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The decision by the BoJ of remaining at -0.10% interest rates has pared the Yen’s 3 months gains and tanked the government bond yields below the central bank’s cap of 0.5%. Consumer spending in the UK was quite lively in December despite the intense cost-of-living conditions. The Eurozone final CPI came in as anticipated though lower than previous. The World Economic Forum Annual Meeting continues in Switzerland with a lineup of central bank officials including FOMC member Bostic.
USDZAR trimmed -0.64% from 17.100 intraday resistance on a broad dollar selloff. The South African rand got help from upbeat Consumer Price Index data for December which rose to 0.4% vs an estimated 0.3% month-on-month. On an annualized basis, the CPI data was 7.2% as anticipated. Looking ahead, the US retail sales data will be featured in the US economic file along with Producer Price Index and TIC Net Long Transactions. An extended move below 16.70 would be key for a strong bearish run otherwise bulls may retest 17.400.
GBPJPY pocketed +1.55% in the aftermath of the BoJ rate decision and the UK’s inflation data. Headline inflation in the UK was as expected at 10.5% in December, dropping from a previous reading of 10.7%. Core CPI [MoM] rose to 0.5% beating expectations of 0.4%. These figures remained in the 10% region pointing to the possibility of more rate hikes by the BoE in the near future. The Bank of Japan maintained its short-term policy at -0.10% disappointing the markets’ expectations of a tweak by the central bank after a surge in bond yields. The pair established a high at 161.50 after poking above last week’s high. Sellers may reclaim 158.50 and 158.00 before bull’s revisit 163.00 in the near term.
EURCHF extended its three-day slide by -0.33% as the Eurozone inflation data meets expectations. Consumer Prices [YoY] met expectations of 9.2% which is a drop from the previous 10.1%. The CPI month-on-month however, dropped to -0.4% vs a target of -0.3%. The pair dropped from 0.9964 intraday high and bulls may retest 1.000 if the 0.9920 low firms up.
European stocks were on positive grounds after CPI data from Britain and the Eurozone. The German 40 rose +0.12% building on Tuesday’s gains. Next on the rally is 15500 with a possible retest of 14700. France 40 gained +0.25% capped by 7114 and a low at 7060. The UK100 was up +0.15% with a low residing at 7830 and near-term psychological resistance at 7900.
US stock futures gave up earlier gains as investors take a more cautious stance. US500 futures were steady at +0.15% as bulls drift away from the 4000 psychological resistance and on the downside, the 3900 remains a critical support level. US100 futures added by +0.16% and key levels to watch out for are 11600 resistance and 11200 support. US30 futures struggle to hold onto gains as the 34400-resistance level continues to hold. The index is only up +0.07% and 33500 remains near-term support.
Additionally, the US 10-year bond yields tumbled by -2.03% trading below 3.500%. Further down 3.40% may be breached before sellers make their way to 3.00%. A move to the upside may be challenged by 3.95% and 4.00%.
