Fundamental News And Technical Analysis Report – 28 December 2022

28 Dec 2022

The dollar increases to a one-week high against the yen as Treasury yields rise

Asian stock market closes in red on Tuesday. The Shanghai Composite is down 0.25% at 3095.57. Overall, the Singapore MSCI is down 0.31% at 290.18. Over in Hong Kong, the Hang Seng Index is up 1.53% at 19593.06. In Japan, the Nikkei 225 is down 0.46% at 26447.87. While the Topix index is down 0.14% at 1910.46 South Korea’s Kospi is down 2.17% at 2332.79. Australia S&P/ASX 200 down 0.30% at 7107.70.

Top News of the Day:-

The dollar climbed to a more than one-week high versus the yen on Wednesday, buoyed by higher Treasury yields amid hopes for a strong rebound in Chinese growth as COVID-19 curbs loosen.

The yen also came under pressure amid more signals from the Bank of Japan that a surprise policy tweak last week was not the start of a scrapping of stimulus.

The dollar rallied 0.5% to 134.17 yen in Asian trading, and earlier touched 134.40 for the first time since Dec. 20, when the BOJ sent the pair spiralling lower with an unexpected loosening of the 10-year Japanese government bond yield policy band.

The greenback dropped as low as 130.58 yen that day for the first time since early August as traders speculated about an eventual withdrawal of stimulus.

A summary of opinions from the meeting though, released Wednesday, showed policymakers backing a continuation of ultra-accommodative policy, even as they discussed growing prospects the country could see higher wage growth and sustained inflation next year.

Market Summary as per 27/12/2022:

European equities Tuesday closing. The DAX futures contract in Germany traded up 0.39% at 13995.10, CAC 40 futures up 0.70% at 6550.66. UK 100 futures contract in the U.K. up 0.05 at 7473.01

In the U.S. on Wall Street, the Dow Jones Industrial Average Closed up 0.11% at 33241.56. The S&P 500 down 0.40% at 3829.25 and the Nasdaq 100 down 1.38% at 10353.23, NYSE closes 0.20% up at 15218.26.

Top Market News Today:

In the Forex market, GBPUSD up 0.10% at 1.2026. The USDJPY up 0.47% at 134.09, The USDCHF up 0.13 at 0.9293. EURUSD up 0.06% at 1.0645. EUR/GBP up 0.12% at 0.8850. The USD/CNY up 0.13% at 6.9687 at the time of writing.

In the Commodity market U.S. Gold futures down at 0.15% $1,810.94. Elsewhere, Silver futures down 0.25% at $23.97 per ounce, Platinum down 0.34% at $1018.72 per ounce, and Palladium down 0.26% at $1821.96.

Brent Crude Oil down 0.04 at $84.65 per barrel.

In the Cryptocurrency Markets, Bitcoin at 16604.00 down at 0.56%, Ethereum down 1.59% at 1191.69, Litecoin at 67.59 down 1.56%, at the time of writing.

Top Market Segment to Watch Out Today:

Tesla: -(NASDAQ: TSLA) Inc shares fell 11.4% in previous market session, after a Reuters report that Tesla was planning to run a reduced production schedule in January at its Shanghai plant sparked worries of a drop in demand in the world’s biggest car market.

The stock, which fell to its lowest in more than two years and had its worst day in eight months, was the biggest drag on the benchmark S&P 500 index and the tech-heavy Nasdaq index.

It has lost more than half its value since the start of October as investors worry that Twitter was taking much of Chief Executive Elon Musk’s time while fretting about his stake sale in the electric-car maker.

Economic News:

US: – Annual price growth in the increasingly fragile U.S. housing market slid into the single digits in October for the first time in about two years when mortgage rates that month surged above 7% and further stifled demand, a pair of closely watched surveys showed on Tuesday.

The S&P CoreLogic Case Shiller national home price index increased by 9.2% in October, down from 10.7% in September and notching the first single-digit gain since November 2020. On a month-over-month basis, S&P Case Shiller’s index fell for a fourth straight month, while FHFA’s gauge was unchanged.

“As the Federal Reserve continues to move interest rates higher, mortgage financing continues to be a headwind for home prices,” Craig Lazzara, managing director at S&P DJI, said in a statement.

The housing market has suffered the most visible effects of aggressive Fed interest rate hikes that are aimed at curbing high inflation by undercutting demand in the economy. This month the Fed raised rates again by half a percentage point, capping a year that saw its benchmark rate shoot from near zero in March to between 4.25% and 4.5% now – the swiftest rates have risen since the early 1980s. Fed officials projected rates would climb further in 2023, likely topping 5%.

The 30-year fixed mortgage rate breached 7% in October for the first time since 2002, more than doubling in the span of nine months, pulling the rug out from what had been a red-hot housing market fuelled by historically low borrowing costs and a rush to the suburbs during the coronavirus pandemic.

Data last week showed the combined annual sales rates of new and existing homes through November had slumped by 35% since January – among the fastest falls on record – to the slowest since late 2011. New single-family housing starts and permit issuance skidded to a two-and-a-half-year low last month as well.

Euro Zone: –

UK retail destinations enjoyed an almost 40% rise in shopper numbers after the first Christmas in three years with without pandemic restrictions, data compiled by Springboard showed on Tuesday.

Footfall at UK retail centres on Dec. 26 — known as Boxing Day in the UK and a key date for retailers — climbed 38.8% year-over-year, with central London clocking a 66% increase.

Still, data showed UK retail footfall for Boxing Day was 18.2% lower than pre-pandemic levels in 2019.

UK footfall jumped 50.1% up to 12 p.m. on Boxing Day before tapering off, while footfall up to noon in central London more than doubled, rising 139.2% from a year earlier.

“Boxing Day was far from doom and gloom this year,” Diane Wehrle, insights director at Springboard, said in a statement.

“These positive results come in line with the first Christmas post-pandemic without any formal social restrictions and in spite of the cost-of-living crisis and the rail strikes, which inevitably affect retailers negatively.”

The numbers are “very welcome and promising” for retailers in London, Wehrle added.

Top Economic Releases Today:

USD: Pending Home Sales (MoM) (Nov) Forecast –0.8%, Previous –4.6% at 20:30
USD: 5-Year Note Auction Previous 3.974% at 23:30
JPY: Industrial Production (MoM) (Nov) Actual –0.1%, Forecast –0.3%, Previous –3.2% at 05:20
RUB: Retail Sales (YoY) (Nov) Forecast –9.2%, Previous –9.7% at 21:30
RUB: Unemployment Rate (Nov) Forecast 4.0%, Previous 3.9% at 21:30