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Asia-Pacific markets traded higher on Tuesday morning, with the Nikkei 225 rising 1.46% while the Japanese Yen gained 0.42% against the US dollar. Markets in China, Hong Kong, Taiwan, South Korea, Malaysia and Singapore are closed due to the Lunar New Year holiday.

The euro hovered near a 9-month high against the US dollar, drawing strength from Christine Lagarde’s comments on possible interest rate hikes and upbeat consumer confidence data coming from the Eurozone.

A report by the Wall Street Journal (WSJ) suggested that “US Federal Reserve officials are preparing to slow interest-rate increases for the second straight meeting and debate how much higher to raise them after gaining more confidence inflation will ease further this year.”

New Zealand CPI edges lower in Q4 2022?

Later in the day, Statistics New Zealand will publish its CPI inflation report for the fourth quarter of 2022. Some economists suggest that New Zealand’s inflation slowed down to 7.1% in the last quarter, on an annualised basis. However, the Reserve Bank of New Zealand (RBNZ) has suggested that it expects inflation to have hit 7.5%, which would be a 32-year high.

Commenting on the RBNZ’s monetary policy, Kiwibank analysts noted in their report that “we believe the RBNZ has gained enough traction with their rate hikes to date, and a terminal cash rate of 5% (or lower) is all that is required to meet the RBNZ’s mandates. We continue to highlight that a move to 5.5% is likely to be a step or two too far.”

Australian CPI data release follows suit

A few hours later, economists will have the chance to scrutinise the Q4 2022 CPI inflation data released by the Australian Bureau of Statistics (ABS). CPI inflation is expected to have peaked in December, reaching 7.7% on a year-to-year basis.  

During its November meeting, the Reserve Bank of Australia’s (RBA) governing board suggested that headline inflation could hit 8% at the end of 2022 before retreating early this year. December’s jobs data showed that the unemployment rate remained unchanged at 3.5%, implying that the economy could be slowing.

Analysts at the Commonwealth Bank forecast inflation to have jumped by 1.7% over the quarter, up from an increase of 1.3% for the same period a year earlier. RBA’s policymakers monitor inflation and other important economic data to see if they could hike interest rates for the ninth consecutive time next month.

Eyes on Microsoft earnings report and ChatGPT

Just after the US market close, investors and traders will be expecting Microsoft’s Q4 2022 earnings reports. The stock price has been down 22% over the last 12 months, underperforming the S&P 500 over that same time period.

Microsoft announced on Monday a new multibillion-dollar investment with the artificial intelligence lab OpenAI. Microsoft has declined to provide a specific dollar amount regarding its investment. Semafor’s analysts reported a few days ago that Microsoft was in talks to invest as much as $10 billion.

The deal marks the third phase of the partnership between the two companies, following Microsoft’s previous investments in 2019 and 2021. Microsoft’s representatives stressed that the renewed partnership would accelerate breakthroughs in AI.

Bitcoin gains ground, but…

Bitcoin made a strong comeback last week, gaining around 7% in value and trading very close to the $23,000 threshold. On Sunday January 22nd, Bitcoin rose briefly above $23,000 for the first time in the last 5 months. While some traders would like to take advantage of Bitcoin’s rally, some analysts suggest that the first cryptocurrency ever created just follows market fluctuations. 

Commodity strategists at Bloomberg noted that “with the world leaning into recession and most central banks tightening, we think the macroeconomic ebbing tide is still the primary headwind for Bitcoin and crypto prices.” Since the beginning of the year, Bitcoin is up by 37%.

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This material does not contain and should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments. Please note that such trading analysis is not a reliable indicator for any current or future performance, as circumstances may change over time. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks.

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