Daily Market Bulletin – 27 January 2022

Market Developments

Sentiment was poor, as investors digested yesterday's monetary policy decision by the US central bank.

The Fed kept rates at 0%-0.25% and expects that "it will soon be appropriate to raise the target range for the federal funds rate", with mr Powell pointing to a March lift-off.

The bank reaffirmed that asset purchases will end in early March, did not say when it will begin reducing the balance sheet, but published a set of principle regarding the process. [1]

Mr Powell commented that there is "Quite a bit of room to raise interest rates without hurting the labor market" [2], boosting the US Dollar and hurting equity markets.

Earlier on Wednesday, the Bank of Canada (BoC) maintained interest rates at 0.25% and signaled at increases ahead. The bank has stop buying assets and said reduction of its balance sheet will be considered after it begins hiking rates. [3]

Trade the News: View our Economic Calendar

Tesla released solid results for the fourth quarter, with Revenue rising to $15,967 billion [4].The firm now aims to increase production as quickly as it can and that Full Self-Driving (FSD) software remains one of the "primary areas of focus". Mr Musk said that Tesla "will not be introducing any new models this year" [5].

Today, Deutsche Bank reported Net Profits of € 2.5 billion for 2021 – the highest since 2011.

New Zealand CPI Inflation surged 5.9 y/y in Q4, from 4.9% y/y prior, reinforcing the case for further rate hike by the country's central bank.

Main Asia-Pacific stock markets were down and European futures follow suit.

US Dollar strength was prevalent and the Japanese Yen also rises, while main Commodity Currencies (CAD, AUD, NZD) drop against both.

Instruments Snapshot

EUR/USD drops to new 2022 lows towards 1.1200, after hawkish Fed.

GBP/USD is similar decline, breaks below 1.3450.

USD/JPY shows indecision above 114.50, following yesterday's Fed-boost.

USD/CAD is on the offensive and retakes 1.2700.

AUD/USD extends losses towards 0.7050, amidst broad-based USD strength.

NZD/USD drops to the lowest level since late-2020, testing 0.6600.

GER30 sheds around 1%, but tries to reclaim 15,200.

US30 is on the defensive, probing 33,800.

USOIL clinched fresh multi-year highs on Wednesday (87.96), but retreats today below 87.00.

XAU/USD extends yesterday's losses, but defends 1,810.

Economic Calendar Picks (GMT)

Market participants now turn to Q4 GDP and Durable Goods (13:30) form the United States.

Apple dominates today's earnings (after market close), while McDonalds reports before the bell.

Over in the UK, we are still expecting the results of the investigation over Downing Street parties during lockdown.

See the economic calendar here.

Nikos Tzabouras

Senior Market Specialist

Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.

With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.

References

1

Retrieved 27 Jan 2022 https://www.federalreserve.gov/monetarypolicy/files/monetary20220126a1.pdf

2

Retrieved 27 Jan 2022 https://www.federalreserve.gov/monetarypolicy/fomcpresconf20220126.htm

3

Retrieved 27 Jan 2022 https://www.bankofcanada.ca/2022/01/fad-press-release-2022-01-26/

4

Retrieved 27 Jan 2022 https://tesla-cdn.thron.com/static/WIIG2L_TSLA_Q4_2021_Update_O7MYNE.pdf

5

Retrieved 27 Jan 2022 https://www.youtube.com/watch

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