Good Morning,
We’re starting the week with uncertainties but a lot of hope. Mainly in focus this week are quarterly earnings which investors believe will justify high valuations and FED chair Yellen is speaking later on Monday. Anticipated are hawkish remarks and a hint at the next rate hike this comes while USDJPY rejected a clean support in line with 10yr treasury yields coming off the lows.
Japanese economy is expanding according to the BOJ and current data jumped considerably mainly from overseas investments. Talking of which there seem to be a lot of bonds maturing which in theory means Japanese investors cashing in on their maturities but the proceedings are likely to find their way towards reinvestments.
Gbp cpi is due on Tuesday and if levels are contained, pressure on the BOE to lift rates will ease as wage growth hasn’t been that stellar. Which in turn means board member Forbes call for an immediate liftoff is gone and with it the entire GBPUSD rally.
Euro finds itself in a similar choke box. Inflation targets are not quite there yet coupled with no clear direction from the French election will leave it exposed to the downside.
Cad$ has been enjoying higher oil prices but if production cut talks don’t pan out we’re likely in fort a top. BOC interest rate decision due this week, keeping an eye on developments from Polloz’s corner.
Metals reaction to US closing in on North Korea has been zero. That doesn’t mean we won’t get any but for now it’s nothing but a patrol. Keeping a close eye on this developing story as Risk always happens fast.
No charts today, mainly pointing out flows. I’ll regularly copy my notes and thinking process here to make sense of the bigger picture and most importantly developing stories.
Miad Kasravi