Ichimoku Kinko Hyo CNH/JPY: The CNH/JPY pair is trading above the Kumo…
Japanese Yen weakness gains momentum
Information is not investment advice
XAU/USD: Gold facing a further consolidation above 23.6% retracement area. Bulls try again to gain control.
Ichimoku Kinko Hyo
EUR/JPY: The pair is trading above the cloud. An upward pressure would lead the pair to exit further the cloud, confirming a bullish outlook.
US Market View
World stock prices held near record highs on Wednesday, while U.S. bond yields flirted with their lowest levels in a month, as investors bet the Federal Reserve is some way off from tapering its economic stimulus. U.S. payrolls data last Friday showed hiring did not grow as fast as economists had expected, despite growing signs of a labour shortage.
The U.S. central bank has said rises in inflation this quarter would be transient and would not threaten price stability, one of its key mandates. Thursday's U.S. consumer price data is expected to show the overall annual inflation rate rose to 4.7% and core inflation increased to 3.4%. While those readings will be well above the Fed's inflation target of 2%, many economists expect the inflation rate to ease in coming months, allowing the Fed to wait before taking any tapering measures.
Inflation data from China showed its producer price index jumped 9.0% from a year earlier, the highest in over 12 years, on surging commodity prices. The rise in consumer prices, however, was softer than expected, helping to mitigate concerns. While China's central bank is slowly scaling back pandemic-driven stimulus, top leaders have vowed to avoid any sharp policy turns and keep borrowing costs low.
The dollar clung to marginal gains in early European trade Wednesday, but volatility was limited with traders awaiting upcoming U.S. inflation data and an ECB meeting for clues about future central bank policy. The dollar has been on a downtrend for much of the last year, but investors are starting to get nervous that rampant inflation could force the Federal Reserve to taper back its ultra easy monetary policies earlier than previously guided. This would result in rising interest rates and a more buoyant greenback.
Thursday also sees the latest policy decision by the ECB, with the central bank widely expected to keep in place its ultra-loose monetary policies given the region has yet to generate inflation at anything like the levels seen across the Atlantic. That said, the euro is likely to be sensitive to changes in the bank's economic forecasts or any signal that the pace of bond buying could be reduced in months ahead.
USA Key Point
- Germany April trade balance €15.5 billion vs €16.3 billion expected.
- Germany reports 3,254 new coronavirus cases, 107 deaths in latest update today.
- China is considering price controls on coal prices.
- China state planner promises intervention to keep inflation in certain goods down.
- US Republican senators said made “a lot of progress” in infrastructure talk.
- UK Chancellor Sunak wants City of London exempt from G& new global minimum tax.
- US President Biden to meet with UK Prime Minister Johnson Thursday 10 June 2021.
- RBA Kent says expectations do not point to inflation rising above targets in a sustainable way
- US Senate votes to approve bill to help US compete with China.
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.