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Markets traded in a thin range early Thursday morning as investors wind down activity towards the New Year’s Holiday. Investors had a limited risk-on mood as the dollar remained downbeat ahead of Jobless Claims and 7-year Note Auction. Commodity markets experienced selling pressure as swelling China’s Covid cases dim reopening hopes. The Japanese Yen was the biggest FX mover as BoJ announced an unscheduled bond purchase of 2-year and 5-year and 10-year debt at 0.5% for the second day.
USDJPY plunged by -0.49% as BoJ conducts unscheduled bond purchases for a second day. Dollar weakness continued to dominate as Traders shift focus to the Initial Jobless Claims report due for release later in the New York session. The BoJ made another intervention after JGB yields spiked past the limit. The pair dropped from the 134.50 level, the weekly high and bears may target the 131.80 level in the near term. However, a break above the 134.50 level could give bulls the 135.00 psychological level.
EURGBP rallied by +0.12% ahead of UK’s Nationwide House Price Index data on Friday. The UK House price index is expected to drop to 2.3% from a previous reading of 4.4% in December. There has been thin liquidity on the market as investors wind down towards the year-end holiday. The European economic docket did not have any high-impact news. Bulls are currently trading near a 3-months high at the 0.8850 level. A failure to break above that high could cause a price correction towards the 0.8800 support level.
EURAUD soared by +0.53% as the Australian dollar dropped on the angst of the rate hike outlook weigh. The swelling of Chinese Covid cases has reversed the hopes of easing amidst concerns about the global interest rate outlook. The RBA was pricing in peak inflation going into 2023 but markets continue to echo the need for further tightening amidst economic uncertainty. The bulls recovered yesterday’s losses after bouncing off a 1.57000 level, a previous resistance-turned-support. Upside gains are capped by 1.5900 and 1.6000 psychological levels.
European stocks were mixed as investors maintain a cautious tone on recession fears. FTSE100 advanced by +0.07% although the index remains bound by a 5-day range between the 7450-support level and 7550 resistance level. CAC40 edged higher by +0.05% after bouncing off a 6400 near-term support. Gains remain capped by the 6600 level. DAX rallied by +0.39% from a 13870-support level and bulls could be challenged by the 14100. However, a break below that level could trigger selling pressure towards the 13800 and 13700 levels.
US stock futures were slightly higher ahead of US jobs data. S&P500 futures gained by +0.25% as bulls find near-term support at the 3780 level and upside gains are capped by the 3850. Nasdaq100 futures soared by +0.50% after closing at 10700, a new bear market low. Bulls are challenged by the 10900 level and a break above that level could extend targets towards the 11000 psychological level. DJIA index futures remain steady at +0.08% as the index remains rangebound between the 32800 support and 33400 resistance level.
In commodities, oil extended its Wednesday losses as Traders weigh concerns over swelling China’s Covid cases versus global demand. USWTI dropped by -1.42% to the 77.00 level as bulls struggle to challenge the 80.00 level. Downside targets are at the 74.00 level coinciding with a 2-week low. Brent crude oil stocks were down -0.99% towards the 81.00 near-term support. A break below that level could trigger further selling towards the 79.50 area. Bulls are challenged by the 85.00 level.
