Market Update – January 18 – BOJ Stands Pat

Asian markets weaker as BOJ stays put (-0.1% interest rate) with stimulus package intact, raises inflation target to 1.1% and growth to 3.8% for 2022. Kuroda: “Will ease monetary policy without hesitation as needed, there has been a notable improvement in the economy.”  USD firmer, Yields moved up with US 2-yr over key 1.0%, 10-yr over 1.8%. Oil higher – Saudi’s retaliate, attacking Yemen and Gold holds at $1815.

USD (USDIndex 95.25) holds on to gains from Friday, pushing to 953.8 earlier.
US Yields 10-yr moved higher again and trades at 1.818%.    
Equities – US closed yesterday. Nikkei -0.27% – USA500 FUTS lower again at 4633.     
USOil – Spiked over $84.70 as very tight supply, Saudi’s retaliation on Sanaa and NK continued firing of missiles unsettles sentiment.
Gold – holds at $1815 from a test of $1823.
Bitcoin another down day, tested to $41,600, back to 42,200 now.
FX marketsEURUSD back to 1.1400, USDJPY now 114.80 tested 115.00 earlier, Cable back to test 200hr MA 1.3620, +20 pips after UK jobs data.

OvernightUK Earnings in line at 4.2%, Unemployment (4.1%) and Claims better than expected. PBOC deputy governor says will keep yuan exchange rate basically stable.

European Open – The March 10-year Bund future is down -19 ticks, Treasury futures are underperforming. Stocks across Asia struggled with the renewed rise in yields and DAX and FTSE 100 futures are also down -0.3% and -0.2% respectively.  Inflation risks and central bank outlook will be dominating the discussion in coming months.

Today – German ZEW, Empire State Manu. Index & Earnings from Goldman Sachs. Day 2 of DAVOS (on-line).


Biggest FX Mover @ (07:30 GMT) CADJPY (again) (+0.34% again) Rallied all day over 91.73 (Thursdays high) and onto test 92.00. MAs aligned higher, MACD signal line & histogram higher & above 0 line. RSI 68 rising,  H1 ATR 0.131 Daily ATR 0.804.

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Stuart Cowell

Head Market Analyst

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