Kiwi Dropped, Greenback Reinforced

Market Reviews

Shares still haven’t recovered from earlier declines. DOW tried to reach 25293.96 but reduced -0.08% to 24893.35. Nikkei lifted 0.35% but the upside impulse is weak. 10 year yield surged 0.076 to 2.845. The maximum of 2.862 is about to be reached. Firm breach in that area will confirm uptrend resumption. Japanese Yen is still the firmest among currencies. Greenback reinforced and now follows the latter.

Kiwi has strongly declined and become the softest as Reserve Bank of New Zealand stood pat at yesterday’s meeting, keeping the OCR at 1.75%. NZD/USD’s fall from a near term top of 0.7435 hit the minimum of 0.7181. 55 day EMA at 0.7170 is aligned. Strong breach in that zone should indicate ending of the recoil from 0.6779 and head towards repeat test of this minimum. Medium term 0.6779/7557 diapason trading is expected.

John Williams (San Francisco Fed President) stated that moderate rate hikes will match the economic condition. His outlook is rather positive, as the Fed President doesn’t expect any slowdowns. Other Fed members share positive expectations about the economy. For example, Charles Evans (Chicago Fed President) says there should be 3 or 4 rate hikes this year. Evans also sees inflation peaking up.

Angela Merkel officially declared the reformation of grand coalition after conclusion of the negotiation with Social-Democratic Party. The Chancellor claimed they will create "the good and stable government that our country needs and that many in the world expect from us". SPD leader Martin Schulz will leave his leading position and become Foreign Minister of Germany.

Japan current account surplus reduced to 1.48 trillion yen in December. Chinese trade surplus fell to 20.3 billion dollars (136 billion yuan) in prior month. Australia NAB business confidence declined to 6 in the fourth quarter. Today, Bank of England will announce its rate and release Inflation Report. Germany will feature trade balance. European Central Bank will present monthly bulletin. Canada will show housing starts and new housing price index. US will announce jobless claims.