FOREX: USD/JPY Slippage Exposes January Low
- JPY is favoured across G10 for a second session, helping press USD/JPY seemingly sustainably back below the 50-dma. The moves follow a speech from the BoJ's deputy governor Himino, who stressed that real rates in Japan remain in negative territory despite a recent rate hike - meaning the BoJ has scope to continue to tighten policy should its economic outlook unfold inline with expectations.
- JPY price action raises the focus on key support below - crossing at 153.72 to coincide with the DeepSeek-inspired sell-off in US equities this week. This level also marks the 50% retracement for the upleg in the pair posted off December low - meaning a break below will open the next leg toward 152.55.
- The EUR trades poorly on the back of a soft string of economic data. Both French and German GDP updates were soft relative to expectations, helping EUR/GBP slip to a new multi-week low at 0.8360, opening 0.8348 in the process.
- NZD/USD trade this week has kept the pair inside it's primary downtrend, with the near-term outlook worsening on the failed break of the 0.5707 50-dma on January 24th. Renewed weakness here isolates downside targets at 0.5633 and - ultimately - the bear trigger and pullback low of 0.5542.
- Focus for the session ahead turns to the ECB rate decision, at which markets expect another sequential 25bps cut. The tone of Lagarde's press conference will be carefully watched, particularly to gauge any contrast with Powell's policy comments yesterday - at which the Fed adopted an effective wait-and-see approach on rates for this year.
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COMMODITIES: WTI Futures Holding Higher
WTI futures are trading higher today as the contract extends recent gains. A stronger reversal to the upside would refocus attention on key short-term resistance at $76.41, the Oct 8 high. Initial firm resistance is unchanged at $71.97. A bear threat in Gold remains present. The yellow metal traded sharply lower on Dec 18 and the move undermines a recent bull theme. A resumption of weakness would open key support at $2536.9, the Nov 14 low.
- WTI Crude up $0.4 or +0.56% at $71.41
- Natural Gas down $0.14 or -3.51% at $3.799
- Gold spot up $8.09 or +0.31% at $2614.49
- Copper down $3.3 or -0.81% at $405.95
- Silver up $0.01 or +0.05% at $28.961
- Platinum up $8.16 or +0.9% at $912.55
EQUITIES: Bear Threat in E-mini S&P Remains Present
A bear threat in the S&P E-Minis contract remains present and the latest move down highlights the end of the recent Dec 20 - 26 corrective bounce. An extension lower would expose 5866.00, the Dec 20 low and a key short-term support. A bull cycle in the Eurostoxx 50 futures contract remains intact, however, the recent move down highlights a corrective phase. Despite the latest bounce, a short-term bear threat remains present - for now.
- In China the SHANGHAI closed lower by 55.563 pts or -1.63% at 3351.763 and the HANG SENG ended 18.53 pts higher or +0.09% at 20059.95.
- Dow Jones mini up 56 pts or +0.13% at 42977, S&P 500 mini up 17.75 pts or +0.3% at 5976.25, NASDAQ mini up 87.75 pts or +0.41% at 21503.25.
CHINA: CFETS RMB Basket Tweak Drops USD, EUR, JPY Weighting, Adds MOP
China adjust the currency weightings as part of the CFETS RMB Index: Full basket of currencies now composed of 25 currencies, having included the Macau Pataca (MOP) for 2025:
- USD weighting dropped to 18.903% from 19.460%
- EUR weighting dropped to 17.902% from 18.080%
- JPY weighting dropped to 8.584% from 8.963%
Full list found here: https://iftp.chinamoney.com.cn/chinese/zxpl/20241231/3028340.html
