<ul><li>Inflation risks are becoming more pronounced</li><li style=““ class=“text-align-justify“>If significant risks materialise, BOJ must be ready to withdraw stimulus more strongly – such as raising short-term rates</li><li style=““ class=“text-align-justify“>Policy proposal calls for BOJ to allow bond yields to move more flexibly, following annual consultation with Japan</li><li style=““ class=“text-align-justify“>Possible options include widening yield band, raising yield target, targeting shorter-term yields</li></ul><p style=““ class=“text-align-justify“>The pressure is continuing to stay on the Japanese central bank here despite their policy decision last week. It seems like the chorus that is asking for change is getting louder and markets are also listening. 10-year JGB yields are back up to 0.49% today, just a whisker away from touching the <a target=“_blank“ href=“https://www.forexlive.com/terms/b/boj/“ class=“terms__main-term“ id=“c1f60108-4283-4827-911e-95f01607c737″ target=“_blank“>BOJ</a> ceiling of 0.50% again.</p>

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

<p>Market picture</p><p>Bitcoin
spent most of Wednesday in a shallow corrective mode, pulling back to $22.3K.
However, with the start of active trading in New York, optimism returned to the
equity markets, pushing BTC to $23.7K by the end of the regular session. We saw
renewed pressure and a pullback to the $23.0K level on Thursday morning.</p><p>Yesterday’s
decline can be seen as a technical correction from the momentum from January
19th, paving the way to $25.0K. However, it is more likely that the renewal of
the six-month highs was a false breakout, as trading has been predominantly in
the $22.7-23.3K range since Saturday, reflecting the continued profit-taking.</p><p>The
cryptocurrency’s market cap has returned to the $1.05 billion level, where it
has spent most of its time since January 21st.</p><p>News background</p><p>Twitter
analyst Trader_J called Bitcoin’s continued rise a manipulation. He speculates
that most of the BTC in the current rally has been bought using BUSD, Binance
stablecoin.</p><p>South Korean
authorities have issued an arrest warrant for the head of the country’s
second-largest cryptocurrency exchange, Bithumb, who is accused of manipulating
the share prices of the exchange’s subsidiaries and embezzlement.</p><p>According to
SEC Commissioner Hester Pearce, participants in the cryptocurrency community
and regulators should learn from the problems faced by the crypto industry in
2022. However, she noted that the challenges faced could be beneficial in the
future.</p><p>Attorney
John Deaton, who represents XRP owners, said a final hearing on the LBRY platform
would occur in New Hampshire on 30 January. The event, he said, is significant
for the industry: a final victory for the SEC would mean that all secondary
market transactions in digital assets could be deemed illegal in the US.</p><p>This article was written by <a target=“_blank“ href=“https://www.fxpro.com/“ rel=“follow“ target=“_blank“>FxPro</a>’s Senior Market Analyst Alex
Kuptsikevich.</p>

This article was written by ForexLive at www.forexlive.com.

<ul><li>Prior was +27.9%</li><li>Mortgage rate 6.20% vs 6.23%</li></ul><p>Mortgage News Daily had US 30-year fixed mortgages falling as low as 6.04% last week but not yet below the 6% level, which could spur some activity. US home builder shares have done well since October, suggesting there’s some optimism out there about housing, despite all the negative commentary.</p>

This article was written by Adam Button at www.forexlive.com.

