Wednesday 21st January: European Open Briefing

Global Markets:

  • Asian stock markets: Nikkei down 0.70 %, Shanghai Composite gained 2.20 %, Hang Seng rose 1.40 %, ASX rallied 1.40 %
  • Commodities: Gold at $1296 (+0.15 %), Silver at $18.10 (+0.75 %), WTI Oil at $46.90 (+0.90 %), Brent Oil at $48.40 (+0.40 %)
  • Rates: US 10 year yield at 1.797, UK 10 year yield at 1.541, German 10 year yield at 1.541

News & Data:

  • Bank of Japan keeps rates unchanged and QE at ¥80T
  • BOJ sees FY2015 core CPI at 1.0%; OCT forecast was 1.7%
  • BOJ: CPI likely to slow for time being reflecting energy prices, gains likely to be lower toward FY2015
  • BOJ: Underlying CPI trend remains unchanged
  • BOJ says that inflation expectations rising somewhat in the long term; to continue QQE until 2% inflation stable
  • BOJ voted 8-1 to keep asset purchase plan unchanged
  • New Zealand CPI q/q -0.2 %, Expected: 0.0 %, Previous: 0.3 %
  • New Zealand CPi y/y 0.8 %, Expected: 0.9 %, Previous: 1.0 %
  • Japan Industry Activity Index 0.1 %, Expected: 0.1 %, Previous: 0.1 %
  • Australia Westpac Consumer Sentiment 2.4 %, Previous: 5.7 %

Markets Update:

The Shanghai Composite recovered somewhat after the +7 % loss in yesterday’s trading session and most of the other major APAC indices are up on the day as well. The Nikkei fell after the Bank of Japan announcement, though there were no surprising comments and the decision to keep rates unchanged and QE at ¥80trln was expected by the market. Meanwhile, Gold and Silver continue to perform very well, with the former mentioned about to break the $1300 level. Oil prices remain heavy after another losing day, but both WTI and Brent were able to stabilize a bit in Asia.

In FX, the main data release overnight were the New Zealand inflation figures, which arrived lower than expected, at -0.2 % month-on-month and 0.8 % year-on-year. NZD/USD went for another test of the 0.7620 and it held for a third time. While a continuation of the current range seems possible, there are a decent amount of stops resting beneath the aforementioned level, which may attract price soon.

The Aussie Dollar was amongst the top performers overnight. AUD/USD hit a bottom of 0.8155 ahead of the Tokyo open and has been rising since then. It hit a high of 0.8220 so far and key resistance is now eyed at 0.8252. Should we take that one out, bulls will target the post-SNB high of 0.8293 next. To the downside, pivotal support at 0.8150 and then 0.8070. Meanwhile. the Canadian Dollar remains weak amid declining Oil prices + weak domestic data yesterday. USD/CAD broke above the 1.21 level and bids are said to be building in the 1.2040-50 area now.

USD/JPY fell to a low of 117.65 earlier, led by the decline in the Nikkei. Good support seen at 117.50 and then at 116.90. To the topside, 118.80 is the next hurdle for longs. EUR/USD continues to consolidate and is very likely to continue to do so ahead of the ECB tomorrow. GBP/USD however will see increased volatility today with the Bank of England minutes & employment data out at 09:30 GMT.

Upcoming Events:

  • 09:30 GMT – Bank of England Minutes
  • 09:30 GMT – UK Claimant Count Change (-25k)
  • 09:30 GMT – UK Average Earnings (1.7 %)
  • 09:30 GMT – UK Unemployment Rate (5.9 %)
  • 13:30 GMT – US Building Permits (1.3 %, 1.05mln)
  • 13:30 GMT – US Housing Starts (1.2 %, 1.04mln)
  • 15:00 GMT – Bank of Canada Interest Rate Decision (1.00 %)
  • 15:00 GMT – Bank of Canada Monetary Policy Report
  • 16:15 GMT – Bank of Canada Governor Poloz speaks
  • 21:30 GMT – New Zealand Business PMI

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