ECB’s Wunsch: ECB will not go from 50 bps in March to no rate hike in May 0 (0)

<ul><li>A 25 bps or 50 bps rate hike in May is possible</li><li>If core inflation remains persistent, 3.50% terminal rate is the minimum</li><li>Thursday decision is a hawkish one so market reaction has been surprising</li></ul><p style=““ class=“text-align-justify“>Well, they are really coming out to make it clear to markets that March isn’t going to be the last rate hike in this tightening cycle. I think the issue for me is why couldn’t we just hear something like this from Lagarde yesterday? Geez.</p>

This article was written by Justin Low at www.forexlive.com.

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The US jobs report may play second fiddle in terms of data importance today 0 (0)

<p style=““ class=“text-align-justify“>In case you need a reminder on what happened in January:</p><ul><li><a target=“_blank“ href=“https://www.forexlive.com/news/us-dollar-sinks-on-hard-landing-fears-after-ism-services-survey-plunges-20230106/“ target=“_blank“ rel=“follow“>US dollar sinks on hard landing fears after ISM services survey plunges</a></li></ul><p style=““ class=“text-align-justify“>While the main focus is on the US non-farm payrolls first and foremost, it may not be the most important data release on the day. The ISM services report saw a stark miss in December (49.6 vs 55.0 estimated) and the reading is expected to come in at 50.4 today.</p><p style=““ class=“text-align-justify“>As much as broader markets may be paying attention to the US jobs report, another big miss could really set off fears of a hard landing and that could compound the pain in the equities space so far on the day.</p>

This article was written by Justin Low at www.forexlive.com.

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Risk stays on the defensive so far on the day 0 (0)

<p style=““ class=“text-align-justify“>Easy come, easy go. After yesterday’s gains, stocks are giving a chunk of that back today ahead of the US non-farm payrolls later today. There are a couple of moving parts, so let’s try to sort things out.</p><ol><li style=““ class=“text-align-justify“>Apple and Alphabet reported misses on earnings after the close and that is weighing on tech sentiment; Nasdaq futures down 1.5%</li><li style=““ class=“text-align-justify“>European bond yields recover slightly from yesterday’s drop as ECB policymakers talk up more rate hikes after March; 10-year German bund yields up 8 bps to 2.14%</li><li style=““ class=“text-align-justify“>A further cooling of the US jobs data later could bolster the narrative of a less soft landing, especially as the Fed keeps its resolve to tighten rates further</li></ol><p style=““ class=“text-align-justify“>It’s pretty much a case of pick your poison but I wouldn’t rule out a turnaround in sentiment later in the day as Wall Street enters the fray. After all, the technicals are still supportive although we are seeing the S&P 500 near key resistance from its 100-week moving average:</p>

This article was written by Justin Low at www.forexlive.com.

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China to step up support for domestic demand but big stimulus splash unlikely – report 0 (0)

<p style=““ class=“text-align-justify“>The report highlights that China’s policymakers are planning to increase support for domestic demand this year but they are likely to stop short of coming up with a big stimulus injection on direct consumer subsidies – instead keeping their main focus on investment. The sources said that China is expected to stick more closely to its familiar playbook of policies and provide support to key industries as well as splurge on infrastructure.</p><p style=““ class=“text-align-justify“>“There are limited options to stimulate consumption. The possibility of giving cash handouts is small.“</p><p style=““ class=“text-align-justify“>Now that we are trying to recalibrate to the post-pandemic era in China, common prosperity remains the number one goal for Xi and trying to bolster domestic consumption is arguably one of the biggest challenges.</p>

This article was written by Justin Low at www.forexlive.com.

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Eurozone December PPI +1.1% vs -0.4% m/m expected 0 (0)

<ul><li>Prior -0.9%; revised to -1.0%</li><li>PPI +24.6% vs +22.5% y/y expected</li><li>Prior +27.1%; revised to +27.0%</li></ul><p style=““ class=“text-align-justify“>Euro area producer prices surprised to the upside in December, with more expensive energy prices being the main driver again – rising 2.5% on the month. If you strip that out, producer prices were seen down 0.1% on the month instead.</p>

This article was written by Justin Low at www.forexlive.com.

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