Ichimoku Kinko Hyo CNH/JPY: The CNH/JPY pair is trading above the Kumo…
EUR/USD will likely weaken further
Information is not investment advice
Ichimoku Kinko Hyo
NZD/JPY: The NZD/JPY pair is now trading above the cloud. An upward wave would lead the exchange rate to eliminate the Kijun sen and Tenkan sen levels, with immediate target the previous peak. Alternatively, further drop of the market will lead the pair to test the upper level of the Kumo.
European Market View
Friday's key release will be the US labour market report, which is important because it will shed some light in regards to whether the Fed starts tapering in November as planned.
In the equities space risk appetite returned to markets yesterday. Risk on was evident, with equities bouncing, most sectors where trading higher and cyclicals beating defensives. Europe outperformed the US after lagging in the prior session. Major U.S. indices closed as follows: S&P500 up 0.8%, led by consumer discretionary and materials, NASDAQ 1.1%, Dow 1%. Positive sentiment continuing in Asia this morning, with Chinese markets reopening 0.5% higher after the long Golden Week holiday. In the U.S., futures point also slightly higher.
In the FX space, EUR/USD will likely weaken as payrolls confirm Fed can go ahead with tapering.
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.