USDJPY rockets higher with 130.00 in the cross-hairs as BOJ leaves main policy steady, to hold 10yr JGB ceiling at 0.25%, while JPY was clobbered across the board again. AUDJPY back to 92.00, GBPJPY 162.00, EURJPY 136.40. The markets continued to mull the implications of the stand off between the EU and Russia over payment modalities for Russian gas deliveries.
- The front on a gradual ban of Russian oil imports has hardened, as Russia upped the ante, but while the EU urged a united front on Russian demands for ruble payments, the European Commission last week seemed open to companies finding ways to tally Moscow’s demands with the EU’s sanctions against Putin and that is what many companies are doing now. In the end it seems unlikely that gas supplies to the EU will stop immediately, although governments will work even harder to become independent of Russian deliveries as soon as possible.
- The 10-year Treasury yield is down –1.1 bp to 2.82%, while JGBs were supported after the BOJ.
- Stocks – ASX lifted 1.2%, and the Hang Seng 0.5%, but the CSI 300 is currently down -0.4%, with Covid developments still in focus. US futures are also higher, with a 1.3% rise in the USA100 leading the way.
- Earnings – Strong earnings from Microsoft and Visa. Facebook owner Meta beat Wall Street forecasts and said it had eked out user growth, sending its shares up almost 20% after hours. Microsoft MSFT.O shares rallied as well. Google-parent Alphabet Inc GOOGL.O fell 3.6% as slowing YouTube ad sales pushed quarterly revenue below expectations. Boeing Co BA.N dropped 7.5% after it disclosed $1.5 billion in abnormal costs from halting 777X production.
- USDIndex the main leader, at 103.70 highs.
- Oil is currently trading at $101.08, with yesterday’s gains already erased. China’s capital Beijing closed some public spaces and stepped up checks at others on Thursday, as most of the city’s 22 million residents embarked on more COVID-19 mass testing aimed at averting a Shanghai-like lockdown.
- Gold drifts to $1885.
- FX markets – Developments are hurting the EUR, which has dropped below 1.0500, while EURGBP fell towards the 0.8394 mark. GBPUSD is also under pressure amid general Dollar strength. AUD and NZD were on the ropes as worries about a recession in Europe and a slowdown in China engulfed risky assets and overwhelmed the promise of rising interest rates at home.
Today – Inflation reports for Germany and Spain are due today, as well as confidence data for Italy.
Biggest FX Mover @ (07:30 GMT) CADJPY (+1.68%) breached 101.90. MAs pointing higher, MACD signal line & histogram moving higher, RSI at 82, all signalling further boost in the near term. H1 ATR 0.277, Daily ATR 1.15.
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Andria Pichidi
Market Analyst
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