Ichimoku Kinko Hyo CNH/JPY: The CNH/JPY pair is trading above the Kumo…
Stocks were moderately higher on Tuesday
Information is not investment advice
Ichimoku Kinko Hyo
EUR/JPY: The EUR/JPY pair is now trading slightly above the cloud. If the pair manages to withstand the sellers’ pressure, will fuel the pair to test the previous top. On the other hand, a downward wave would push the pair within the Kumo.
European Market View
Today's main event will be the FOMC meeting, where is expected that the Fed will announce tapering of their QE asset purchases. Tapering is expected start immediately in November with a pace of USD 15 billion per month, and with risks tilted towards a faster pace. The reaction in EURUSD to tonight's FOMC meeting may be volatile but spot is likely headed lower.
As for the Bank of England meeting, a dovish BoE may send EURGBP higher.
In the equities space, stocks were moderately higher on Tuesday, which was enough to tick in on new all-time highs. The inflation trade reversed somewhat with growth and quality among the outperformers, such as tech and health care. Dow Jones and S&P 500 closed up 0.4%, and NASDAQ 0.3%.
This morning, U.S. futures point lower in line with Asian markets down between -0.5% and -1%.
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.