RIKSBANK: Slightly Morre Cautious Tone Amongst the Doves
The Riksbank January meeting minutes highlight a slightly more cautious stance amongst the “doves” (Breman, Bunge and Jansson) than was seen in December. At first glance, Breman and Bunge still tilt in favour of further easing at first glance, but Jansson appears happy with rates at current levels in the absence of new information. Seim and Thedeen continue to provide a more cautious outlook. We will review the minutes in further detail in due course.
Thedeen: "My assessment is that, with today’s decision, the policy rate has probably been lowered sufficiently. The upturn in economic activity towards the end of 2024 supports this assessment and the forecasts we published in December".
Breman: “I assess that the forecast for the policy rate from December still largely holds, but that it is important to be prepared to both cut and raise the policy rate if the outlook changes. However, my assessment is that the probability of the next step being a further rate cut is greater than the next step being a rate hike”.
Jansson: “As I pointed out at the outset, I support the assessment that the forecast for the policy rate from December still seems to hold reasonably well. This forecast means that the interest rate after the cut at today's meeting will remain unchanged at 2.25 per cent for the meantime”
- “Having said that, I would like to emphasise that I fully share the view in the draft update that we need to be prepared to adjust our monetary policy plan if the outlook for inflation and the economy changes”
Bunge: “We now have to look forward and carefully evaluate the need for coming policy rate adjustments on the basis of the effects of those already implemented. However, I consider that one additional part of the puzzle of monetary policy deliberations is the risk that monetary policy is too contractionary”.
Seim: “. In my view, we are now conducting a virtually neutral monetary policy which will eventually close the inflation and GDP gaps. This means that we are also well placed to be able to adjust monetary policy when shocks hit the economy”
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JGB TECHS: (H5) Returns Lower
- RES 3: 149.55 - High Mar 22 (cont)
- RES 2: 147.74 - High Jan 15 and bull trigger (cont)
- RES 1: 144.48/146.53 - High Nov 11 / High Aug 6
- PRICE: 142.12 @ 15:01 GMT Jan 03
- SUP 1: 141.65 - Low Dec 30
- SUP 2: 141.56 - 1.764 proj of the Aug 6 - Sep 3 - 9 price swing
- SUP 3: 141.05 - 2.000 proj of the Aug 6 - Sep 3 - 9 price swing
Markets slipped on the hawkish Fed and are yet to fully recover, touching 141.65 on the way lower. Medium-term trend signals on the continuation chart continue to point south. A resumption of the trend would pave the way for a move towards 141.56, a Fibonacci projection point on the continuation chart. A stronger recovery would open 144.48, the Nov 11 high. Further out, key resistance is at 146.53, the Aug 6 high (cont).
USDCAD TECHS: Bull Flag Highlights A Clear Uptrend
- RES 4: 1.4669 2.0% 10-dma envelope
- RES 3: 1.4539 3.382 proj of the Oct 17 - Nov 1 - 6 price swing
- RES 2: 1.4508 3.236 proj of the Oct 17 - Nov 1 - 6 price swing
- RES 1: 1.4467 High Dec 19
- PRICE: 1.4392 @ 15:50 GMT Jan 3
- SUP 1: 1.4336 Low Dec 20
- SUP 2: 1.4307/4232 20-day EMA / Low Dec 17
- SUP 3: 1.4136 50-day EMA
- SUP 4: 1.4011 Low Dec 5
USDCAD is unchanged and bulls remain in the driver’s seat. The latest pause appears to be a flag formation - a bullish continuation signal. Note too that moving average studies are in a bull-mode position, highlighting a dominant uptrend. Sights are on 1.4508 next, a Fibonacci projection level. Initial firm support to watch lies at 1.4307, the 20-day EMA. A pullback would be considered corrective.
AUDUSD TECHS: Southbound
- RES 4: 0.6471 High Dec 9
- RES 3: 0.6408 50-day EMA
- RES 2: 0.6341 High Dec 18
- RES 1: 0.6247/6282 High Dec 30 / 20-day EMA
- PRICE: 0.6204 @ 15:21 GMT Jan 3
- SUP 1: 0.6179 Low Dec 31
- SUP 3: 0.6158 1.236 proj of the Sep 30 - Nov 6 - 7 price swing
- SUP 3: 0.6100 Round number support
- SUP 4: 0.6045 1.500 proj of the Sep 30 - Nov 6 - 7 price swing
A bearish trend condition in AUDUSD remains intact and the pair continues to trade closer to latest lows. Recent weakness maintains the price sequence of lower lows and lower highs. Note that moving average studies are in a bear-mode position too, highlighting a dominant downtrend. Scope is seen for an extension towards 0.6158 next, a Fibonacci projection. Initial firm resistance to monitor is 0.6282, the 20-day EMA.
