Bitcoin Completes Consolidation and Rushes to the High

Bitcoin rose above its 50-day moving average, confirming the bullish medium-term trend and easing fears of a deeper correction. On a weekly basis, bitcoin is now above its December-January closing levels, although intra-week volatility briefly pushed the price higher earlier in the year. However, weekly closes are the more important benchmark for the markets.

Why Are Chinese Stocks Melting Down?

It’s been a tough few years for Chinese stock markets. Shares in mainland China have fallen to their lowest levels since 2019 as investors continue to liquidate their positions, despite a series of stimulus measures by Beijing that were meant to stop the bleeding. 

USD/JPY Slides After BOJ Uchida's Hawkish Comments

The Japanese yen is down sharply on Thursday. In the European session, USD/JPY is trading at 149.12, up 0.64%. This is the yen’s lowest level against the US dollar since November 27.

EUR/USD Eyes German Inflation

Germany’s CPI is expected at 0.2% m/m on Friday, which would confirm the initial estimate from two weeks earlier. On an annualized basis, the initial estimate for CPI came in at 2.9% in January, down sharply from 3.7% in December. A deceleration in energy and food costs was the driver of the downturn in January, which was the lowest inflation rate since June 2021. Core inflation has also been falling, with the initial estimate showing a drop to 3.4%, its lowest rate since June 2022.

Sunset Market Commentary

Japanese stock markets and JPY still account for today’s biggest market move in a telling sign about current market momentum. The Nikkei closed slightly over 2% higher. USD/JPY sets a new YTD high at 149.40 with both the psychologic 150 mark and the 2022 (151.95) and 2023 (151.91) tops coming dangerously close.

Sunset Market Commentary

The Bank of England kept its policy rate unchanged at 5.25% in a 3-way split with two members (Mann & Haskel) preferring a 25 bps rate increase to 5.5% and one member (Dhingra) voting in favour to reduce it by 25 bps to 5%. That compares with consecutive 6-3 votes (3 in favour of +25 bps) in November and December.

Bank of England Review

As expected, the Bank of England (BoE) decided to keep the Bank Rate unchanged at 5.25%. The vote split indicated a continued split committee, as 6 members voted for an unchanged decision, 2 for a 25bp hike and 1 for a 25bp cut.

Will RBA Drop Its Tightening Bias?

At its December decision, the Reserve Bank of Australia (RBA) kept interest rates unchanged after raising them by 25bps in November. The November hike followed a period of four months where borrowing costs remained steady, and it was based on the assessment that the progress in driving inflation back within the 2-3% target range was slower than previously expected.

ISM Shows Contraction in U.S. Manufacturing Sector Slowed in January

The ISM Manufacturing Index ticked up to 49.1 in January, handily beating the 47.2 level markets had expected. Four industries reported growth in January, up from one in December.

US Jobs Report Will Set the Tone for Markets

In the US, we will get the US January job report. We expect the employment growth to have slowed down to 180k from 216k in December, which is a robust pace in historical terms. We expect average hourly earnings growth to have slowed to 0.3% m/m SA from 0.4% in December.