Ichimoku Kinko Hyo CNH/JPY: The CNH/JPY pair is trading above the Kumo…
The USD/JPY pair is now trading within the Kumo
Information is not investment advice
Ichimoku Kinko Hyo
USD/JPY: The USD/JPY pair is now trading within the Kumo. Further bearish sentiment will push prices below the cloud, targeting the previous low. Alternatively, an upward wave would lead the exchange rate to test the upper level of the Kumo. If the pair manages to withstand the sellers’ pressure, it will exit the cloud. The next resistance is seen at the previous peak.
The battle over the besieged South-eastern city of Mariupol continues after Ukraine refused to surrender by yesterday's deadline. Securing control over Mariupol would mark a key victory for Russia after it has moved the focus of its military operations to the East and South of Ukraine. Taking over Mariupol would enable a land bridge for Russia from the Donbass region to Crimea. Ukraine has said they are ready for a 'special round of negotiations' to protect civilians in Mariupol.
Elsewhere, the World Bank President, David Malpass, warned yesterday that the food crisis – which was triggered by Russia's invasion on Ukraine - is causing a 'human catastrophe'. He said food prices could increase by as much as 37% and that impacts will be magnified for the world's poor who will struggle to make ends meet. According to a UN food price index, food prices are at their highest since the records began 60 years ago.
In the equity space, stocks were mostly higher, but in a volatile session. Defensive stocks did better than cyclicals, and value outperformed growth although yields ticked lower. It is evident that there is a disconnect in the market and a reason behind it is that yields have not been rising due to macro, but monetary policy repricing and market fear for stagflation. Dow Jones closed +0.7% higher and S&P 500 -0.1% and NASDAQ -1.2%.
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.