FOREX: USDJPY Bear Cycle Extension, Initial Support Holds
Feb-05 11:33
- USDJPY downside momentum gained traction on Wednesday, following a break of short-term support at 153.72, the Jan 27 low. The move marks an extension of the bear cycle that started Jan 10. Both sides of the trade have been working in tandem as the USD index extends its pullback to roughly 2.3%, and stronger-than-expected Japanese wage data assists a more hawkish BOJ narrative.
- We previously noted support at 152.55, a Fibonacci retracement, which has held at first attempt. However, should the short-term sentiment extend through US hours, more meaningful support is found at 151.81, the Dec 12 low. Below here, attention would be on 151.06, the 76.4% retracement of the Dec 3 - Jan 10 bull leg.
- SocGen questions if USDJPY can fall much further "if the US economy remains robust, the Fed doesn’t ease much further and Treasury yields remain, essentially, rangebound". They, instead, see a "short-term solution [of] selling EURJPY [...] where the deterioration in Eurozone growth expectations relative to Japan is striking".
- Further weakness in the cross would place attention on 156.99, the Dec 4 low, and 156.18, the Dec 3 low and a key support.
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BONDS: Bund/Schatz Swap related trade
Jan-06 11:26
Bund/Schatz Swap related trade:
- DUH5 7.95k at 106.73 (suggest Payer).
- RXH5 1.36k at 13.40 (suggest Receiver).
GERMAN DATA: Small Regions Suggest Some Upside Risk For National CPI
Jan-06 11:23
December CPI Y/Y prints for Hesse (2.7% vs 2.0% Nov) and Rhineland-Palatinate (3.3% vs 2.7% Nov) clearly accelerated more than consensus expects for the national-level CPI due today (with the median analyst looking for 2.4% Y/Y after 2.2% in Nov). The Hesse M/M print of +0.7% was also notably higher than the national-level consensus of +0.3%.
- This means that there should be some upside risks here, but as Hesse and Rhineland-Palatinate cumulatively only account for 12.6% of the national basket, we can't put too much weight on the apparent beat just yet.
- Also, as the Hesse & R-P statistics agencies both noted some elevated uncertainty with the data on the back of a methodology update, the national agency Destatis might also be less certain on the flash print than usual. Nevertheless, focus lies on that national-level data, scheduled to be released today at 1300GMT/1400CET.
- Final data bringing some more clarity for Hesse and R-P is scheduled for Thursday, alongside releases from a wider set of other states, before the finalised national CPI release on Jan 16.
- Looking at the services prints of the two states already released, developments were mixed - there was some acceleration in Hesse but a lower print than before in Rhineland-Palatinate.
LOOK AHEAD: Monday Data Calendar: Serv/Comp PMIs, Dur/Cap Goods, Tsy 3Y Sale
Jan-06 11:22
- US Data/Speaker Calendar (prior, estimate)
- 6-Jan 0915 Fed Gov Cook eco-outlook at law and economics conf (text, Q&A)
- 6-Jan 0945 S&P Global US Services PMI (58.5, 58.5)
- 6-Jan 0945 S&P Global US Composite PMI (56.6, --)
- 6-Jan 1000 Factory Orders (0.2%, -0.4%); ex-trans (0.1%, --)
- 6-Jan 1000 Durable Goods Orders (-1.1%, -0.4%); ex-trans (-0.1%, 0.3%)
- 6-Jan 1000 Cap Goods Orders Nondef Ex Air (0.7%, 0.1%)
- 6-Jan 1000 Cap Goods Ship Nondef Ex Air (0.5%,0.3%)
- 6-Jan 1130 US Tsy $84B 13W and $72B 26W bill auctions
- 6-Jan 1300 US Tsy $58B 3Y note auction (91282CMF5)
