Wednesday January 26th Morning Update

The US$ stronger, oil prices and equity markets and US yields are higher. Market is eyeing todays Fed reserve and BoC’s interest decision and more importantly the minutes which will give guidance as to their thinking. Expectations are that the Fed will signal rate increase to start in March, Elevated US Treasury bond yields should continue to underpin the greenback. In other news. Biden warns Putin with sanctions as West steps up Ukraine defenses. US, Europe plan for any cutoff of Russian natural gas. OPEC+ said to stick with plan for modest hike in output. Covid. Current wave could be prolonged by new strain of Omicron variant,The COVID-19 booster drive in the U.S. is losing steam. Netherlands to ease restrictions despite rising case numbers. China eases Covid testing rules for participants amid rise in cases. In currency markets.  Australia’s headline CPI surged in 4Q21. More importantly, core CPI surpassed the midpoint of the Reserve Bank of Australia (RBA)’s 2-3% target leading expert believe that the RBA will cease bond purchase in February.

A 25-bps hike by the BoC is 70% priced in by the futures market, leaving some upside potential for the Loonie should they raise rate. Still geo-political concerns and its effect on oil remains a major driver in the currency’s direction. Support rises to 1.2545 while resistance resets to 1.2661.

German government cuts 2022 GDP growth forecast to 3.6% from 4.1% and expect consumer price inflation to accelerate to 3.3% in 2022 from 3.1% in 2021. EUR/USD is trading in the negative territory below 1.1300 as markets wait for the FOMC to announce its policy decisions following its two-day meeting. Support adjusts to 1.1233, while resistance sets at 1.1335.

EUR/GBP eases to 0.8365 amid an inactive trading session. EURGBP remains in an .8300-.8400 range. Support holds .8280 (1.2077) while resistance remains at .8400 (1.1905)

U.K.’s Boris Johnson braces for ‘partygate’ investigation report which could come out as early as today. Concerns over Brexit and UK politics could cap the upside in the pound. Traders remain in a wait-and-see mode ahead of the Fed decision. Support lowers to 1.3457 while resistance remains at 1.3555.

Other Ccy levels vs C$ – EURCAD 1.4181, GBPCAD 1.6988, AUDCAD.9016, CADCHF.7319, CADJPY 90.80, CADTHB 26.19, CADCNY 5.0254, CADNOK 7.0707, CADSEK 7.3619 CADDKK 5.2462, CADZAR 12.0513.

Other Ccy levels vs US$ – JPY 114.15, CHF.9201, AUD.7172, NZD.6692, CNY 6.3189, MXN 20.577, INR 74.8520, PLN 4.0660, CZK 21.72, ZAR 15.1595, ILS 3.1816, AED 3.6726, KWD 0.30199.

Other Major X levels – EURCHF 1.0378, EURJPY 128.76, EURSEK 10.4410, EURNOK 10.0276, GBPCHF 1.2439, EURAUD 1.5723, GBPAUD 1.8840, AUDCHF.6601, AUDJPY 81.89, CHFJPY 124.05.