Global Stocks extend lower, USD steady and Yields picked up across the curve with the short end underperforming in a bear flattener given the Fed views. The curve flattened to -72 bps before unwinding to -70 bps. The looming FOMC decision on Wednesday and expectations for a hawkish trimming in the rate path left bonds and stocks heavy with buyers sidelined. Concerns over upcoming earnings from Apple, Amazon, Alphabet, and Meta also weighed. The US100 slumped -1.96%. European bonds and stocks were mostly lower too ahead of ECB and BoE rate decisions.
Elsewhere:
- China: domestic orders and consumption and manufacturing PMI drove higher (>50). A rebound in non-manufacturing activity was more decisive than expected by economists – but helped by a seasonal surge in spending for the Lunar New Year holiday.
- Japan Dec factory output inches down, retail sales beat forecasts
- German retail sales down 5.3% m/m in December & December import prices -1.6% m/m, +12.6% y/y.
- The USD Index – firmed, however, rising to 102.32 assuming the Fed reiterates a higher for longer stance.
- EUR – drifts to 1.0827.
- JPY – rise slightly at 20-DMA i.e. 130.4.
- GBP – struggling to break 1.2450.
- Stocks – US100 -1.96% at 11929, US500 off -1.30% and the US30 -0.77%. Losses were broadbased.
- USOil – down to $77.60, below 50-day SMA as the threat of further interest rate increases and ample Russian crude flows outweighed demand recovery expectations from China. OPEC+ panel is likely to recommend keeping the oil producer group’s current output policy unchanged when it meets tomorrow.
- Gold – at its 4th day lower, but still set for gain of 5% in January. Silver, platinum palladium are set for a monthly decline.
- BTC – held support at $22,400.
Today – German unemployment, EU prelim GDP, US CB and NZ employment data; Earnings: AMD, Exxon, Pfizer, General Motors, Mc Donald’s, Marathon Petroleum etc.
Biggest FX Mover @ (07:30 GMT) GBPAUD (+0.56%). Up to R2 of the day, i.e. 1.7586. MAs aligning higher, MACD histogram & signal line extends higher. RSI 71 & neutral, H1 ATR 0.00254, Daily ATR 0.01533.
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Andria Pichidi
Market Analyst
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