Ichimoku Kinko Hyo CNH/JPY: The CNH/JPY pair is trading above the Kumo…
EURGBP moved somewhat lower
Information is not investment advice
Ichimoku Kinko Hyo
EUR/JPY: The EUR/JPY pair is now trading within the Kumo. An upward wave would lead the echange rate above the upper level of the cloud, with immediate target the previous peak. On the other hand, a failed attempt to move higher will push prices to find support at the lower level of the cloud.
European Market View
COVID-19 cases are on the rise again in different parts of the world and countries are taking measures to deal with the problem. After rising contaminations, the Netherlands has decided to enter a three-week partial lockdown forcing bars, restaurants and supermarkets to close at 20.00 and non-essential stores to close at 18.00. Also, spectators will be banned from sporting events and people are being urged to work from home. This illustrates the rising risk of new lock-down measures being put in place in developed countries. Also, Austria and Germany have issued tougher measures.
Possibly the next 3-6M will be challenging in Europe and in the US and could expect many countries will re-introduce (or tighten) some of the soft measures like face mask requirements and COVID-19 green pass.
In the equities space last week, we saw both defensives/cyclicals and growth/value among winners- and losers. On Friday, preference reversed for the week, with growth names generally outperforming. Communication services and tech were among the leaders, while value defensives such as energy, utilities and consumer staples lagged behind. Asian markets are mixed this morning, despite the strong Chinese macro numbers. US futures slightly higher.
In the FX space Friday’s session was generally characterised by modest USD gains and both EURUSD and EURGBP moved somewhat lower.
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?