Daily Forex News

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NZD/USD sellers attack 0.6800 as yields, New Zealand corona virus cases drop

NZD/USD maintained yesterday’s downtrend and dropped to 0.6800 during Wednesday’s Asian session. In doing so, the Kiwi pair discourages positive news regarding the coronavirus at home amid widespread pessimism about the virus. Stronger expectations of the Fed slated to raise rates in 2022 are also putting downward pressure on the listing. While reporting 46 new community cases of Covid19 in New Zealand, the NZ Herald said: ‘during the holiday period. On the other hand, “China reported 197 confirmed new corona virus cases on December 28, up from 209 cases a day earlier, its health authorities said on Wednesday,” according to Reuters.

It should be noted that the UK is reporting a record number of daily infections, exceeding 122,000 a day after authorities ruled out any further activity restrictions for the rest of 2021. France joins with 179 807 new confirmed cases, making it the world’s heaviest daily toll. Elsewhere, “The average number of new COVID19 cases in the United States has increased by 55% to more than 205,000 per day over the past seven days,” according to a Reuters tally. Additionally, Australia’s most populous state of New South Wales (NSW) reported a doubling of fallopian tube infections on Tuesday, with 11,201 new infections and three deaths from the virus.

Inflation expectations in the United States remain close to monthly highs, according to 10-year breakeven inflation data from the Federal Reserve Bank of St. and weigh in on the NZD/USD price. That said, the US released mixed data a day earlier, with the US home price index falling below the 1.2% forecast at 1.1% in October, while The S&P/Case Shiller home price index fell 19.5% ahead of 18.4%, against 18.5% of market consensus. . However, the Richmond Fed manufacturing index for December broke the adjusted number, rising from 12.00 to 16.00%.

Amid those games, the 10-year US Treasury yield remains under pressure at 1.475% while the two-year benchmark, which hit its highest since March 2020, is also hovering at 0.746%. Additionally, the S&P 500 Futures index showed slight gains, while the latest Asia-Pacific stocks traded mixed.

Looking forward, US tier two data could keep NZD/USD traders entertained, but risk catalysts are key importantly, weak liquidity conditions towards the end of the year could limit the pair’s momentum.

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NZD/USD slides to over two week low, below mid0.6700s amid stronger USD/risk off

The NZD/USD pair endured dropping floor via the early European consultation and dropped to over a two-week low, under mid-0.6700s within side the ultimate hour. The pair prolonged the preceding day`s retracement slide from the 0.6835-forty place and witnessed heavy promoting all through the primary 1/2 of of the buying and selling on Thursday. The US greenback became again in call for following the discharge of especially hawkish FOMC assembly mins on Wednesday. Apart from this, the risk-off impulse in addition benefitted the safe-haven dollar and drove flows far from the perceived riskier kiwi. The December 14-15 FOMC financial coverage assembly mins pointed to a faster-than-predicted upward thrust in hobby rates. Moreover, a few Fed officers additionally notion that it’d be suitable to provoke stability sheet runoff in some unspecified time in the future after the primary increase. This underscored a massive shift with within the policymakers’ tone, which, in turn, became visible as a key thing that endured appearing as a tailwind for the USD.

Meanwhile, the market was quick to assess an approximately 80% chance of a 25bp Fed hike in March 2022. This was reflected in the prolonged sell-off in the US bond market, pushing up government bond yields Long-term US – 10 and 30 years – to their highest levels since October. In addition, concerns about the rapid spread of the Omicron variant have sparked a new wave of risk-averse global trading.

A combination of factors put a lot of pressure on the NZD/USD pair, resulting in a few short-term trading stops placed near the 0.6800 round figures. Therefore, a further drop to the 2021 tough low, around the 0.6700 mark reached on December 15, now looks a clear possibility. The negative outlook is reinforced by bearish technical indicators, which are still far from being in oversold territory.

Market players are now eagerly awaiting the US economic records, highlighting publications from the usual Weekly Initial Jobless Notice and ISM Services PMI. This, coupled with US bond yields and the broader market risk sentiment, should weigh on the USD price dynamics and give fresh impetus to the NZD/USD pair. However, the main focus will remain on the release of the US Monthly Employment Report (NFP) on Friday.

