COMMODITIES: WTI Futures Through $80/bbl, Volatile Bull Cycle Intact
A volatile bull cycle in WTI futures remains intact. Despite being in overbought territory the contract traded higher again, Thursday, to confirm a resumption of the current uptrend. The move higher paves the way for a climb towards the $82.92 next, a Fibonacci projection. The first key support to monitor is $68.11, the 20-day EMA. A pullback would allow the overbought condition to unwind. Gold is unchanged and continues to trade below Monday’s intraday high. For now, a short-term bullish theme remains intact following recent gains. The metal has cleared all key retracement points of the sharp sell-off between Jan 29 - Feb 2. This strengthens the short-term bullish theme and signals scope for an extension towards key resistance and the bull trigger at $5595.5, the Jan 29 high. Initial firm support to watch lies at $5083.0, the 20-day EMA.
- WTI Crude up $3.24 or +4% at $84.28
- Natural Gas up $0.02 or +0.8% at $3.025
- Gold spot up $3.41 or +0.07% at $5087.69
- Copper up $1.6 or +0.28% at $582
- Silver up $0.57 or +0.69% at $82.7135
- Platinum up $24.81 or +1.17% at $2142.47
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JPY: USDJPY Extends Rebound, BOJ Minutes Stir Hiking Speculation
- USDJPY continues to grind higher on Wednesday, extending the recovery from last week’s lows to 3% in recent trade. The move back above the 50-day EMA, intersecting at 155.75, undermines the recent bear theme and highlights a stronger short-term bull cycle. Price action this morning has bridged the gap to initial resistance at 156.64, the 61.8% retracement of the Jan 14 - 27 bear leg, with 157.72 the next topside level of note.
- The swift recovery has been primarily driven by a more stable backdrop for the dollar following Kevin Warsh’s nomination, while expectations for the LDP securing a majority bring concerns surrounding Japan’s fiscal trajectory back to the fore.
- Going slightly under the radar has been the latest release of the BOJ’s summary of opinions, which were published during Monday’s APAC session and have stirred some speculation surrounding the Bank’s short-term hiking timeline.
- Indeed, HSBC believe the BoJ may prove to be a more reliable lifeline for the JPY in the coming weeks and months. They highlight considerably more “hawkish” comments on the JPY in the January edition when USDJPY was around 158. New innovations included concerns of how a weak yen can lead to wider inequality, how it raises housing prices and an explicit link to the JPY’s depreciation and loose financial conditions.
- Additionally, JP Morgan said the minutes read a tad hawkish, and that with some political stability post-election the BOJ could hike in March, which could also lead to some shift in local flow dynamics.
- Finance Minister Katayama was on the wires again on Tuesday, reiterating the MoF will keep close communication with the US about the currency markets. CIBC believe official warnings could get louder if USDJPY nears 157-158 ahead of Sunday’s vote.
MNI: EUROZONE JAN FLASH HICP 1.7% Y/Y (MNI MED 1.7%, DEC 2.0%)
- MNI: EUROZONE JAN FLASH HICP 1.7% Y/Y (MNI MED 1.7%, DEC 2.0%)
- EUROZONE JAN FLASH CORE HICP 2.2% Y/Y (MNI MED 2.2%, DEC 2.3%)
- EUROZONE JAN FLASH SERVICES HICP 3.2% Y/Y (MNI MED 3.3%, DEC 3.4%)
MNI: EUROZONE DEC PPI -0.3% M/M, -2.1% Y/Y (VS +0.7% M/M, -1.4% Y/Y NOV)
- MNI: EUROZONE DEC PPI -0.3% M/M, -2.1% Y/Y (VS +0.7% M/M, -1.4% Y/Y NOV)
