The US$ steadies, oil prices up, equity markets rise, while US yields are mixed as markets take stock of the BoJ action. The Bank of Japan announced a bond buying operation today as the 10-year yield debt approached the new upper limit, while the nation’s 2-year yield rose above zero for the first time since 2015. The JPY vs US$ eased slightly after its biggest one-day rally since 1998 on Tuesday. The Bank of Japan is expected to keep phasing out massive stimulus in 2023 adjusting its dovish policy guidance. Global equity markets edge higher after the BoJ rocked markets by unexpectedly to loosen its policy on government bond yields, as equity markets face their patchiest yearly performance since 2008. Today sees US Consumer Confidence and in CAD BoC inflation report will both be in focus. In other news. Ukraine’s President Zelensky is enroute to Washington to meet President Biden and will address the US Congress today. The UK budget deficit soars to its biggest shortfall since 1993. Hearses queue at Beijing crematorium, even as China reports no new covid deaths. Recession, rate hikes seen jamming brakes on global 2023 earnings growth as US companies are forecast to have the slowest full-year profit growth since 2020 and the start of covid. In Currency markets. JPY holds on to its gains after the BOJ’s surprise policy tweak. CNY eases on covid concerns. NZD ease as they lose “Carry trade” appeal as Japanese yields rise. CNY weakens 0.2%, while Asian currencies are down 0.1% on average vs US$. Trading currencies are mixed with NZD tumbles 0.9%, ZAR weakens 0.25%, SEK eases 0.1%, while JPY, AUD, MXN, & CHF are flat, and NOK strengthens 0.4% vs US$.
Oil prices rise after data suggested a larger than expected draw in US crude stockpiles, but gains remain capped on China covid concerns & snowstorms in the US impacting travel. C$ holds near its weekly highs as markets focus on Canada inflation report. Markets are expecting Nov y/y inflation levels to ease to 6.7% vs 6.9% in October. A print over 6.7% could see C$ volatility increase and the loonie could rally through 1.3550. Support holds at 1.3570 while resistance remains at 1.3700.
EURCAD edges higher in quiet markets as investors focus on the upcoming Canadian inflation report. Support holds at 1.4440 while resistance remains at 1.4634 (Feb 4th highs).
Euro holds steady near 1.10600 amid consolidating holiday markets. Euro holds steady as currency markets consolidate amid an improving market mood and thinning holiday markets. Euro continues to find underlying support as the ECB appears comparatively more hawkish than its global peers. Intraday expect markets to remain within current ranges as markets await the US GDP report on Thursday. Support holds at 1.0560 while resistance holds at 1.0715.
GBPEUR weakens as domestic UK growth worries, and a bearish BoE remains a concern for investors. Support holds at 1.1420 (.8756) while resistance remains at 1.1600 (.8620).
GBP continues under selling pressure increasing strike action and ballooning domestic costs. The UK budget deficit soared to its biggest shortfall since 1993 with the rising cost of debt servicing and the high cost of subsidizing energy bills for consumers & businesses. The budget deficit hit GBP 22 bln which is almost triple the reading from just a year ago the office of national statistics said today. Focus shifts to tomorrow’s UK GDP report for direction. Support holds at 1.2050, while resistance remains at 1.2220.