BoJ Raises CPI Target, ZEW Above Expectations, onto Draghi
New easing from BOJ to
start next year, higher CPI target; Rumors of Weidman resigning false; German
and EZ ZEW indicies soar; British public sector net borrowing lower and CBI
orders expectations fall. Canadian retail sales and US existing home sales are
next.
Status on last Wednesday's Premium Insights: 8 trades hit all targets, 5 were unfilled, 5 remain in progress.
1 of 2 EURUSD longs hit all targets, the other in progress; 2 of 2
GBPUSD shorts hit all targets 2 of 2 USDJPY longs hit all targets 2 of 2
AUDUSD longs in progress 1 of 2 CADJPY hit all targets, the other
missed the fill (89.10) by 18 pips 2 of 2 EURJPY longs unfilled 2 of 2
EURGBP longs unfilled (1st missed fill (0.8290) by 9 pips 1 of 2 Gold
longs hit all targets, the other in progress (missed final target by 3
pips) 1 of 2 Silver longs hit all targets, the other in progress (missed
final by 0.29) 1 of 1 Crude longs unfilled (missed entry by 0.30)
USDJPY initially rose to
90.12 but then fell sharply lower after the BOJ announced a new open ended
easing program. Markets were a bit disappointed as asset purchases in the
amount of JPY 13 trillion per month will begin only after the completion of the
current easing program, in January 2014. In line with expectations, the BOJ
increased the CPI target from 1% to 2% and kept the overnight rate below 0.1%.
USDJPY fell to 88.35 and now trades around 88.65 while EURJPY trades around
118.35.
EURUSD saw a nasty whipsaw
as it initially rose to 1.3365, then fell sharply lower to 1.3266 on rumors of
a Bundasbank president Weidman resigning. Within and hour the rumor proved to
be false and the pair moved back to 1.3360 also underpinned by German ZEW
economic sentiment index that surprised to the upside as it soared in
January to 31.5 from previous 6.9. This is the best result since mid 2010. The
Eurozone equivalent also improved significantly to 31.2 from 7.6.
British public sector net
borrowing declined to GBP 13.2 bln in December after November’s GBP 14.3 bln
and industrial orders expectations worsened in January to –20 from prior –12.
GBPUSD trades higher around 1.5865 and EURGBP is a bit weaker around 0.8410.
The US session begins at
8:30 am ET with Canadian retail sales that are expected to be flat in November
after a prior growth 0.7%. Core sales are seen at 0.1% from 0.5%. US reports
will be limited to existing home sales at 10:00 am that are anticipated to rise
in December to 5.09M from previous 5.04M.
Traders are also awaiting
the ECB president Draghi's speech in Frankfurt, which begins at 1:00 pm.
Patrik Urban
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