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Market movers today

In the US, GDP figures for Q4 2022 are on the agenda today, where we look for growth of 2.8% q/q AR. It's worth noting though, that the relatively high figure largely reflects fairly strong October activity and the continuing positive contribution from net exports, while December data and most leading indicators suggest that private consumption growth will clearly slow down in Q1 23.

In Sweden, NIER's January confidence survey should give important signals of the economy, while the December trade balance appears unlikely to buck the previous 2022 trend with increasingly bigger deficits.

The 60 second overview

ECB: ECB's Nagel said she would not be surprised if interest rates rose further after March and thus made final hawkish comments to the market before the silent period begins today before next week's ECB meeting.

Commodities: Industrial metal prices have risen more than 8% this year. The reopening of Chinese economy and sign the global manufacturing cycle has turned encourages the market. In addition, the weaker dollar supports higher prices.

Canada: Bank of Canada hiked its key policy rate 25bp to 4.5% yesterday. The move was expected by the market, which was surprised by the central bank's decision to signal its plan to keep interest rates on hold and assess impact on the economy from higher interest rates.

FI: Rates markets were a tale of two stories yesterday, which in the end left European core rates unchanged on the day. Spreads widened somewhat to the periphery in a steepening move yesterday amid peripheral bonds underperforming as Spain revised its 10y bond supply higher to EUR13bn. The bond sell-off extended through the BoC's decision to hike 25bp yesterday. They expect to hold the rates while they assess the impact. ECB policy peak repriced slightly lower earlier on the day to 3.40% as ECB enters silent period today.

FX: The CEE currencies continue to do well while NOK, NZD and CAD all took a setback in yesterday's session. EUR/USD moved above 1.09 while EUR/GBP has fallen back to the 0.88 mark. EUR/SEK remains just north of 11.10 while EUR/NOK has moved back above 10.80.

Credit: On Wednesday, credit markets were in risk-off mode along with equities, likely weighing the prospects of a weaker than expected corporate earnings season and outlook for 2023. Itrax main widened 1.5bp to close at 80.5bp and Itrax Xover widened 6.0bp to close at 422.4bp. Despite the soft risk-asset sentiment, primary markets were well functioning with TDC Net (BB issuer rating) printing a 7 year EUR benchmark SLB at MS+285bp. Books were more than four times oversubscribed and the deal printed 35bp tighter than the IPT of MS+320bp.

Daily Pivots: (S1) 1.0873; (P) 1.0899; (R1) 1.0940; More...

Intraday bias in EUR/USD is back on the upside as rally is trying to resume. Current rise from 0.9534 should target 61.8% projection of 0.9630 to 1.0733 from 1.0482 at 1.1164 next. On the downside, though, break of 1.0765 support should now indicate short term topping, and turn bias back to the downside for 55 day EMA (now at 1.0582).

In the bigger picture, current development suggests that the rally from 0.9534 low (2022 low) is a medium term up trend rather than a correction. Further rise is in favor to 61.8% retracement of 1.2348 (2021 high) to 0.9534 at 1.1273 next. This will remain the favored case as long as 1.0482 support holds.

Daily Pivots: (S1) 1.2321; (P) 1.2363; (R1) 1.2442; More...

Intraday bias in GBP/USD remains neutral as range trading continues. On the downside, firm break of 1.2252 minor support will turn bias to the downside, and extend the corrective pattern from 1.2445 with another falling leg. On the upside, decisive break of 1.2445 will confirm resumption of whole rise from 1.0351. Next target will be 1.2759 fibonacci level.

In the bigger picture, rise from 1.0351 medium term bottom is at least correcting whole down trend from 1.4248 (2021 high). Further rise is expected as long as 1.1644 resistance turned support holds. Next target is 61.8% retracement of 1.4248 to 1.0351 at 1.2759. Sustained break there will pave the way back to 1.4248.

Daily Pivots: (S1) 0.9154; (P) 0.9199; (R1) 0.9226; More...