<p>Headlines:</p><ul><li><a target=“_blank“ href=“https://www.forexlive.com/news/bond-bears-quietly-plot-their-move-against-the-boj-again-20230125/“>Bond bears quietly plot their move against the BOJ again</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/us-futures-dribble-lower-as-risk-stays-on-the-defensive-20230125/“>US futures dribble lower as risk stays on the defensive</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/germany-january-ifo-business-climate-index-902-vs-902-expected-20230125/“>Germany January Ifo business climate index 90.2 vs 90.2 expected</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/ifo-economist-german-economy-starting-the-year-with-cautious-optimism-20230125/“>Ifo economist: German economy starting the year with cautious optimism</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/switzerland-january-credit-suisse-investor-sentiment-400-vs-428-prior-20230125/“>Switzerland January Credit Suisse investor sentiment -40.0 vs -42.8 prior</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/japan-pm-kishida-will-make-decision-on-next-boj-governor-based-on-future-economic-trends-20230125/“>Japan PM Kishida: Will make decision on next BOJ governor based on future economic trends</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/japan-official-cites-kuroda-as-saying-boj-will-resolutely-stick-to-easy-policy-20230125/“>Japan official cites Kuroda as saying BOJ will resolutely stick to easy policy</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/japan-downgrades-overall-economic-assessment-for-the-first-time-in-11-months-20230125/“>Japan downgrades overall economic assessment for the first time in 11 months</a></li></ul><p>Markets:</p><ul><li>AUD leads, NZD lags on the day</li><li>European equities lower; S&P 500 futures down 0.7%</li><li>US 10-year yields down 2.7 bps to 3.439%</li><li>Gold down 0.7% to $1,923.81</li><li>WTI crude up 0.1% to $80.21</li><li>Bitcoin down 1.2% to $22,621</li></ul><p style=““ class=“text-align-justify“>It was a bit of a quiet session but there were some decent market moves, as risk sentiment turned from being cautious to being put on the defensive.</p><p style=““ class=“text-align-justify“>Microsoft warned about a slowing sales outlook and that weighed on tech stocks with Nasdaq futures holding lower by 0.6% at the end of Asia trading, before things turned worse in European morning trade. The mood in equities is perhaps also not helped by stronger CPI data in Australia and New Zealand as well.</p><p style=““ class=“text-align-justify“>S&P 500 futures are now down 0.7% with Nasdaq futures down 1.1%, as we also see European indices sit lower on the session.</p><p style=““ class=“text-align-justify“>In FX, the dollar benefited as a result with the euro and pound nudging slightly lower against the greenback and USD/JPY falling from 130.20 to 129.70 levels at the moment.</p><p style=““ class=“text-align-justify“>The aussie remains the lead gainer, after having pushed to 0.7120 against the dollar after the CPI data earlier in the day before falling back to 0.7080 levels currently – still up 0.5%.</p><p style=““ class=“text-align-justify“>Even though we also did saw a strong NZ CPI data, the kiwi is the laggard today with NZD/USD still facing a rejection of 0.6500 it seems. The pair is down 0.5% to 0.6470 currently, near the lows for the day as the sour risk mood isn’t helping.</p><p style=““ class=“text-align-justify“>All eyes are on the Bank of Canada decision up next now, and that could really be a big one – not just for the loonie, but for broader markets as well.</p>

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

<p>The Washington Post <a target=“_blank“ href=“https://www.washingtonpost.com/politics/2023/01/25/lael-brainard-national-economic-council/“ target=“_blank“ rel=“nofollow“>reports </a>that Biden is close to naming the next head of the National Economic Council and that Fed vice chair Lael Brainard „has emerged as a top contender“, according to three sources.</p><p>Brainard would replace current NEC director Brian Deese, who they said is expected to leave soon.</p>

This article was written by Adam Button at www.forexlive.com.

<p style=““ class=“text-align-justify“>The central bank tightening cycle is in the final stretch of reaching the end zone now. While some major central banks are still trying to convince of a more hawkish stance, others are closing in on the end of rate hikes. And the Bank of Canada is arguably one of the latter.</p><ul><li><a target=“_blank“ href=“https://www.forexlive.com/centralbank/preview-why-the-bank-of-canada-could-be-the-first-to-the-sidelines-20230124/“ target=“_blank“ rel=“follow“>Preview: Why the Bank of Canada could be the first to the sideline</a></li></ul><p style=““ class=“text-align-justify“>They are expected to hike interest rates by 25 bps today but markets are bracing for the potential for a surprise decision, in which they might announce a pause to the tightening cycle. After all, Macklem & co. <a target=“_blank“ href=“https://www.forexlive.com/centralbank/the-bank-of-canada-isnt-afraid-to-surprise-the-market-20230124/“ target=“_blank“ rel=“follow“>isn’t one to shy away from surprises</a>.</p><p style=““ class=“text-align-justify“>The thing about today’s decision is that the Bank of Canada could lay down a marker as the first major central bank to have turned hawkish and then announce a pause to its tightening cycle.</p><p style=““ class=“text-align-justify“>Even though this particular change in policy stance is very much expected among all the major central banks (except the BOJ) at some point, it is the very fact that we’re witnessing the first signs of change and that could spell something big for broader markets. Adam provided a good preview on that above, so watch out in case we do get some big market moves later in the day – not just on the loonie.</p>

