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Market movers today

There are no tier-1 market movers today and it will be a pretty quiet week on the data front where the main highlights will be German ZEW and US regional surveys from Philadelphia and Empire.

On the central bank front China has already cut policy rates this morning (see below) and Turkey may also cut rates later this week. Bank of Japan meets on Tuesday where no change is expected but we will listen closely to policy signals given Friday's Reuters story that BoJ may hike policy rates prior to hitting 2% inflation. ECB releases minutes on Thursday which is also the day of the interim Norges Bank meeting where we do not expect any new policy signals. The Fed blackout period has started so we will have no more Fed speeches before the meeting next week (22 January).

The Russia/Ukraine conflict will remain in focus as well.

US stock and bond markets will be out today due to the Martin Luther King holiday.

The 60 second overview

Markets. It has been fairly quiet overnight with limited market moves across asset classes.

Chinese data and rate cut. Overnight the People's Bank of China cut its key policy rates by 10bp and added more liquidity to the banking system. This was the first change in policy rates in almost two years but follows several credit and regulatory easing measures over the last month as a response to the softening growth outlook. This morning's rate cut was announced shortly before national account figures revealed that the Chinese economy grew 1.6% Q/Q in Q4 2021. While this was slightly stronger than expected by consensus the figures still highlighted a weakening momentum and a hit to demand from the zero COVID-19 policy and the property sector. Looking forward we expect 2022 to be a year in which the Chinese economy continues to recover moderately but also where the impact of the recent easing is not felt on the global cycle until summer.

COVID-19 update. Despite new cases are rising sharply in many countries due to omicron, it seems like we have reached or are close to reaching "peak restrictions" in the sense that severe disease still seems under control for now. Risk is, of course, that the waves get so big that they dominate the fact that omicron is milder than delta. We continue to believe this is the last winter with restrictions in the advanced economies, as COVID-19 becomes endemic like the seasonal flu. We have good vaccines (especially when updated to the prevailing variant), more natural immunity, better treatments and more know-how. So from a societal, economic and financial market perspective, we should be able to deal with COVID-19 outbreaks going forward.

Equities: Global equities moved lower Friday despite some late hour rally in US. Defensives, large cap value outperforming last week where bond yields and central bank repricing dominated the action in equities. The earnings season kick-off in the US did not change the narrative with some mixed bank reporting. Asia is very mixed this morning with Japan and most other markets higher while South Korea is sharply lower. Futures in Europe are playing some Friday catch up to the US session while tech stocks lead US futures lower.

Fixed income: Last week was fairly volatile for the US Treasury market where US inflation hit 7% amid increased speculation of four hikes rather three hikes in 2022 from the Federal Reserve. 10Y US government bond yields rose almost 10bp on Friday and the US curve continues the flattening trend from the start of the year.

FX: Growth and inflation sensitive currencies ended last week on a weak-footing. SEK, AUD, NZD and NOK lead losses with EUR/SEK and EUR/NOK moving towards 10.30 and 10.00, respectively. On the other hand, the USD ended a long string of losing sessions with EUR/USD moving back close to 1.14.

Credit: This Friday the risk off sentiment in credit continued. iTraxx main widened 1.2bp to 52.1bp and Xover widened 4.9bp to 257.5bp. The poor sentiment continues to be driven by fears of rising rates, coupled with rising worries about geopolitical risk relating to Russia and inflation. In cash space, liquidity remains muted.

Daily Pivots: (S1) 1.1382; (P) 1.1433; (R1) 1.1466; More...

Intraday bias in EUR/USD remains neutral at this point and outlook is unchanged. Rebound from 1.1185 is seen as a corrective move. Above 1.1482 will extend the rebound but upside should be limited by 38.2% retracement of 1.2265 to 1.1185 at 1.1598. On the downside, below 1.1284 support will bring retest of 1.1185 low. However, sustained break of 1.1598 will argue that the trend is reversing already.

In the bigger picture, there are various ways of interpreting the fall from 1.2348 (2021 high). It could be a correction to rise from 1.0635 (2020 low), the fourth leg of a sideway pattern from 1.0339 (2017 low), or resuming long term down trend. In any case, outlook will now stay bearish as long as 1.1703 support turned resistance holds. Sustained break of 61.8% retracement of 1.0635 to 1.2348 at 1.1289 would pave the way back to 1.0635.

Daily Pivots: (S1) 1.3642; (P) 1.3692; (R1) 1.3732; More...

Intraday bias in GBP/USD remains neutral for consolidation below 1.3748 temporary top. Downside of retreat should be contained by 1.3489 support to bring another rally. As noted before, corrective fall from 1.4282 should have completed with three waves down to 1.3158, after hitting 1.3164 medium term fibonacci level. Above 1.3748 will target 1.3833 first. Sustained break of 1.3833 will pave the way back to retest 1.4248 high.

In the bigger picture, strong support was seen from 38.2% retracement of 1.1409 to 1.4248 at 1.3164. The development suggests that up trend from 1.1409 (2020 low) is still in progress. On resumption, next target will be 38.2% retracement of 2.1161 to 1.1409 at 1.5134. Nevertheless sustained break of 1.3164 will argue that whole rise from 1.1409 has completed and bring deeper fall to 61.8% retracement at 1.2493.

Daily Pivots: (S1) 0.9108; (P) 0.9125; (R1) 0.9155; More....

Intraday bias in USD/CHF remains neutral for consolidation above 0.9090 first. On the downside, firm break of 0.9084 support will argue that choppy rise from 0.8925 has completed. Fall from 0.9471 might be ready to resuming. Further decline would be seen back to 0.8925 support first. On the upside, above 0.9276 will target 0.9372 resistance instead.