Intraday bias in USD/CHF remains neutral as range trading continues. On the downside, sustained break of 61.8% projection of 1.0146 to 0.9355 from 0.9545 at 0.9056 will pave the way to 100% projection at 0.8754, which is close to 0.8756 long term support. Nevertheless, on the upside, break of 0.9407 should confirm short term bottoming and turn bias back to the upside.

In the bigger picture, rise from 0.8756 (2021 low) has completed at 1.0146, well ahead of 1.0342 long term resistance (2016 high). Based on current downside momentum, fall from 1.0146 should be a medium term down trend itself. Next target is a test on 0.8756 low. Strong support should be seen there to bring rebound. Still, further decline will now be expected as long as 0.9407 resistance holds, in any case.

Daily Pivots: (S1) 129.04; (P) 129.82; (R1) 130.36; More...

Intraday bias in USD/JPY remains neutral as range trading is still in progress. On the downside, break of 127.20 will resume the whole decline from 151.93 and target 121.43 fibonacci level. Nevertheless, on the upside, break of 131.56 should confirm short term bottoming, and turn bias back to the upside for stronger rebound to 55 day EMA (now at 134.13).

In the bigger picture, the break of 55 week EMA (now at 131.47) raises the chance of medium term bearish reversal, but that's not confirmed yet. Strong support could be seen around 61.8% retracement of 102.58 to 151.93 at 121.43 and 38.2% retracement of 75.56 to 151.93 at 122.75 to bring rebound. But break of 131.56 resistance is needed to indicate bottoming first. Otherwise further fall will remain in favor.

Daily Pivots: (S1) 1.3345; (P) 1.3387; (R1) 1.3433; More....

Range trading continues in USD/CAD and intraday bias stays neutral. On the downside, break of 1.3320 will resume the fall from 1.3704 to 1.3224 key support level. On the upside, though, above 1.3519 will turn bias back to the upside for 1.3704 resistance.

In the bigger picture, as long as 1.3222 cluster support (38.2% retracement of 1.2005 to 1.3976 at 1.3223) holds, larger up trend from 1.2005 (2021 low) is still expected to resume through 1.3976 high at a later stage. However, firm break of 1.3222/3 will indicate that the trend might have reversed. Deeper fall would be seen to next cluster support at 1.2726 (61.8% retracement at 1.2758).

Daily Pivots: (S1) 0.7050; (P) 0.7086; (R1) 0.7141; More...

Intraday bias in AUD/USD remains on the upside at this point. Current rise from 0.6169 should target 61.8% projection of 0.6169 to 0.6892 from 0.6721 at 0.7168 next. Break there will target 0.7304 fibonacci level. On the downside, below 0.7061 minor support will turn bias neutral and bring consolidations. But outlook will stay bullish as long as 0.6871 support holds, in case of retreat.

In the bigger picture, corrective decline from 0.8006 (2021 high) should have completed with three waves down to 0.6169 (2022 low). Further rally should be seen to 61.8% retracement of 0.8006 to 0.6169 at 0.7304. Sustained break there will pave the way to retest 0.8006. This will now remain the favored case as long as 0.6721 support holds.

Australian Dollar strengthens further with mildly positive risk sentiment in Asia. But other major currencies are sluggish. Yen is still recovery but apparently lacks committed buying. Canadian Dollar is staying soft after yesterday's BoC hike, but selloff is relatively limited. Euro is having a slight upper hand against Dollar, but both are actually mixed. Focuses will now turn to US GDP today, and then PCE inflation tomorrow.

Technically, Bitcoin is extending near term rally today, but continues to lose upside momentum as seen in 4 hour MACD. For now further rise is in favor as long as 22314 support holds, towards 25198 medium term resistance. However, break of 22314 will indicate near term topping and bring some consolidations first. Bitcoin's next move will be used as a hint on the development in broader risk sentiment.

In Asia, at the time of writing, Nikkei is down -0.20%. Hong Kong HSI is up 1.76%. Singapore Strait Times is up 0.65%. Japan 10-year JGB yield is up 0.0137 at 0.458. China is still on holiday. Overnight, DOW rose 0.03%. S&P 500 dropped -0.02%. NASDAQ dropped -0.18%. 10-year yield dropped -0.007 to 3.462.

