The trading year for Japan officially began today after an extended new year’s holiday, and we are seeing the yen drop further. It seems like domestic banks are fueling the fire in saying that the supposed impossible task by the BOJ to perform an early policy pivot, has now just became even more impossible. In referring to the Ishikawa earthquake, this is what they have to say:

„Although there must be quite a few foreign investors who have been anticipating the end of negative rates in January, under these circumstances, the BOJ will almost certainly not move this month. Should negative rates not be lifted in January, ending it in the first half of 2024 will also become doubtful.“ — Mizuho Bank

„The January move seems even more impossible. The earthquake is likely to depress production activity while the government may have to set up a supplementary budget for recovery measures.“ — Daiwa Securities, also revising forecast for exit from negative rates to April from January previously

„Any lingering expectation for an end to negative rates in January is completely shattered.“ — SMBC Nikko Securities

Meanwhile, Morgan Stanley MUFG Securities also revised its call for a change to the BOJ rate decision this month and sees the central bank leaving policy unchanged instead. Adding that any exit from negative rates will only come on April at the earliest. Besides that, Nomura Holdings also chimes in by saying that the earthquake may delay the BOJ’s plans to exit from negative rates in January although it also depends on the extent of the economic damage from the incident.

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

Copper has been on a
retreat since last week as the US Dollar strength coupled with year-end flows
might have weighed a bit on the market. The sentiment around the Chinese
economy remains weak and the recent data from the US doesn’t look good either.
In fact, yesterday the inside data of the US ISM Manufacturing PMI report painting a weaker picture
compared to the headline beat and the upbeat comments. Moreover, the US Job Openings missed expectations with the hiring
rate now below the pre-pandemic levels which could be a bad omen.

Copper Technical Analysis –
Daily Timeframe

On the daily chart, we can see that Copper is
bouncing near a key trendline where we
can also find the confluence with the
Fibonacci retracement levels and the
red 21 moving average. This is
where the buyers are stepping in with a defined risk below the trendline to
position for a rally into the 4.03 resistance.

Copper Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see more closely the
bounce around the trendline as we have a strong support zone with many
technical confluences. The sellers will want to see the price breaking below
the trendline to invalidate the bullish setup and position for a drop back into
the 3.55 support.

Copper Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that the
price has been diverging with
the MACD
falling into the key trendline. This is generally a sign of weakening momentum
often followed by pullbacks or reversals. We can also notice that the recent
downtrend got broken after the price breached the trendline. The buyers should
have even more conviction for a rally now while the sellers will need to wait
for the price to break below the key trendline.

Upcoming Events

Today we will have another slate of US labour market
data with the release of the US ADP and Jobless Claims figures. Tomorrow, we
conclude the week with the NFP report and the ISM Services PMI. Weak data is
likely to weigh on Copper due to lower future demand fears while strong data
should keep the market supported.

This article was written by FL Contributors at www.forexlive.com.

There seems to be a bit of pushing and pulling in markets at the moment, and I would say that something’s gotta give in due time. The dollar is mostly lower across the board, with it only gaining against the Japanese yen today. That comes as Treasury yields are pushing back higher on the session with 10-year yields now up 4.3 bps to near 3.95%.

Elsewhere, the dollar is down against the European currencies as noted here and also down just slightly against the commodity currencies. USD/CAD is down 0.3% to 1.3318 while AUD/USD is up 0.2% to 0.6740, though the latter has large option expiries at 0.6755 to contend with as well.

It is a bit of a mixed bag as equities are slightly higher but bond yields as well, then you couple that with the action in major currencies above. It seems like traders are trying to find some answers on the week but for the day itself, there are some conflicting convictions. I reckon it’s going to be all about where the data takes us in the closing stages this week it would seem.

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

While the UK economy arguably ended the year on a high, the Eurozone economy is still suffering a downturn even with the positive revisions to the French and German data earlier. But amid a steadier market mood today, the euro and pound are able to push a little higher against the dollar now.

EUR/USD is up 0.4% to 1.0960 while GBP/USD is also up 0.4% to 1.2710 on the day, keeping tabs with the gains in the commodity currencies. The greenback suffered a setback yesterday, with 10-year Treasury yields failing to hold a push at 4% and has since struggled to recapture the momentum from earlier this week.

After two days of traders seemingly correcting the moves in November and December, we might be in for a return to the norm today if risk trades can hold up. European stocks are up slightly by around 0.3% to 0.7% while S&P 500 futures are marginally higher, up 0.2% on the day currently.

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