
- Australia coronavirus lockdowns - HSBC expect Australia's economy to stall.
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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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