Newsquawk

Euro Market Open: JPY leads amid BoJ reports, USD remains around 103.00 pre-CPI

12 Jan 2023, 06:50 by Newsquawk Desk

APAC stocks traded mixed as the major indices failed to fully sustain the early momentum from Wall St.
European equity futures are indicative of a higher open with the Euro Stoxx 50 +0.4% after the cash market closed up 1.0% yesterday.
DXY remains supported around the 103 mark, JPY leads the majors following reporting around the BoJ, EUR/USD is steady on a 1.07 handle.
BoJ is to review the side effects of its massive monetary easing at its policy meeting next week, according to Yomiuri.
Looking ahead, highlights include US CPI & IJC, Speeches from Fed's Barkin, Bullard & Harker, Supply from Spain, Italy & US

US stocks extended on their gains with a fall in yields aiding the relative outperformance in tech names, while catalysts were light with no major data releases which kept participants' attention on Thursday's CPI.
SPX +1.28% at 3,970, NDX +1.76% at 11,403, DJIA +0.80% at 33,973, RUT +1.17% at 1,844.
Click here for a detailed summary.

NOTABLE HEADLINES

Fed's Collins (non-voter) said she is leaning towards a 25bps hike at the February 1st meeting but is data-dependent and open to 50bps, while she is looking at favouring three more 25bps hikes to a policy rate of just above 5% and sees the terminal rate of over 5% being held through year-end.
WSJ's Timiraos tweeted Fed research presented at the recent AEA meetings suggests average underlying job growth of around 300k per month last year, which is not as strong as reported in the monthly BLS payroll reports".
USMCA trade dispute panel ruled in favour of Mexico and Canada in the auto rules of origin dispute with the US and it was noted the US interpretation of rules is inconsistent with the 2020 trade pact.

APAC stocks traded mixed as the major indices failed to fully sustain the early momentum from Wall St.
ASX 200 was led higher by outperformance in the commodity-related industries and the top-weighted financial sector, while the latest trade data showed a wider trade surplus.
Nikkei 225 faded early gains after a report that the BoJ is to review the side effects of its monetary easing.
Hang Seng and Shanghai Comp swung between gains and losses with the Hong Kong benchmark initially boosted by the reopening play which helped energy, auto and casino names. However, Chinese markets then failed to sustain the early moment amid losses in tech and as participants digested mixed inflation data from the mainland in which CPI matched estimates but factory gate prices fell by more than expected.
US equity futures were uneventful (ES +0.1%) but prodded this week's highs amid pre-CPI positioning.
European equity futures are indicative of a higher open with the Euro Stoxx 50 +0.4% after the cash market closed up 1.0% yesterday.

DXY remained flat amid a non-committal mood as participants await the US inflation data and with early pressure stemmed by support near the 103.00 level.
EUR/USD held on to recent spoils after several ECB speakers echoed the need for further significant hikes.
GBP/USD notched marginal gains after yesterday’s intraday rebound from a floor at the 1.2100 level.
USD/JPY slipped below 132.00 after a report the BoJ will review the side effects of its monetary easing at next week’s policy meeting, while data showed Japan's Current Account surplus reached a November record high.
Antipodeans treaded water with price action kept afloat amid the mixed risk appetite and following a larger-than-expected trade surplus for Australia.
PBoC set USD/CNY mid-point at 6.7680 vs exp. 6.7698 (prev. 6.7756)

10yr UST futures continued their upward trend after the recent bull flattening in sympathy with EGBs and with support from a strong 10yr auction.
Bund futures marginally extended on the prior day’s one-way advance with prices eyeing a test of resistance at 138.00.
10yr JGB futures were pressured and eventually fell to their lowest since May 2014 after a press report that the BoJ is to review the side effects of its massive monetary easing at its policy meeting next week.

Crude futures were rangebound and held on to the prior day's gains which were attributed to global growth prospects and mean reversion despite the large crude stock build.
US Treasury official said Russia's oil revenues are decreasing because of the price cap and said that Europe can withstand price pressures on oil products with good diesel supplies and warm winter.
Spot gold marginally benefitted from the contained dollar.
Copper futures slightly softened amid the mixed risk tone and with a slight pullback from a near 7-month peak.
UK regulator blocks LME's plan to restart nickel trade during Asian hours amid doubts of the ability to run an orderly market in that time zone, according to Reuters sources.

Bitcoin was firmer after breaking above the 18,000 level and Ethereum reclaimed the 1,400 status.

NOTABLE ASIA-PAC HEADLINES

PBoC injected CNY 65bln via 7-day reverse repos with the rate kept at 2.00% and CNY 52bln via 14-day reverse repos with the rate kept at 2.15% for a CNY 115bln net daily injection.
US and Taiwan intend to focus on five areas this weekend during their first round of negotiations towards a trade agreement and indicated a readiness for subset deals as the sides make progress, according to WSJ.
BoJ is to review the side effects of its massive monetary easing at its policy meeting next week due to skewed interest rates in markets despite last month's tweak in its bond yield control policy, according to Yomiuri.

DATA RECAP

Chinese CPI YY (Dec) 1.8% vs. Exp. 1.8% (Prev. 1.6%)
Chinese PPI YY (Dec) -0.7% vs. Exp. -0.1% (Prev. -1.3%)
Japanese Current Account (JPY)(Nov) 1803.6B vs. Exp. 471.1B (Prev. -64.1B)
Australian Trade Balance (AUD)(Nov) 13.2B vs. Exp. 10.5B (Prev. 12.2B)
Australian Exports (Nov) 0.0% (Prev. -1.0%)
Australian Imports (Nov) -1.0% (Prev. -1.0%)

Russia replaced the commander of the Ukraine war after three months in the job with the chief of the general staff and head of the Russian military Valery Gerasimov the replacement, according to Sky News.
UK navy said a UK warship was tracking the movements of a Russian warship in the North Sea but noted that escorting warships in UK waters and adjacent areas is routine activity for the navy.
US Defence Secretary Austin said China's military is engaging in provocative behaviour around Taiwan to try to establish a new normal, but added that he seriously doubts Chinese provocations are a prelude to an imminent invasion of Taiwan, according to Reuters.
Taiwan's Defence Ministry said five Chinese air force planes crossed the Taiwan Strait median line in the past 24 hours, according to Reuters.

NOTABLE HEADLINES

UK's PCS union said 100k staff in government departments and other bodies will strike on February 1st.
ECB's de Cos said the ECB will continue raising rates significantly at a sustained pace.