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USD/JPY remains sluggish around 115.50 amid Japan decline

USD/JPY is hovering around 115.60 as holidays in Japan and lack of major data/events limited the pair’s move during Monday’s Asian session. Besides the lack of domestic companies, which are key to the global bond market, mixed concerns about the next move by the Fed and the coronavirus are also limiting the pair’s latest moves on the risk barometer. The US Dollar Index (DXY) posted its biggest daily loss in six weeks after the December jobs report failed to impress Fed advocates. That said, US Non-Farm Payrolls (NFP) disappointed markets with 199k numbers for December versus previous 400k and 249k forecasts (upgraded from 210k) thousand). However, the unemployment rate fell to 3.9% from 4.1% in the market and 4.2% in November, while the U6 underemployment rate fell to 7.3% from 7. .7% revised down in November, both closing pre-pandemic levels.

It should be noted, however, that the disappointment led by the NFP has been largely offset by the unemployment and underemployment rates in the U6 age group, which appear to be challenging market sentiment during the period recent times. As a result, market bets on the Fed’s March 2022 rate hike remain at 80%, following Friday’s increase to 90% prior to data.

Returning home, Okinawa, Hiroshima and Yamaguchi prefectures are seeing new virus activity restrictions starting Sunday, lasting until January 31. An increase in infections that the governors their say is derived from the spread of the Omicron variant in US facilities,” said Kyodo News. Elsewhere, struggles between the United States and China continued, recently over trade and human rights issues, as the Russia-Ukraine issue drew attention ahead of Washington’s meeting in Moscow this week. Between those games, S&P 500 futures are down 0.20% while non-Japanese Asia Pacific stocks trade mixed at press time. A light schedule could then limit market movement beyond the Japanese public holidays. However, the cautious sentiment as US inflation figures this week and December retail sales approach could drive US Treasury yields higher, which in turn could lead USD/JPY buyers to lose ground Mandarin. A clear downside break of the three-week-old ascending trend line, near 115.80 by the press time, keeps USD/JPY sellers hopeful around November’s peak of 115.52.

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AUD / USD approaches 0.7200 as risk sentiment joins Australian mixed data

The AUD / USD hit a daily high near 0.7185 as mixed data at home added to the market’s cautious optimism to challenge immediate action early on Tuesday. 4,444 Australia’s retail sales exceeded expectations of 3.9%, 4.9% exceeded 7.3% MoM and the trade balance reached 9423 million. Details suggest that both exports and imports rose to 2.0% and 6.0 on the order of 3.0%. %, each. Data aside, the cautious optimism of the market considering the risk barometer status of the pair can also be cited as an additional catalyst for the recent rise in the AUD / USD pair. The limited comments of Federal Reserve Chairman Jerome Powell can be seen as a major risk of risk sentiment, according to the comments prepared for today’s testimony. “The economy is growing faster than it was a few years ago, and the labor market is resilient,” the Federal Reserve said, strengthening his promise to prevent high inflation.

In addition, comments on Merck’s official slogan, “Any variant of Covid, where the Molnupiravir mechanism expects to counter Omicron,” can be quoted as positive for risk-taking. According to the Federal Reserve Bank of St. Louis’ (FRED) 10-year breakeven inflation rate, stable inflation expectations in the United States are also challenging bears ahead of key US consumer price index (CPI) data in December. It’s worth noting.

In these developments, US equity futures have recorded a slight rise, while 10-year Treasury yields have raised their previous day’s pullback by 2.3 basis points (bps) from the previous year’s highs to 1.757% at the latest. I’m pulling it up.

Going forward, AUD / USD pair traders will continue to look at the Fed’s Prime Minister Powell’s testimony to gain further insight into rate hikes that could put pressure on Australian prices. However, for a clear direction, it is important to monitor market reaction through yields and equities.

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USA T-bond yields, S&P 500 Futures portray pre-Inflation anxiety

Global markets began to slow on Wednesday as key US inflation cautious sentiment probed earlier optimism fueled by US Federal Reserve Chairman Jerome Powell. The risk appetite also defies concerns about the coronavirus with links to South Africa, specifically Omicron, as well as CPI/PPI data from China, not to mention the World Bank’s 2022 economic forecast.

