Fri, Jan 22, 2021 @ 22:35 GMT
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Sunset Market Commentary

Markets January PMI’s confirmed the gut feeling of an economic setback caused by fresh and extended lockdown measures to fight Covid-19 (mutants). The EMU composite PMI declined from 49.1 to 47.5, broadly in line with consensus. The underlying divide between strength in the export-oriented manufacturing sector (54.7 from 55.2) and...

Dollar Rebounds Broadly as Risk Appetite Recedes

Dollar rebounds broadly today following receding risk appetite. Investors are apparently paring their gains in stocks. Swiss Franc and Euro are the next strongest, followed by Yen. On the other hand, Australian Dollar and Sterling are the worst performing. In particular, the Pound was weighed down by sharp deterioration...

Euro Rebounds Against While Stock Traders Take Profit

The forex markets are reversing some of this week moves today, as stock investors are also taking some profits ahead of the weekend. Euro is the better performing so far, followed by Swiss Franc, Dollar and Yen. Meanwhile, Sterling and commodity currencies are the weaker ones. As for the...

Japan CPI core dropped to -1% yoy in Dec, worst since 2010

Japan CPI core (all item ex-fresh food) dropped further to -1.0% yoy in December, down from -0.2% yoy, but was above expectation of -1.1% yoy. That's still the biggest annual decline in core inflation since September 2010. Headline CPI (all items) dropped to -1.2% yoy, down from -0.9% yoy....

Japan PMI manufacturing dropped to 49.7 in Jan, short-term activity undoubtedly hampered by rising coronavirus cases

Japan PMI Manufacturing dropped to 49.7 in January, down from 50.0, back in contraction. PMI Services dropped to 45.7, down from 47.7. PMI Composite dropped to 46.7, down from 48.5. Usamah Bhatti, Economist at IHS Markit, said: "Short-term activity will undoubtedly be hampered by rising coronavirus disease 2019 (COVID-19) cases,...

Central Banks Ready and Willing

Stock markets are broadly flat on Thursday as numerous central banks held their first policy meetings of the year and earnings season continued. So much focus has been on the transition in Washington and Joe Biden's inauguration but today we've had multiple major monetary policy meetings, albeit no action from...

Euro Recovers as ECB Sees Less Pronounced Downside Risk, Dollar Softens after Jobless Claims

Euro recovers mildly in early US session, after ECB said downside risks to the economic outlook are less pronounced. Though, it remains one of the worst performing for the week, together with Dollar, Yen and Swiss Franc. The greenback is clearly still under pressure for now, after worst than...

BoJ Kuroda: Risk of sliding back into deflation is not high

In the post meeting press conference, BoJ Governor Haruhiko Kuroda admitted that "output gap is worsening sharply at present". However, they won't have a "huge immediate negative impact on medium- and long-term inflation expectations". "I don't think the risk of Japan sliding back into deflation is high," he added. Also,...

Keep A Very Close Eye At Sterling

Markets The British pound unexpectedly took center stage yesterday. EUR/GBP declined sharply at the very start of the European open, temporarily breaking below key support at the 0.886 area. UK December inflation topped expectations but failed to explain the move from a timing-perspective. Moreover, with inflation still well below the...

Euro Vulnerable as ECB Awaited, Strong Risk-On Sentiment Continues

Euro recovers mildly today but stays as one the weakest, along with Dollar, Yen and Swiss Franc. Strong risk-on sentiments pushed major US indices to new records overnight. Commodity currencies are generally strong on the sentiments. Canadian Dollar was additionally lifted by the not-so-dovish BoC statement, but it's awaiting...

Japanese Yen Gains After The Bank Of Japan Rate Decision

The price of crude oil declined in overnight trading after a sudden increase in US oil inventories. According to the American Petroleum Institute (API), the number of inventories increased by more than 2.5 million barrels last week. That was higher than the expected drawdown of more than 300k barrels....

BoJ kept policy unchanged, raised growth fiscal 2021, 2022 growth forecasts

BoJ left monetary policy unchanged today as widely expected,. Under the yield curve control framework, short-term policy interest rate is held at -0.1%. The central bank will continue to purchase unlimited amount of JGBs to keep 10-year yield at around 0%, with some fluctuations allowed. Goushi Kataoka dissented again...

Japan posted first annual export growth since 2018

In non seasonally adjusted terms, Japan's exports rose 2.0% yoy in December to JPY 6.71T, slightly below expectation of 2.4% yoy rise. But that's still the first annual growth since November 2018. Imports dropped -11.6% yoy to JPY 5.96T, above expectation of -14.0% yoy. Trade came in at JPY...

Yellen Stimulates Markets

Yellen says more stimulus on its way Wall Street got back to business as usual overnight, buying equities and selling the US dollar as Janet Yellen, in her Treasury Secretary selection testimony, told them everything they wanted to hear. They wanted to hear more stimulus, and Ms Yellen delivered 1.9...