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

<p style=““ class=“text-align-justify“>This comes as tech continues to lead the downside, with Nasdaq futures down 1.2% and Dow futures down by 0.6% currently. The drop is also putting a drag on European indices, with the DAX and CAC 40 both also down by 0.6% on the session.</p><p style=““ class=“text-align-justify“>There’s not much in European morning trade to have caused the fall but it comes after Microsoft’s slowing sales outlook earlier in the day and also stronger Australia and New Zealand CPI data – which may cause markets to be a bit more skeptical about the peak inflation narrative.</p><p style=““ class=“text-align-justify“>The dollar is slightly higher now with AUD/USD also seeing gains trimmed from 0.7110 earlier to 0.7080 levels now. GBP/USD is also seen down 0.3% now to 1.2285, sitting at the lows for the day.</p>

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

<p>Headlines:</p><ul><li><a target=“_blank“ href=“https://www.forexlive.com/news/dollar-steadies-as-risk-optimism-fades-20230124/“>Dollar steadies as risk optimism fades</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/uk-january-flash-services-pmi-480-vs-497-expected-20230124/“>UK January flash services PMI 48.0 vs 49.7 expected</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/eurozone-january-flash-services-pmi-507-vs-502-expected-20230124/“>Eurozone January flash services PMI 50.7 vs 50.2 expected</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/germany-january-flash-manufacturing-pmi-470-vs-479-expected-20230124/“>Germany January flash manufacturing PMI 47.0 vs 47.9 expected</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/france-january-flash-services-pmi-492-vs-498-expected-20230124/“>France January flash services PMI 49.2 vs 49.8 expected</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/centralbank/ecbs-nagel-we-need-to-keep-tightening-to-dampen-price-pressures-20230124/“>ECB’s Nagel: We need to keep tightening to dampen price pressures</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/germany-february-gfk-consumer-sentiment-339-vs-330-expected-20230124/“>Germany February GfK consumer sentiment -33.9 vs -33.0 expected</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/france-january-business-confidence-102-vs-102-prior-20230124/“>France January business confidence 102 vs 102 prior</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/uk-january-cbi-trends-total-orders-17-vs-8-expected-20230124/“>UK January CBI trends total orders -17 vs -8 expected</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/switzerland-december-trade-balance-chf-283-billion-vs-chf-231-billion-prior-20230124/“>Switzerland December trade balance CHF 2.83 billion vs CHF 2.31 billion prior</a></li></ul><p>Markets:</p><ul><li>JPY leads, GBP lags on the day</li><li>European equities lower; S&P 500 futures down 0.3%</li><li>US 10-year yields down 2.1 bps to 3.502%</li><li>Gold up 0.3% to $1,936.73</li><li>WTI crude flat at $81.96</li><li>Bitcoin down 0.3% to $22,933</li></ul><p style=““ class=“text-align-justify“>The European morning session featured quite a number of data releases and it was PMI readings that helped to move the needle in markets today. The euro area figures were not too bad but not too good either, but at least pointing to a less bleak start to the new year as economic activity stagnated.</p><p style=““ class=“text-align-justify“>Instead, it was the UK figures that instigated some moves with the pound notably sliding on the back of rising recession fears. The report showed that the UK services sector slumped to its weakest in two years and that was enough to see GBP/USD fall from 1.2380 to 1.2303 and holding near the lows now.</p><p style=““ class=“text-align-justify“>Equities were steadier early on but the slight optimism faded and now the dollar also picked itself up from the lows to keep little changed for the most part – in particular against the aussie and kiwi.</p><p style=““ class=“text-align-justify“>The antipodeans were targeting key upside breaks above 0.7000 and 0.6500 respectively before price is pulled back on the day now.</p><p style=““ class=“text-align-justify“>Meanwhile, the yen continues to do its thing as the volatility trip continues with USD/JPY down around 129.90 to 130.20 levels throughout the session.</p><p style=““ class=“text-align-justify“>We’ll have US PMI data coming up later in the day and that will likely play into the underlying risk sentiment once Wall Street steps into the fray later today.</p>

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

<ul><li>Prior -6</li></ul><p style=““ class=“text-align-justify“>The good news is that cost pressures are growing at the slowest in nearly two years for UK factories, but order books continue to be weak. The quarterly business optimism reading also improved to -5 from -48 previously, so that’s a positive but output volumes and new orders remain subdued.</p>

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

<p style=““ class=“text-align-justify“>The interview is alongside his colleague Villeroy, who says that the ECB will probably reach peak rates by the summer. You can check out the full interview <a target=“_blank“ href=“https://www.lexpress.fr/economie/la-derive-de-la-dette-publique-en-france-est-preoccupante-villeroy-de-galhau-nagel-le-debat-WW4MMMETSJDXLEMTBHJCGEUPFA/“ target=“_blank“ rel=“nofollow“>here</a> but for the most part, these are remarks that have already been echoed for quite a while now by ECB policymakers.</p>

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