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Market movers today

A very quiet day with no data of interest. Instead markets will be awaiting the US CPI data on Thursday.

We have some ECB speeches out during the day with Holzmann, Villeroy and De Cos speaking.

Overnight China will release PPI and CPI inflation for December.

The 60 second overview

Markets: Yesterday and overnight have proven relatively calm and uneventful sessions. Markets are eagerly awaiting tomorrow's US CPI print which will be key for the size of the February Fed rate hike. At this stage markets are clearly leaning towards a 25bp hike with the short-end of the US rates curve pricing around 26bp. We still think it is a very close call but for now highlight that we think markets are underestimating the likelihood of a 50bp hike amid the last months' easing of global financial conditions.

Fed Chair Powell took part in yesterday's Riksbank symposium in honour of Stefan Ingves stepping down as Riksbank governor. Meanwhile, Powell refrained from giving any new policy signals to markets which seemed like a slight relief to markets. Also a decline in US NFIB Small business optimism marked another "bad news is good news for markets" event as markets priced in less monetary tightening following the release.

In terms of market price action most asset classes have traded fairly sideways over the last 24 hours although the latter part of the US session yesterday was characterised by slight optimism with equities moving modestly higher and US yields settling lower. A big story of the year so far has been the rally in EUR/USD - driven by both a stronger EUR and a weakening of the USD. However, also this rally has stalled this week ahead of the US CPI release. Brent crude continues to trade close to the USD 80/bbl mark while European natural gas prices for now seem to have found a bottom around EUR 70/MWh.

Norwegian inflation: Yesterday's release for December showed core inflation picking up very slightly to 5.8% Y/Y from 5.7% in November. While this was marginally higher than Norges Bank's expectations of 5.7% we do not see this as sufficient for Norges Bank to hike policy rates next week. Also the details were in our view by no means alarming. Meanwhile, rates markets are still pricing in a close to 30% probability that policy rates will be lifted by an additional 25bp already next week. Our base case remains that the peak in policy rates has already been reached in Norway although it is a very close call on whether we could get a final 25bp hike in March.

FI: Bearish rates sentiment dominated yesterday with moderate spread tightening lead by the periphery. 10y German bunds ended 8bp higher at 2.3% in a bearish steepening move amid significant supply in euro space yesterday. Interestingly, the Belgian 10y syndication attracted significant bids (leading to relative outperformance to peers). Several ECB speakers were on the wires confirming the need for further policy tightening as already guided at many previous occasions.

FX: EUR/USD held steady above 1.07 yesterday and USD/JPY traded around 132 as the market is in wait-and-see mode before tomorrow's US CPI release. EUR/NOK rallied above 10.70 again after inflation dropped in Norway.

Credit: Following a strong start to 2023, secondary credit spreads were slightly under pressure yesterday where iTraxx Xover widened 7.4bp and Main 2.6bp. Meanwhile, sentiment remained firm in primary markets where new issues continue to be well absorbed.

Nordic macro

There are no data releases out today of particular market or economic importance.

Short term cycle from 11.23.2022 low remains in progress as a 5 waves impulse Elliott Wave. Up from 11.23.2022 low, wave ((i)) ended at 1833.29 and pullback in wave ((ii)) ended at 1795.90. The metal then rallies higher again in wave ((iii)). Internal subdivision of wave ((iii)) is unfolding as another 5 waves impulse in lesser degree. Up from wave ((ii)), wave i ended at 1825.21, and pullback in wave ii ended at 1813.30. Wave iii ended at 1850.15, pullback in wave iv ended at 1829.90, and final leg wave v ended at 1865.15 which completed wave (i). The metal then pullback in wave (ii) towards 1824.

The metal extends higher again in wave (iii) towards 1881.59, and wave (iv) ended at 1871.10. Final leg wave (v) is in progress to end wave ((iii)). Afterwards, Gold should pullback in wave ((iv)) to correct cycle from 12.28.2022 low before it resumes higher again in wave ((v)) of 1. Afterwards, it should end cycle from 11.23.2022 low and the metal should pullback to correct that cycle before the rally resumes again. Near term, as far as pivot at 1796.6 low stays intact, expect pullback to find support in 3, 7, or 11 swing for further upside.

Gold 45 Minutes Elliott Wave Chart

Daily Pivots: (S1) 160.16; (P) 160.55; (R1) 161.05; More...

Intraday bias in GBP/JPY remains neutral first. Break of 158.49 minor support will turn bias back to the downside for retesting 155.33. Further break there will resume the fall from 172.11 to 153.70 fibonacci level. Nevertheless, considering bullish convergence condition in 4 hour MACD, firm break of 162.32 will argue that such decline has completed, and turn bias back to the upside for 55 day EMA (now at 163.27) and above.

In the bigger picture, as long as 153.02 support turned resistance holds, decline from 172.11 medium term top is expected to continue to 38.2% retracement of 123.94 to 172.11 at 153.70. Sustained break there will raise the change of trend reversal and target 61.8% retracement at 142.34. Nevertheless, break of 153.02 support turned resistance will argue that the decline has completed, and retain medium term bullishness.

