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Actions for the 23rd. Hugely frustrating day, picked my spots but my timing was off. I don't seem able to find a trade that will survive long enough for me to manage and test my patience, that in itself is testing me right now.
FX News Today
10-year Treasury yields are down from overnight highs, but still up 0.7 bp at 2.746%, and 10-year JGB yields climbed 0.8 bp to -0.004%.
Stock markets remained cautious during the Asian session.
The Bank of Japan held policy steady, as expected, while further reducing its outlook for inflation. The resulting weakness in the Yen didn’t help stock markets and Topix and Nikkei dropped -0.60% and -0.14% respectively.
The Hang Seng is also down -0.04%, despite mainland China markets initially moving higher as China’s central bank pumped liquidity into the banking system once again. Still, the measures are also a sign that officials are nervous about the slowdown in the economy and CSI 300 and Shanghai Comp are down -0.24% and -0.13%. The bank offered around 258 bln Yuan (USD 38 bln) to banks through its medium term lending tool.
Markets continue to question the progress in the US-Sino trade talks, even though White House adviser Lawrence Kudlow said that the trade talks are still on and the story about cancelled preparatory meetings was “not true, there was never any meeting. We are moving toward negotiations.” The negotiations next week will be “very, very important” and “determinative”.
Meanwhile, there are the first signs of a possible way out of the US government shutdown.
Markets remain easily spooked, but appear to have already priced in a lot of risk last year and US stock futures are moving higher after yesterday’s sell off. Oil prices are trading at USD 53.27 per barrel.
Charts of the Day
Main Macro Events Today
Canadian Retail Sales – After Wholesale Sales plummeted yesterday, Canadian Retail Sales are expected to have also declined by 0.4% m/m, with core Retail Sales (ex autos) expected to have declined by 0.6%.
World Economic Forum at Davos –The second day of the WEF annual meetings held in Davos and attended by officials from over 90 countries. Comments from central bankers and other influential officials can create significant market volatility.
Richmond Manufacturing Index – Expectations – The index is expected to have remained at a sub-zero level, standing at -2 after the -8 in the December release.
Support and Resistance Levels
Always trade with strict risk management. Your capital is the single most important aspect of your trading business.
Please note that times displayed based on local time zone and are from time of writing this report.
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Dr Nektarios Michail
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USDJPY Eyes The 109.88 Resistance Zone And Beyond
USDJPY eyes the 109.88 resistance zone beyond as it looks to resume its upside pressure. On the upside, resistance comes in at 110.00 level. A turn above here will turn attention to the 110.50 level. Further out, we expect a possible move towards the 111.00 level if the earlier resistance is invalidated out. The next resistance resides at the 111.50. Its daily RSI is bullish and pointing higher suggesting further strength. On the downside, support comes in at the 109.50 level where a break will target the 109.00 level. Below that level will turn focus to the 108.50 level and then lower the 108.00 level. On the whole, USDJPY faces further upside pressure on corrective recovery.