While portraying the mood, 10-year US Treasury yields remained under pressure around 1.741% as 2-year yields fell for the second day in a row, down 1.2 basis points (bps). closest near 0.887. In addition, the future S & P 500 is struggling to keep up with Wall Street’s profits, unchanging about 4,705 at the press time.

Two key measures of China’s inflation eased December and tested already sluggish markets later this year. That said, the overall Consumer Price Index (CPI) fell below 1.8% forecast and 2.3% ahead of 1.5% year-on-year, while last month’s index also fell. down 0.3% from +0.2% expected and +0.4% from previous readings. In addition, ex-factory inflation, production price index (PPI), also dropped below 11.1% expected and 12.9% earlier, to 10 3% compared to the same period last year for December.

On the other hand, a new record of daily fallopian tube infections in Australia and an announcement of a public health emergency in Washington DC are also probing risk takers. In addition, the increase in virus cases in China, recently 166 cases compared to 110 cases a day earlier, is adding to commercial filters.

Elsewhere, negative economic forecasts from the World Bank (WB) also challenged previous market optimism. The World Bank cited the coronavirus issue as lowering its global GDP expectations for 2022 to 4.1% from 4.3% previously estimated. The World Bank also cut its economic forecasts for the United States and China, by 0.5% to 3.7%, and 0.3% to 5.1%, respectively, for 2022.

It should be noted that Fed Chairman Jerome Powell’s testimony before the Senate Banking Committee could be seen as the main positive factor in the good market performance on Tuesday. That said, Fed’s Powell has shown he is willing to raise rates, but remains cautious about normalizing the balance sheet. However, the Fed boss also expects the supply slump to ease somewhat and that the economic impact of the Omicron variant will be short-lived. Therefore, US CPI for December today, at 7.0% yoy vs. 6.8% previously, will be an important number to watch as higher inflation could refresh the risk-on mood.

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EUR/USD swings between 1.1400 as ECB-Fed fight intensifies after US inflation

EUR/USD is balanced around the highest level since mid-November early Thursday morning in Europe. Major currency pairs made the biggest jump in 5 weeks the previous day as the US dollar fell to multi-day lows as inflation data matched expectations, causing market challenges causing the US dollar to drop to multi-day lows. There will be less ammo when they meet on Jan. 25. That suggests, the US Consumer Price Index (CPI) hit its highest level since 1982 while still hitting a forecast of 7.0% year-over-year, down from 6.8% in previous readings. The monthly figures stood at 0.5% vs 0.4% expected but fell below 0.8% previously.

However, Fed policymakers have reiterated their bullish bias following the release of inflation data, thus stressing EUR/USD bulls in recent times. . The Chairman of the Federal Reserve St. Louis James Bullard was the first to declare, according to the Wall Street Journal (WSJ), “four rate hikes in 2022 appear to be on the cards and, in the face of high inflation, and one in March seems very likely.

Then a member of the Fed’s Board of Governors and the new FOMC vice president, Lael Brainard, also mentioned: signaled a rate hike as early as March. On the other hand, European Central Bank (ECB) decision maker François Villeroy de Galhau states: “We are very close to the peak of inflation. It should be noted that industrial production in the euro area increased 2.3% month-on-month in November from previously revised 0.5% and 1.3% forecasts.

With the recent escalation of pressure on Fed policymakers, bond yields consolidate previous losses, raising questions about equity futures and assets more risky. However, a large number of policymakers from the European Central Bank (ECB) and the Fed will speak on Thursday, thus providing an active day for EUR/USD traders. In addition to monetary policy signals, the US Producer Price Index (PPI) for December and weekly jobless claims, along with the European Economic Bulletin, will also lead the pair’s moves Short-term.

In summary, recent inflation data reinforces the drama between the ECB and the Fed even as the Fed has the upper hand over the bloc’s central bank. Therefore, the EUR/USD price could turn lower if the balance is in favor of the Fed hawks.

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XAU/USD bulls point to further US dollar weakness

Potential catalysts for the day ahead will come during the US session with New York Fed President John Williams and retail sales in the United States. The Fed will then enter a shutdown until its next interest rate decision later this month. This makes the US data the proof.

