Weekly FX Market Recap: Jan. 17 – 21

Blended value motion for the monetary markets this week, however the normal theme appears to be like to be one in all “risk-off” as secure haven currencies uniformly outperformed the risk-on majors.

As traditional on this atmosphere, the Japanese yen and Swiss franc took the highest spot in opposition to the remainder of the FX majors, whereas crypto and equities to a again seat to gold.

Notable Information & Financial Updates:

U.Okay.’s shopper costs rise by 5.4% – the very best since March 1992 – vs. 5.2% anticipated and 5.1% in Nov.

Australian financial system added 64.8K jobs in Dec. vs. 60K forecast, 366.1K earlier

Canadian inflation hits 30-year excessive at +4.8%

PBOC reduce lending charges to spice up credit score provide and progress on Thursday

Financial institution of Russia requires a full ban on crypto buying and selling and mining; possession can be permitted

U.S. jobless claims surge to a three-month excessive of 286K new claims

BOJ’s Kuroda: “Completely not serious about elevating charges or modifying our simple financial coverage”

President Lagarde re-iterates a that the ECB will tighten when inflation circumstances meet their standards

Intermarket Weekly Recap

Greenback, Gold, S&P 500, Oil, Bond Yield, Bitcoin Overlay 1-Hour

Broad threat sentiment appeared to be the dominant theme this week as equities, crypto property, and threat currencies couldn’t discover a bid, whereas secure havens just like the U.S. Greenback, gold, and the Japanese yen noticed inexperienced a lot of the week.

It’s doubtless that the unfavorable vibes stem from a group of drivers, beginning with unfavorable pandemic associated headlines from China to begin the week (Chinese language cities on excessive COVID-19 alert as Lunar New 12 months journey season begins), adopted by the ever current fears of excessive inflation and rising rates of interest (as evidenced by bond yields, together with the U.S. 10-yr Treasury yield practically touching the 1.90% degree).

We additionally noticed recent gas for rising hypothesis that the globe could also be seeing slowing progress within the coming months, together with weakening Chinese language & U.Okay. retail gross sales information, rising unemployment claims within the U.S., and combined enterprise survey information from across the globe.

We did get a short second of risk-on sentiment on Thursday, sparked by information of a lending price reduce from the Individuals’s Financial institution of China, however that proved to be a short-lived bounce as merchants went again to promoting threat property throughout the U.S. session. It was a flip that was arguably fueled by the continued sell-off within the tech sector as merchants are likely to rotate away from riskier property in a rising price atmosphere.

This may occasionally have been the rationale for the unfavorable flip in crypto property as effectively, however we are able to additionally argue that tales just like the hacking of Crypto.com for $34M, and one other SEC rejection of a spot bitcoin ETF (this time First Belief SkyBridge’s Spot Bitcoin ETF Proposal) could have had an affect on crypto bias as effectively.

With threat aversion dominating this week, it was no shock that within the foreign exchange markets, the Japanese yen took the highest spot, adopted by the Swiss franc and U.S. greenback. The Canadian greenback additionally noticed quite a lot of inexperienced this week regardless of the unfavorable threat atmosphere, doubtless pushed extra by rising oil costs because of geopolitical headlines (Oil hits a seven-year excessive of $87.10 after a key Iraq-Turkey Oil pipeline was knocked out by an explosion).

 USD Pairs

Overlay of USD Pairs: 1-Hour Forex Chart
Overlay of USD Pairs: 1-Hour Foreign exchange Chart

NY Empire State Manufacturing Index fell to -0.70 in January vs. an anticipated drop to 25.0

U.S. Housing begins rose 1.4% to 1.7M models in Dec.

U.S. Jobless Claims Surge to Three-Month Excessive on Omicron Affect

Fed officers say greater immigration might ease U.S. labor scarcity

The Philadelphia Federal Reserve’s manufacturing circumstances rose by 8 factors to 23.2 in Jan.

