FUNDAMENTAL NEWS AND TECHNICAL ANALYSIS REPORT – 08 FEBRUARY 2023

08 Feb 2023

Japan PM says global communication skills key for new BOJ head pick

Asian stock market closes in green on Tuesday. The Shanghai Composite is in green 0.29% at 3248.09. Overall, the Singapore MSCI is down 0.53% at 306.68. Over in Hong Kong, the Hang Seng Index is up 0.36% at 21298.70. In Japan, the Nikkei 225 is down 0.03 at 27685.47. While the Topix index is up 0.21% at 1983.40, South Korea’s Kospi is up 055% at 2451.71. Australia S&P/ASX 200 down 0.46% at 7504.10.

Top News of the Day: –

Japanese Prime Minister Fumio Kishida said the new central bank governor must have strong communication skills and be able to closely coordinate with global peers, offering his most explicit comment to date on his preference for the top job.

Speaking in parliament, Kishida said on Wednesday he was still in the process of selecting the successor to incumbent BOJ Governor Haruhiko Kuroda, whose term ends in April, noting “the impact the decision would have on financial markets.”

While Kishida did not name any potential candidates for the job, some central bank watchers say his comments suggest he has not ruled out Hiroshi Nakase, a former BOJ deputy governor with international experience, previously thought to have pulled out of the race.

“Since the Lehman crisis, close coordination among major central bank leaders, as well as the ability to receive and deliver high-quality communication to and from domestic and overseas markets, have become extremely important,” Kishida said.

Market Summary as per 07/02/2023:

European equities Tuesday closing. The DAX futures contract in Germany traded down 0.16% at 15320.88, CAC 40 futures down 0.07% at 7132.35. UK 100 futures contract in the U.K. up 0.36 at 7864.71.

In the U.S. on Wall Street, the Dow Jones Industrial Average Closed up 0.78% at 34156.69. The S&P 500 up 1.29% at 4164.00 and the Nasdaq 100 up 1.90% at 12113.79, NYSE 0.79% closes up at 16021.62.

Top Market News Today:

In the Forex market, GBPUSD up 0.01% at 1.2046. The USDJPY up 0.17% at 131.20, The USDCHF down 0.01 at 0.9215. EURUSD up 0.11% at 1.0735. EUR/GBP up 0.08% at 0.8909. The USD/CNY down 0.19% at 6.7776 at the time of writing.

In the Commodity market U.S. Gold futures up at 0.32% $1,877.76. Elsewhere, Silver futures up 0.83% at $22.32 per ounce, Platinum up 0.56% at $979.00 per ounce, and Palladium up 0.58% at $1649.00.

Brent Crude Oil up 0.06% at $83.73 per barrel.

In the Cryptocurrency Markets, Bitcoin at 23205.00 down at 0.18%, Ethereum up 0.28% at 1675.05, Litecoin at 101.43 up 0.61%, at the time of writing.

Top Market Segment to Watch Out Today:

GOLD– Gold prices steadied on Wednesday following somewhat mixed signals on monetary policy from the Federal Reserve

The yellow metal marked two consecutive days of small gains as it staged a recovery from a near one-month low touched last week.

Gold saw a volatile session on Tuesday after Fed Chair Jerome Powell reiterated that the central bank may need to raise interest rates further due to strength in the labour market and elevated inflation.

Economic News:

US: – Federal Reserve Chairman Jerome Powell, repeated that inflation was slowing, though reiterated the need for further hikes as the mission to bring inflation down to the central bank’s target still has a long way to go amid a red-hot labour market.

“We didn’t expect [the January jobs report] to be this strong, but it shows you why we think that this will be a process [to bring down inflation] that takes a significant period of time because the labour markets are extraordinarily strong,” Powell said Tuesday to the Economic Club of Washington, reiterating the need for ongoing rate hikes.

The Fed is trying to “achieve a single policy that is sufficiently restrictive, to bring inflation down to 2% over time and we don’t think we’ve achieved that yet,” Powell added.

The fed chief, however, said that it was “good” that inflation is starting to come down and it wasn’t at the cost of a strong labour market.

Last week’s red-hot jobs report showed the economy created 517,000 new jobs in January, but the unemployment rate dropped to a more than four-decade low.

Powell’s latest remarks were largely a recap of his prior remarks following the Fed’s decision last week to downshift to a quarter-point hike. The scant new clues on monetary policy give the fed options on policy to respond to incoming data either by delivering more hikes or pausing.

“Powell has the luxury to wait because the CPI is going to come down just from the base effects, goods deflation, and lower rental prices…He is in no rush to do anything dramatic at this point,” Ren added.

For others, however, the remarks were deemed hawkish enough to price in more hikes.

“On the back of Powell’s appearance, we are adding a 25bp to the May FOMC meeting, bringing our expectation for the peak rate to 5.00% to 5.25%,” Morgan Stanley said in a note.

Expectations for a March hike are nearing fully priced in, while the odds of a May rate hike jumped to 69% from 38% last week, according to Investing. Com’s Fed Rate Monitor Tool.

Two further rate increases would take the Fed funds rate to a range of 5% to 5.25%, or 5.1% at the midpoint, in-line with Fed’s December projections.

Euro Zone: – Britain’s labour market showed some more signs of cooling in January with starting pay for people hired for permanent roles growing at its slowest pace in almost two years, according to a survey of recruitment firms published on Wednesday.

With the Bank of England worried about inflationary heat in the jobs market as it considers when to stop raising interest rates, the Recruitment and Employment Confederation said cautious employers were relying increasingly on temporary hires.

Billings for temporary workers last month rose at the fastest pace since September, pushing up pay for those workers.

By contrast, hiring of permanent staff fell and their starting salaries grew at the slowest pace in 21 months, although the rise was still big by historic standards, the survey showed.

There were some signs of increased confidence among employers as the pace of growth in the number of vacancies posted for permanent staff accelerated for the first time in nine months, REC said.

“Taking into account the high level of activity last summer and autumn, when the permanent slowdown started, activity levels for both permanent and temporary roles are still high,” REC chief executive Neil Carberry said.

BoE Governor Andrew Bailey said last week that labour market data would be key for understanding how quickly inflation falls. The BoE raised borrowing costs for the 10th time in a row to 4% but hinted it was close to ending its run of rate hikes.

The REC survey, which is sponsored by accountants KPMG, took place between Jan. 12 and Jan. 25 and was based on responses from a panel of 400 recruiters.