TD Securities analysts explain that retail sales are likely to decline in December, even as higher prices have boosted nominal values. “Spending may be dampened by the disappearance of fiscal stimulus, an earlier-than-normal recovery of holiday shopping and Omicron. We are looking for a notable drop in total revenue of 1.4% month-on-month (consensus: 0.1%) and a larger decrease of 2.0% for the control group (consensus level: 0.1%) consensus: unchanged). Real and nominal spending remained strong QoQ and strong YoY dollars. XAU/USD is trading around $1,820 and down around 0.1% as the DXY index attempts to correct its late-December lows until the current financial year’s sell-off.

US$ as measured by the DXY Index, sold off from 96.90 to a recent low of 94.66. For weeks, XAU/USD is up more than 4%. However, in what could be a more technical move, the yellow metal failed to capitalize on falling US yields and the greenback on Thursday. DXY fell 0.4% and the US 10-year yield fell 2.5 basis points to 1.718%. “The persistently weak US dollar failed to lift gold prices as investors expressed concerns about the Fed’s hawkish move to contain inflation,” said analysts at ANZ Bank.

However, that won’t explain why the greenback and yields continue to fall. Instead, the bond market appears to be reassessing the pace of the Fed’s balance sheet liquidation following less hawkish rhetoric from Fed Chairman Jerome Powell and Fed Chairman Philly Patrick Harker.

On Thursday, Harker said he sees the Fed beginning to shrink its balance sheet “in late 2022 or early 2023” after the central bank raised its target interest rate enough, to about 1% from level close to zero. The comments echo those of Powell, who said the Fed could begin shrinking its balance sheet later this year during a confirmation hearing before the Senate Banking Committee. “At some point, maybe later this year, we’re going to start to see the balance sheet collapse, and that’s just the path to policy normalization,” he said, adding that the US economy “no longer needs or wants” the Fed. policy is very appropriate.

These remarks contrast with those of other more belligerent officials, such as Atlanta Fed President Raphael Bostic. “There is a risk that inflation will be high for a long time and we need a direct, clear and decisive response,” Bostic told Reuters in an interview on Monday. Bostic explains that central banks should also be aggressive on their balance sheets, allowing their holdings to drop by at least $100 billion per month and with plans to withdraw at least $1.5 trillion a quick run of financial markets that it considers pure “liquidity”.

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XAU/USD stands at a two-month high of $1,845 despite more steady yields

Gold prices maintain previous rally momentum as it sits near fresh two-month highs of $1,844 set in early Asia. The upside potential for the shiny metal remains intact although continued strength is seen around the on-curve US Treasury yields. Gold prices benefited from soaring inflation in the UK and Germany as investors boosted demand for gold as an inflation hedge. Meanwhile, US President Joe Biden also called on the Fed to curb the fastest inflation rate in decades.

Going forward, the US Dollar valuation and yield price action will continue, with all eyes on the final Eurozone CPI release. Weekly US data on jobless claims and existing home sales may also provide trade incentives. Gold (XAU/USD) from yesterday’s spike around $1,839, is down 0.22% on the day in the early Asian session as market sentiment deteriorates.

The yellow metal rallied to a two-month high on Wednesday after US Treasury yields retreated from multi-day highs and engulfed the US dollar. However, the latest speech by US President Joe Biden has revived hopes of a faster Federal Reserve normalization of monetary policy, thereby boosting bond purchases and pull the price of gold higher. US President Biden highlights efforts by chief trade negotiator Katherine Tai to quell Sino-US trade disputes. However, he also mentioned that the US “has not yet achieved the ability to ease tariffs on Chinese products”. Biden also said, “China doesn’t live up to their purchase commitments.”

In addition, the comments in favor of the US Federal Reserve Chairman Jerome Powell’s efforts to re-adjust the support level also raised concerns about accelerating the pace of interest rate hikes and normalization balance sheet, thereby adding downward pressure on gold prices.