U.S. present dwelling gross sales tumbled by -4.6% m/m in December

Treasury Secretary Yellen expects inflation to gradual considerably subsequent 12 months

GBP Pairs

Overlay of GBP Pairs: 1-Hour Forex Chart
Overlay of GBP Pairs: 1-Hour Foreign exchange Chart

U.Okay. property asking costs improve 7.6% from a 12 months earlier – the quickest tempo since 2016

UK employers add document 184K jobs in Dec.; UK unemployment price down from 4.2% to 4.1% in Nov.

Rising inflation might weaken demand, gradual value progress – BoE’s Bailey

U.Okay. shopper confidence falls from -15 to -19 amid inflation and rate of interest considerations

U.Okay. retail gross sales hunch by -3.7% vs. -0.6% forecast in Dec.

BOE policymaker Catherine Mann says the Financial institution of England must push again in opposition to inflation

EUR Pairs

Overlay of EUR Pairs: 1-Hour Forex Chart
Overlay of EUR Pairs: 1-Hour Foreign exchange Chart

Germany’s ZEW financial sentiment index jumps from 29.9 to 51.7 in Jan.

Eurozone’s ZEW financial sentiment index additionally greater from 26.8 to 49.4

Germany producer costs rose +24.2% y/y in December

Eurozone inflation hits a document excessive of 5% in December

ECB Assembly accounts (15-16 December 2021): a situation of “greater for longer” inflation circumstances couldn’t be dominated out; able to act if value pressures persevered

CHF Pairs

Overlay of CHF Pairs: 1-Hour Forex Chart
Overlay of CHF Pairs: 1-Hour Foreign exchange Chart

Swiss Producer costs index fell -0.1% to 105.1 in December

CAD Pairs

Overlay of CAD Pairs: 1-Hour Forex Chart
Overlay of CAD Pairs: 1-Hour Foreign exchange Chart

Companies, shoppers count on inflation above 3.0% for the subsequent two years: BOC survey

Canada’s manufacturing gross sales up by 2.6% in Nov. regardless of flooding in B.C.

Canada’s dwelling constructing 22% slower in Dec. vs. Nov. however “stays excessive in historic phrases”

Canadian inflation hits 30-year excessive at +4.8%

Canada added 19.2K jobs in December -ADP

Canadian retail gross sales rose 0.7% in November to $58.1B

Canada new dwelling costs rose 0.2% in December

NZD Pairs

Overlay of NZD Pairs: 1-Hour Forex Chart
Overlay of NZD Pairs: 1-Hour Foreign exchange Chart

International Dairy costs rose by +4.6% because the final public sale

New Zealand PM says restrictions could possibly be tightened once more on neighborhood transmission of Omicron

Enterprise NZ’s manufacturing index improves from 50.6 to 53.7 in Dec.

AUD Pairs

Overlay of AUD Pairs: 1-Hour Forex Chart
Overlay of AUD Pairs: 1-Hour Foreign exchange Chart

Australia shopper sentiment slips by 2% to 102.2 in Jan. on Omicron surge

Australian financial system added 64.8K jobs in Dec. vs. 60K forecast, 366.1K earlier

Australia’s jobless price improved from 4.6% to 4.2% vs. 4.5% consensus

Australian MI inflation expectations dipped from 4.8% to 4.4%

JPY Pairs

Overlay of Inverted JPY Pairs: 1-Hour Forex Chart
Overlay of Inverted JPY Pairs: 1-Hour Foreign exchange Chart

Japan’s core equipment orders up by 3.4% vs. 1.4% anticipated in November

BOJ raises inflation estimates from 0.9% to 1.1% in FY 2022, says dangers are “usually balanced”

BOJ downgrades FY 2021 progress forecasts from 3.4% to 2.8% however upgrades FY 2022 progress from 2.9% to three.8%

Japan exports hit 17.5% y/y whereas imports surged by 41.1% in December

Gas prices and weak yen carry Japan’s annualized core shopper costs by 0.5% in Dec

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