Chinese stocks led Asian shares down, as investors remain dissatisfied with Beijing’s failure to issue specific support measures. Hong Kong was the heaviest, while the Nikkei recovered from earlier losses and is now trading green helped by a weak JPY that is heading back towards 142. The BOJ minutes showed that several members believe the CPI will return to 2% and BOJ’s Adachi stated that is too early to change the easy monetary policy: risks are to the downside for the economy even if there is plenty of uncertainty. The US stocks rally is faltering after reaching near overbought levels, yet yesterday they managed to recover from the heaviest losses recorded at the start of the session (almost -1%). The start of the US session was risk-off and dragged gold down to $1,930, Crude Oil to $69.50 and commodities more broadly, before partially reversing. Powell continues his tour of testimony that will take him before the House Financial Services Committee today. CPI data in the UK are just out and they are a new surprise to the upside (CORE + 7.1% y/y exp +6.8%, Headline +8.7% y/y exp 8.4%) with Cable testing 1.28 while yesterday traders were easing their bets of a terminal rate at 6% (down to a 50% chance from 90% before) and the 10 year GILT rallied while the GBP underperformed. Now, there’s a 50% chance of a 50 bps hike tomorrow and a 100% odds of the final rate being at 6% by the end of the year. Tomorrow, BOE and SNB are both expected to raise rates.
Currency Indices Relative strength, last 10 hours
- FX –The USDIndex is flat at 102.19, EUR above 1.09, Cable is testing 1.28. USDCNH has breached 7.20 as the (still) export based economy is slowing down.
- Stocks – China -0.21%, HK -1.58%, Nikkei +0.68%. US Futures absolutely flat. FedEx fell about 3% in extended trading after the shipping giant posted weaker-than-expected revenue for its most recent quarter – not good for the real economy when a carrier has bad results.
- Commodities – USOil – +0.79%, still stuck at $71.44. Gold – close to recent lows, trading at $1932.68 now, Silver heavy yesterday (-3.58%) and in the red today.
Today – CAD retail sales, Speeches from Fed’s Powell, Jefferson, Cook, Goolsbee, Mester & ECB’s Schnabel.
NZDJPY, H1
Biggest FX Mover @ (06:30 GMT) NZDJPY (+0.48 %) the Kiwi is taking advantage of the structural weakness of the Yen, 87.63 right now on H1: RSI at 65, MACD positive but Histogram crossing the line to the downside, price is between the 50 and 200 MAs.
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Marco Turatti
Market Analyst
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