In the bigger picture, the corrective structure of the rebound from 0.8925 argues that fall from 0.9471 is not complete yet. It could either be the second leg of pattern from 0.8756 (2021 low), or resuming larger down trend from 1.0237 (2018 high). We'd pay attention to the downside momentum and assess the odds later. But for now, medium term outlook will be neutral at best as long as 0.9471 resistance holds.

Daily Pivots: (S1) 113.71; (P) 113.99; (R1) 114.49; More...

Intraday bias in USD/JPY remains neutral for the moment. Risk will stay on the downside for another fall as long as 116.34 resistance holds. Break of 113.47 will target 112.52 structural support. Considering bearish divergence condition in in daily MACD, break of 112.52 will confirm that it's already in correction to the up trend from 102.58. Deeper decline would be seen to 38.2% retracement of 102.58 to 116.34 at 111.08.

In the bigger picture, no change in the view that rise from 102.58 is the third leg of the up trend from 101.18 (2020 low). Such rally should target a test on 118.65 (2016 high). Sustained break there will pave the way to 120.85 (2015 high) and raise the chance of long term up trend resumption. However, firm break of 112.52 support will dampen this bullish case and we'll assess the outlook based on subsequent price actions later.

Daily Pivots: (S1) 0.7179; (P) 0.7236; (R1) 0.7275; More...

Intraday bias in AUD/USD remains neutral for the moment. We're still slightly favoring the case that correction from 0.8006 is complete after defending 0.6991. Above 0.7313 will extend the rise from 0.6992 to 0.7555 resistance. However, break of 0.7128 support will dampen this bullish case and bring retest of 0.6991/2 instead.

In the bigger picture, strong rebound from 0.6991 key structural support will retain medium term bullishness. That is, whole up trend from 0.5506 is still in progress. Firm break of 0.7555 resistance will target 0.8006 high and above. However, sustained break of 0.6991 will argue that the whole up trend from 0.5506 might be finished at 0.8006, after rejection by 0.8135 long term resistance. Deeper decline would then be seen back to 61.8% retracement of 0.5506 to 0.8006 at 0.6461.

Daily Pivots: (S1) 1.2488; (P) 1.2529; (R1) 1.2588; More...

Intraday bias in USD/CAD remains neutral for consolidation above 1.2452 temporary low. Further fall is expected as long as 1.2619 support turned resistance holds. Current development argues that whole pattern from 1.2005 has completed with three waves to 1.2963. Below 1.2452 will target 1.2286 support, and possibly further to retest 1.2005 low. Nevertheless, firm break of 1.2619 will bring stronger rebound back to 1.2812 resistance.

In the bigger picture, focus will be on 38.2% retracement of 1.4667 (2020 high) to 1.2005 (2021 low) at 1.3022. Sustained break there should confirm that the down trend from 1.4667 has completed after defending 1.2061 long term cluster support. Further rise would then be seen towards 61.8% retracement at 1.3650. However, rejection by 1.3022 will maintain medium term bearishness. Break of 1.2005 will resume the down trend form 1.4667 and that carries larger bearish implications too.

Daily Pivots: (S1) 0.8337; (P) 0.8350; (R1) 0.8357; More...

Intraday bias in EUR/GBP remains neutral and more consolidations could be seen above 0.8322. Upside of recovery should be limited by 0.8417 resistance to bring another decline. On the downside, break of 0.8322 will resume recent down trend to 0.8276 key long term support. On the upside, however, above 0.8417 will turn bias back to the upside for stronger rebound.

In the bigger picture, price actions from 0.9499 (2020 high) are still seen as developing into a corrective pattern. Deeper fall could be seen as long as 0.8598 resistance holds, towards long term support at 0.8276. We'd look for bottoming signal around there to bring reversal. Meanwhile, firm break of 0.8598 will now be an early sign of medium term bottoming and bring stronger rebound. However, sustained break of 0.8276 will argue that the long term trend has reversed.

Daily Pivots: (S1) 1.5746; (P) 1.5798; (R1) 1.5868; More...

Intraday bias in EUR/AUD remains neutral and outlook is unchanged. On the downside, break of 1.5559 will resume the fall from 1.6168 to retest 1.5250/5354 support zone. On the upside, however, break of 1.5898 will argue that pull back from 1.6168 has completed. Intraday bias will be back to the upside for 1.6168 resistance.

In the bigger picture, rise from 1.5354 is seen as the third leg of the corrective pattern from 1.5250 low. Further rise cannot be ruled out, but even in that case, strong resistance should be seen at 38.2% retracement of 1.9799 to 1.5250 at 1.6988. Larger down trend from 1.9799 is in favor to extend through 1.5250 at a later stage.

Daily Pivots: (S1) 1.0418; (P) 1.0433; (R1) 1.0447; More....

Intraday bias in EUR/CHF remains neutral for the moment. Rebound from 1.0324 could still extend higher. But upside should be limited by 38.2% retracement of 1.0936 to 1.0324 at 1.0558. On the downside, firm break of 1.0423 will bring retest of 1.0324 low. Break there will resume larger down trend from 1.1149.

In the bigger picture, long term down trend from 1.2004 (2018 high) is now extending. Next target is 61.8% projection of 1.2004 to 1.0505 to 1.1149 at 1.0223. On the upside, firm break of 1.0505 support turned resistance is needed to be the first sign of medium term bottoming. Otherwise, outlook will remain bearish even in case of rebound.