Inauguration Day In The US

Market movers today Today's key event is President-elect Joe Biden's inauguration. Normally this is just a formality but the concern is whether there will be another riot on the back of the inauguration. This, however, should not cause any major market reaction, in our view. We still think a...

Bank of Japan: Yen at the Mercy of Global Forces

The BoJ is expected to take no action when it concludes its meeting early on Thursday, despite an escalating covid outbreak and a deflationary storm hitting Japan. In fact, some reports suggest the BoJ is considering scaling back some of its ultra-aggressive policies, but admittedly, this is not the...

China GDP Outperforms

China starts week with strong data China’s GDP for Q4 showed an increase of 6.50% YoY for Q4, leaving China on track to expand by 2.30% for 2020. Industrial Production rose by an impressive 7.30% as the rest of the world’s insatiable demand for Made in China showed no signs...

The Dollar Could Retain The Benefit Of The Doubt Today

Markets Markets finished the week with a cautious risk bias last Friday with Biden's $1900 billion stimulus plan lifting spirits only temporarily. Its announcement was the market's cue for some profit-taking while pondering the way forward. The narrowest Senate majority possible won't make it easy for the plan to be...

Week Ahead – Earnings Season in Focus

Optimism remains despite Covid-19 surge Earnings season is under way and will become an increasing focus in the coming weeks. New variants of Covid-19 are causing major surges across many countries which is forcing more severe and extended restrictions. Economies are coping well under the circumstances but will come under...

Week Ahead – ECB, BoJ and BoC Meet But All Eyes on US Capitol

The first of the new year’s central bank meetings will get under way next week and it will be a heavy schedule on the data front as well. The European Central Bank, Bank of Japan and Bank of Canada will almost certainly be debating the latest setback to the...

Euro’s Decline Continues as Italy Yields Jump, Dollar and Yen Mixed

Euro's broad based decline continues today, dragging down the Swiss Franc, and to a lesser extent Sterling too. Italy bench yield jumps sharply on increasing risk of fresh elections in the summer. On the other hand, commodity currencies continue to be strong, as supported by overall solid risk sentiments....

Euro Falls Against Commodity Currencies, Dollar Mixed Despite Pull Back in Yields

Selloff in Euro against commodity currencies appear to be a main theme today, in otherwise mixed markets. Dollar seems not too bothered by the pull back in treasury yields overnight and stays generally inside last week's range. Sterling is struggling to extend gain despite staying as the strongest one...

BoJ Kuroda: Stand ready to take additional easing steps without hesitation if needed

BoJ Governor Haruhiko Kuroda told branch managers in a quarterly meeting, "domestic economic conditions remain severe due to the impact of coronavirus infections at home and abroad but we have seen a pickup." "Japan's economy is likely to improve as a trend as the impact from the pandemic gradually subsides,...

Japan Extends State of Emergency

The Japanese yen has posted slight gains in the Wednesday session. Currently, USD/JPY is trading at 103.95, up 0.19% on the day. US dollar runs out of steam The US dollar’s rally has ended, as the currency is broadly lower on Wednesday. The US dollar index is currently at 90.26, after...

Interest Rates Again Have Become A Potential Driver For The US Currency

Markets The global reflation trade met some resistance since last week. There was no outright correction but some parts of the global pattern show signs of fatigue. The equity rally slowed, the USD decline took a breather ... The rise in US yields yesterday also met resistance. Initially, the uptrend...

Dollar Relatively Resilient in Strong Risk-on Market, Setting the Base for a Rebound?

Global investors were all in risk seeking mode in the first full week of 2021. That came despite all the headlines of surges in coronavirus infection and death, return to strict lockdowns, chaos in Washington and Joe Biden's certification as US President-Elect. Dollar didn't perform too well but there...

Week Ahead – An Extraordinary Start to the Year

Attention slowly shifting from US politics What an extraordinary start to the year. While next week should be much quieter, it won’t be without action. US politics is unlikely to go quiet with talk continuing of possible impeachment proceedings against President Trump, Covid is wreaking havoc once again and earnings...

Tokyo State Of Emergency Due To Covid: Where Does Yen Go From Here? USD/JPY, EUR/JPY

Japan has declared a second State of Emergency for Tokyo and 10 surrounding areas, which will last 1 month, amid a surge in coronavirus cases in the nation’s capital. Although Tokyo isn’t heading into full lockdown mode, the capital city has set curfews at restaurants and bars and will...

Dollar Recovering But No Follow Through Buying Seen Yet

Dollar extends recovery in European but there appears to be no follow through buying so far. It remains one of the weakest for the week, together with Yen and Sterling. Australian and New Zealand Dollars are paring some of this week's gains too. The US Senate and House certified...

Japan announced limited state of emergency in Tokyo, Saitama, Kanagawa and Chiba

Japan announced a limited state of emergency in Tokyo, and three neighboring prefectures of Saitama, Kanagawa and Chiba. 30% of the country's population are covered. The one-month emergency measure would run from Friday to February 7. Restaurants and bars are asked to close by 8pm. Residents should refrain from...