Daily Pivots: (S1) 141.34; (P) 141.70; (R1) 142.29; More....

Intraday bias in EUR/JPY remains neutral at this point. On the downside, below 140.15 minor support will turn bias back to the downside 137.37 low. break there will resume the decline from 148.38 to 135.40 fibonacci level. However, considering bullish convergence condition in 4 hour MACD, break of 142.92 will argue that the correction from 148.38 might have completed. Intraday bias will be turned back to the upside for 146.71 resistance.

In the bigger picture, as long as 55 week EMA (now at 138.64) holds, larger up trend from 114.42 (2020 low) is still in progress for 149.76 long term resistance. However, firm break of 55 week EMA will bring deeper fall to 38.2% retracement of 114.42 to 148.38 at 135.40. Sustained break there will raise the chance of trend reversal, and target 61.8% retracement at 127.39.

Daily Pivots: (S1) 0.8809; (P) 0.8828; (R1) 0.8854; More...

Intraday bias in EUR/GBP remains neutral for the moment. Corrective pattern from 0.8876 could still extend with another dip. But, further rally is expected as long as 55 day EMA (now at 0.8732) holds. Break of 0.8876 will resume the rise from 0.8545 to 61.8% retracement of 0.9276 to 0.8545 at 0.8997 and possibly above. However, sustained trading below 55 day EMA will bring retest of 0.8545 low instead.

In the bigger picture, outlook is mixed for now as rise from 0.8545 would either be part of the up trend from 0.8201 (2022 low), or just a correction to 0.9267 (2022 high). As long as 55 week EMA (now at 0.8616) holds, the former case is in favor, and break of 0.9267 should be seen next as up trend resumes at a later stage. However, sustained break of 55 week EMA will shift favor to the latter case, for another decline back towards 0.8201.

Daily Pivots: (S1) 1.5508; (P) 1.5565; (R1) 1.5629; More...

Intraday bias in EUR/AUD stays neutral for the moment. While further fall cannot be ruled out, strong support could be seen from 38.2% retracement of 1.4281 to 1.5976 at 1.5329 to complete the correction from 1.5976. Firm break of 1.5614 minor resistance will turn bias back to the upside for retesting 1.5976. However, sustained trading below 1.5329 will carry larger bearish implication and target 61.8% retracement at 1.4928.

In the bigger picture, it's still early to confirm if rise from 1.4281 represents bullish trend reversal. But as long as 1.5271 support holds, such rally is in favor to continue. Break of 1.5976 will target 1.6434 key resistance next. On the other hand, firm break of 1.5271 will retain medium term bearishness instead.

Daily Pivots: (S1) 0.9883; (P) 0.9899; (R1) 0.9922; More....

No change in EUR/CHF's outlook as consolidation pattern form 0.9953 is still extending. On the upside, firm break of 0.9953 resistance will resume larger rally from 0.9407 to 1.0072 fibonacci level. However, break of 0.9720 will extend the decline from 0.9953 to 61.8% retracement of 0.8407 to 0.9953 at 0.9616.

In the bigger picture, as long as 38.2% retracement of 1.1149 to 0.9407 at 1.0072 holds, price actions from 0.9407 medium term bottom will be treated as a corrective pattern. That is, long term down trend would resume through this low at a later stage. Nevertheless, firm break of 1.0072 will also have 55 week EMA (now at 1.0041) taken out. That would be an initial sign of long term bullish reversal.

Daily Pivots: (S1) 1.0712; (P) 1.0736; (R1) 1.0759; More...

No change in EUR/USD's outlook and intraday bias stays mildly on the upside with 1.0659 minor support intact. Current rally from 0.9534 would target 61.8% projection of 0.9630 to 1.0733 from 1.0482 at 1.1164. On the downside, below 1.0659 minor support will turn intraday bias neutral again first. But near term outlook will stay bullish as long as 1.0482 support holds, in case of retreat.

In the bigger picture, focus stays on 38.2% retracement of 1.2348 (2021 high) to 0.9534 at 1.0609. Rejection by 1.0609 will suggest that price actions from 0.9534 medium term bottom are developing into a corrective pattern. Thus, medium bearishness is retained for another fall through 0.9534 at a later stage. However, sustained break of 1.0609 will raise the chance of trend reversal and target 61.8% retracement at 1.1273.

Daily Pivots: (S1) 1.2107; (P) 1.2153; (R1) 1.2195; More...

Intraday bias in GBP/USD is turned neutral first as rebound lost momentum after hitting 1.2208. On the upside, above 1.2208 will resume the rise to retest 1.2445 high. Decisive break there will resume whole rally from 1.0351 to 1.2759 fibonacci level. Nevertheless, break of 1.1840 will resume the correction from 1.2445 to 38.2% retracement of 1.0351 to 1.2445 at 1.1645.

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) 0.9198; (P) 0.9225; (R1) 0.9254; More...

A temporary low is formed at 0.9165 with current recovery. Intraday bias in USD/CHF is turned neutral first. But outlook remains bearish with 0.9407 resistance intact. Break of 0.9165 will resume the decline from 1.0146, to 100% projection of 0.9545 to 0.9199 from 0.9407 at 0.9061 next.

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.