Yen extends loses
18 January 2023
Wednesday calendar is pretty busy. We are in the early hours of the European session and already got a few interesting numbers and statements influencing the main instruments. First of all, in the middle of the Asian session, we heard a few words from the Bank of Japan. Many experts were expecting shocking revelations, but no such luck. The BoJ Governor Mr Kuroda claimed that Japanese economy is picking up. He expects inflation to slow down in the second half of the fiscal year 2023. In addition, Mr Kuroda claims that the BoJ will continue easing down until the sustainable price goal is met.
What Mr Kuroda said is one thing; how it was received is another. Yen is currently dropping and is the weakest currency among majors. That’s an acceleration of a sentiment that started on Monday when the JPY started losing ground. On the Forex market, there are two leaders at the moment – the New Zealand Dollar and the British Pound. The latter one was hit today by the CPI data that came in line with the forecasts (10.5%), but the core CPI came slightly above them (6.3% vs 6.2%).
The last two days have brought correction in the USD whose weakness is rather striking. This is helping commodities climb slightly higher - for example, oil is currently flirting with the yearly highs established on the first trading day of 2023.
The indices had their ups and downs yesterday. The biggest drop was observed in Dow Jones who lost around 1%. On the other hand, Nasdaq finished the day 0.5% higher. Wednesday has futures starting on the front foot with most of them trading on the green side of the market. Nikkei seems to be the most comfortable one, which, of course, has its reasons in the words of Mr Kuroda. The Japanese index is currently at the highest levels of 2023 with a big appetite for more. The bounce from Monday is starting to look really impressive.
The calendar has PPI and Retail Sales numbers from the United States scheduled as well. All of them, apart from the Core PPI, are expected to come negative. Worth mentioning are also words by Mr Villeroy from the ECB who stated that we should avoid the recession this year more than an hour ago. That is definitely a piece of good news to go with your morning coffee - let’s see if the ECB official is right.