Daily Market Outlook, January 18, 2023BoJ Double Down or BustThe Bank of Japan has once again remained anchored to their easy monetary stance, frustrating bond traders who had been poised to profit from an about turn in Yield Curve Control policy, the Japanese Yen shed 2% as the Nikkei ascended by a similar amount. The BoJ stated its intention to continue to purchase bonds at whatever amounts required to maintain the much maligned 0% yield on 10 year JGB, hence, the trading band is maintained at -0.5%/+0.5%, the central bank has deployed billions to defend the ceiling in recent trading sessions, the 10 year yield retreated from a high of 0.51% back towards 0.35% on the announcement.Market watchers now see the BoJ left having to purchase record amounts of domestic debt, essentially making them the prime source of liquidity backstopping the debt markets, this move may be considered a last chance saloon scenario for investors still holding JGB exposure, to exit at reasonable levels before the appointment of a new BoJ Governor and an official reorientation in the Yield Curve Control strategy.UK CPI inflation data released earlier this morning showed that inflation pulled back front he peak of 10.7% to print 10.5% in December inline with market expectations, the majority of the retreat is attributed to the decline in petrol prices, market watchers now look for further declines in food and energy prices next month as the UK market begins to aline with other developed economies, looking past the peak in inflationary pressures, however, the UK economy continues to witness a very tight employment market and general domestic pressures remain stubbornly elevated, this combination will likely keep the Bank of England on course for its tenth consecutive rate increase at its next meeting.In the Eurozone investor focus this morning will be the final print for December inflation data which is expected to confirm a back to back monthly decline in consumer prices, however, recent rhetoric from European Central Bank officials suggest they have set a course for further restrictive monetary policy, with markets currently pricing another 50bps move at the February meetingIn the US all eyes will be on retails sales and industrial production data both of which are expected to show continued weakness, industrial production is set to have taken a hit from significant winter storms seen stateside. On the retail sales side of the ledger weakness is expected to be driven by record declines in the used car sales market. The US data slate is rounded out today with Producer Prices data which is expected to follow CPI’s lead and show a build in disinflationary pressures for Producers, investors will have one eye on the wires as Fed officials are set to make further remarks today.Markets-wise, investors will continue to monitor moves in the bond markets and the JPY remains in focus, the US 10yr continues to rotate around the 3.5% with the Dollar Index anchored around the 102 handle. Commodity markets remain supported with many investors eyeing the breakout in WTI Crude taking out resistance at the $80 a barrel level, $83.50 is the next level of interest, Gold continues to shine, bulls will be looking for the yellow metal to remain supported above 1890 for a move to test 1950 next!Overnight News of NoteAsian Shares Mixed After BoJ Keeps Yield Policy UnchangedBoJ Holds Policy As It Pushes Back Against Market SpeculationBoJ Introduces Latest Weapon To Defend Yield Control PolicyYen Slumps, Bond Futures Rising As Yield-Curve-Control StaysGoldman Sachs Lift China Economic Growth Forecast To 5.5%Bitcoin Has Now Recovered All Its Losses Since FTX CollapsedOil Pushes Higher On Bets Chinese Demand Will Surge This YearGold Slips As Dollar Gains Momentum, Focus On Data ReleasesFed’s Barkin Says Too Soon To End Hikes As Inflation LingeringWhite House: No Debt Discussions After McCarthy Urges TalksUS Sec Blinken: Iran Rejected Chance to Revive Nuclear AccordECB’s Villeroy Says Resilient Economy Makes Rate Hikes EasierUK Pay Deals Steady For Second Month As Wages Lag InflationScholz Sees Germany Riding Out Ukraine War, Avoid RecessionApple Delays AR Glasses, Plans Cheaper Mixed Reality HeadsetMicrosoft To Axe Thousand Of Jobs In Latest Cull By Tech Giant(Sourced from Bloomberg, Reuters and other reliable financial news outlets)Technical & Trade ViewsSP500 Bias: Bullish Above Bearish Below 3950Primary support is 3950Primary objective is 4022Below 3940 opens 389020 Day VWAP bullish, 5 Day VWAP bullishEURUSD Bias: Bullish Above Bearish below 1.0735Primary support is 1.0735Primary objective is 1.09Below 1.0730 opens 1.061020 Day VWAP bullish, 5 Day VWAP bullishGBPUSD Bias: Bullish Above Bearish below 1.2230 -123.15 Target Hit New Pattern EmergingPrimary support is 1.2230Primary objective 1.2370Below 1.2140 opens 1.208020 Day VWAP bullish, 5 Day VWAP bullishUSDJPY Bias: Bullish above Bearish Below 132.30Primary resistance is 132.30Primary objective is 125.00Above 133.00 opens 135.0020 Day VWAP bearish, 5 Day VWAP bearishAUDUSD Bias: Bullish Above Bearish below .6920 – .7030 Target Hit, New Pattern EmergingPrimary support is .6920Primary objective is .7090Below .6900 opens .682020 Day VWAP bullish, 5 Day VWAP bullishBTCUSD Bias: Bullish Above Bearish below 20200Primary support 20200Primary objective is 22400Below 19900 opens 1930020 Day VWAP bullish, 5 Day VWAP bullish