In addition, US President Biden also directly warned Russia not to invade Ukraine and that if it did; it would lose access to the US dollar. Elsewhere, uncertainty surrounding US stimulus measures and upcoming moves by the People’s Bank of China (PBOC) also weighed on gold prices. US President Biden has signaled that Build Back Better (BBB) ​​stimulus talks are underway, but US Senator Joe Manchin dismissed the comments. Additionally, the PBOC is set to make a rate decision at 01:30 GMT, with market participants evenly split between initial signals of a rate cut from China’s central bank and latest comment from PBOC Deputy Governor, Liu. Guoqiang. The PBOC official mentioned that the central bank “will keep the yuan exchange rate essentially stable.”

Against this backdrop, the yield on the 10-year US Treasuries rose 4.5 basis points (bps) to 1.87%, while S&P 500 futures fell 0.15% on the day, suggesting a lack of sentiment latest positive. Even so, gold prices are trading above a key near-term resistance level and so today’s PBOC ruling, as well as risk catalysts, will have important implications for the clocks in Asia. Then, US Jobless Claims, the Philadelphia Fed Manufacturing Survey for January and Existing Home Sales for December will keep gold traders entertained afterwards.

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USD/JPY renews weekly lows below 114.00 as profits drop, BOJ Minute


USD/JPY remains down for the third day in a row, down 0.30% on the day around 113.85 when Tokyo opens on Friday. The yen pair depicts market risk aversion while tracking falling Treasury yields and equities.

Concerns about a hawkish appearance by the US Federal Reserve (Fed) at next week’s monetary policy meeting seems to be weighing on USD/JPY prices. Along with that are recent pessimistic signals from the minutes of the Bank of Japan’s (BOJ) monetary policy meeting as well as mixed inflation data from Japan.

Expectations for a Fed rate hike signal were bolstered after US Treasury Secretary Janet Yellen said in an interview with CNBC: “Inflation has risen more than most economists, myself included. , and of course our responsibility to the Fed to fix it. And we will. “It should be noted that hesitancy over the US-China relationship also affected market sentiment and USD/JPY prices, but did not give a date. The 10-year US Treasury posted daily losses on Tuesday two in a row, down four basis points to 1.79% latest, while S&P 500 Futures are down 0.30% on the day at press time that said USD/JPY prices encourage data mixed data as an excuse for Bullish bets on greenback and treasury yields. US jobless claims hit their highest level since late October and details from the Philadelphia Fed manufacturing survey also improved in January.

Looking ahead, the lack of major data/events could limit USD/JPY moves in the short term, but the downside remains intact amid falling Treasury yields and concerns ahead of the Fed

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NZD/USD hit by a toxic cocktail with risk themes

Down around 0.15%, NZD/USD is currently trading near 0.6690 and is moving between a low of 0.6670 and a high of 0.6709. Escalating tensions between Russia and Ukraine became the driving force as investors pounced on the Federal Reserve on Wednesday,

As a result, the S&P 500 went so far after a correction, its first. first since the 2020 crash in the world. market caused by the coronavirus pandemic. However, US stocks ended higher on Monday after reversing heavy losses early in a late rebound ahead of megacap tech earnings and this week’s Federal Reserve policy meeting. The Nasdaq Composite rose 0.6% to 13,855.13, turning green in a strong last-minute reversal. The S&P 500 gained 0.3% to 4,410.13 and the Dow Jones Industrial Average also gained 0.3% to 34,364.50.

Meanwhile, ‘data points to a slowdown in economic activity at the start of the year, amid broader inflation concerns’, said analysts at ANZ Bank.

This week, the Consumer Price Index will be the focus on this issue. “The 10% increase in oil prices from Q4 will make transportation a major contributor to equities with upside risk coming from housing, mainly due to spending,” TD Securities analysts explained commodity prices increased and consensus was faster,” explained TD Securities analysts. “A print close to 6%, a 3-decade high is unlikely to trigger a significant market reaction, but a print that matches the RBNZ forecast of 5.7% YoY would lead to a rally recover.

As for the US Central Bank, the market is bracing for the US Federal Reserve and the market is expecting the Fed to signal the removal of its broad stimulus program. “The risk with the meeting could be that the Fed gets even louder with its intention to adjust policy in response to inflation,” said analysts at ANZ Bank.