Morning wrap (18.01.2023)

• US indices finished yesterday's trading mostly lower. S&P 500 dropped 0.20%, Dow Jones moved 1.14% lower and Russell 2000 declined 0.15%. Nasdaq was an outperformer and managed to finish trading 0.14% higher

• Indices from Asia-Pacific traded mostly higher today. Nikkei gained 2.5%, S&P/ASX 200 added 0.1%, Nifty 50 moved 0.7% higher and indices from China traded up to 0.3% higher. Kospi was a laggard with 0.5% drop

• DAX futures point to a higher opening of the European cash session

• JPY slumped today following Bank of Japan monetary policy decision with USDJPY jumping 2% higher on the day

• Bank of Japan left interest rates and other monetary policy settings unchanged. Markets hoped that tolerance band around target 10-year yield will be widened further but it was left unchanged at +-0.5%

• BoJ also introduced a new tool that will allow it to make loans on variable rate against collateral to financial institutions. Earlier only fixed-rate loans were allowed

• BoJ Governor Kuroda said that there is no need to expand bond yield target band further

• Goldman Sachs boosted their forecast for Chinese GDP growth in 2023 to 5.5 from 5.2%

• Morgan Stanley sees chance of a Fed rate cut once CPI inflation drops below 3.0%

• Japanese core machinery orders plunged 8.3% MoM in November (exp. -1.0% MoM)

• Japanese industrial production increased 0.2% MoM in November (exp. -0.1% MoM)

• Cryptocurrencies trade mostly higher - Bitcoin trades 0.2% higher, Ethereum adds 0.5% and Dogecoin rallies over 5%

• Oil trades flat while US natural gas prices trade around 1% lower

• Precious metals pull back. Gold and palladium drop 0.4% each, platinum dips 0.5% while silver is an exception and trades 0.2% higher

• NZD and AUD are the best performing major currencies while JPY and CHF lag the most

USDJPY rallies today after Bank of Japan failed to make another move on the target yield band. The pair trades 2% higher on the day and is now testing the 131.00 resistance zone. Source: xStation5