BoJ Opinions: Necessary to take some time to examine effect of YCC change

In the Summary of Opinions at BoJ's January 17-18 monetary policy meeting, it's repeated noted that it's important to continue with current monetary easing as well as yield curve control.

The modification of YCC at the December meeting was "aimed solely at making monetary easing more sustainable". It is "necessary" to "take some time" to examine the effects of the change in YCC.

One member noted the "upward pressure" on long-term interest rates and the distortions on the yield curve. And, BoJ "should curb interest rate rises across the entire yield curve through measures".

Regarding prices, CPI is expected to fall below 2% from fiscal 2023, and there is "still a long way to go to achieve the price stability target".

But opinions were more upbeat as one noted that "momentum for wage hikes has grown, and it is possible that a certain degree of base pay increases will be realized". But it still takes time for wages to see a "sustained increase".

Firms' stance has "shifted toward actively raising their selling prices" as seen in the outlook for output prices. Pace of rises in prices of both goods and services is "accelerating". It's possible that the significant price shocks since last week will "change the norm for prices".

EUR/CAD resuming up trend, CAD softens after BoC

Canadian Dollar is trading as the worst performer for the week so far, after BoC raised interest rate by a final 25bps in the current cycle. A pause will follow for the impacts of previous tightening to pass through to the economy.

EUR/CAD's breach of 1.4639 temporary top suggests that larger up trend from 1.2867 is resuming. Further rally is now expected as long as 1.4498 support holds. Next target is 61.8% projection of 1.3270 to 1.4591 from 1.4232 at 1.5048. Break of 1.4498 will bring more consolidations before staging another rally.

Looking ahead

The European calender is empty today. Focuses are on US Q4 GDP, durable goods orders, jobless claims, goods trade balance and new home sales.

AUD/USD Daily Report

Daily Pivots: (S1) 0.7050; (P) 0.7086; (R1) 0.7141; More...

Intraday bias in AUD/USD remains on the upside at this point. Current rise from 0.6169 should target 61.8% projection of 0.6169 to 0.6892 from 0.6721 at 0.7168 next. Break there will target 0.7304 fibonacci level. On the downside, below 0.7061 minor support will turn bias neutral and bring consolidations. But outlook will stay bullish as long as 0.6871 support holds, in case of retreat.

In the bigger picture, corrective decline from 0.8006 (2021 high) should have completed with three waves down to 0.6169 (2022 low). Further rally should be seen to 61.8% retracement of 0.8006 to 0.6169 at 0.7304. Sustained break there will pave the way to retest 0.8006. This will now remain the favored case as long as 0.6721 support holds.

Economic Indicators Update

Canadian Dollar is trading as the worst performer for the week so far, after BoC raised interest rate by a final 25bps in the current cycle. A pause will follow for the impacts of previous tightening to pass through to the economy.

EUR/CAD's breach of 1.4639 temporary top suggests that larger up trend from 1.2867 is resuming. Further rally is now expected as long as 1.4498 support holds. Next target is 61.8% projection of 1.3270 to 1.4591 from 1.4232 at 1.5048. Break of 1.4498 will bring more consolidations before staging another rally.

In the Summary of Opinions at BoJ's January 17-18 monetary policy meeting, it's repeated noted that it's important to continue with current monetary easing as well as yield curve control.

The modification of YCC at the December meeting was "aimed solely at making monetary easing more sustainable". It is "necessary" to "take some time" to examine the effects of the change in YCC.

One member noted the "upward pressure" on long-term interest rates and the distortions on the yield curve. And, BoJ "should curb interest rate rises across the entire yield curve through measures".

Regarding prices, CPI is expected to fall below 2% from fiscal 2023, and there is "still a long way to go to achieve the price stability target".

But opinions were more upbeat as one noted that "momentum for wage hikes has grown, and it is possible that a certain degree of base pay increases will be realized". But it still takes time for wages to see a "sustained increase".

Firms' stance has "shifted toward actively raising their selling prices" as seen in the outlook for output prices. Pace of rises in prices of both goods and services is "accelerating". It's possible that the significant price shocks since last week will "change the norm for prices".

Full Summary of Opinions here.