Start of European session with the US Dollar strengthening
24 February 2023
Friday started early with a speech from the BoJ Governor Nominee Ueda. Here are the key takeaways that influenced trading on Yen. He claimed that inflation in Japan will fall below 2% around the middle of the next fiscal year. After that, BoJ will be able to move toward normalization. He also added that it takes a certain time for the effects of monetary policy to play out in the economy. Ueda added that current monetary easing is appropriate and if the trend inflation doesn’t improve, BoJ shall need to consider ways to maintain YCC while being mindful of market distortions. Yen reacted with a mild weakening.
Switching to currencies, the European session starts with the USD getting stronger and the Swiss Franc getting weaker. This allows the USDCHF to reach new monthly highs.
Today’s calendar offers the Core PCE Price Index and Revised UoM Consumer Sentiment from the US. The first data is expected to come at 0.4% and the second one is expected to reach 66.4. Now on to a few words about yesterday’s calendar with the Prelim GDP data from the US. The number slightly disappointed, coming at 2.7% instead of the expected 2.9%. The data initially caused the indices to drop but traders at the Wall Street managed to push the prices higher creating a promising bullish reversal at the end of the day. With yesterday’s bounce, the end of the week can be quite promising.
Thursday brought a reversal on oil that might be promising, but it is still too early to claim any bullish victory. The price is still low and the pressure to sell is significant. The same goes for precious metals. Gold looks weak and is currently trading close to the yearly lows. Silver is doing very similarly and is currently drawing a third consecutive bearish daily candle, being just a few cents from establishing the new low for 2023.