MNI US OPEN - BoJ Minutes Flag Risk of Inflation Momentum

NEWS

ECB (BBG): Nagel Says Inflation to Return to Target Without Recession

The European Central Bank will manage to bring inflation back to target without triggering a recession, Bundesbank President Joachim Nagel said, according to Econostream. “We will get inflation under control in such a manner that what many fear does not occur, namely that is does not come to a recession in the euro area,” Nagel was cited as saying.

JAPAN (MNI): BOJ Dec Minutes Highlight Inflation Momentum Worries

One Bank of Japan board member highlighted a strengthening of the momentum of inflation at the December 19-20 policy-setting meeting, the minutes released by the BOJ on Monday showed.

“Inflation in prices of not only goods but also services had gradually risen, and that the trimmed mean and weighted median of the year-on-year rate of change in the CPI had seen a further rise; this suggested a possibility that the momentum of inflation had started to strengthen,” the minutes showed.

JAPAN (MNI): BOJ Eyes Inflation Flexibility in Accord Review

A review of the joint statement between the Bank of Japan and the government is expected to deliver more monetary policy flexibility but will not lead to an immediate normalisation of policy, with the 2% inflation target and negative short-term policy rate expected to be maintained, MNI understands.

JAPAN (MNI): Kishida to Present BOJ Nominee in February - Press

Japanese Prime Minister Fumio Kishida said Sunday he will present his nominee for the next Bank of Japan governor in February, Kyodo News reported. The PM also said the government, in cooperation with the BOJ, remains committed to achieving economic growth accompanied with wage hikes and price stability although he added that a revised joint statement between the government and the central bank will be matter after the new BOJ governor takes office.

HONG KONG (BBG): Hong Kong Aims to Scrap Testing, Quotas on China Border Travel

Hong Kong is looking to drop the requirement that travelers to and from mainland China get a PCR test and seeking to remove the cap on people crossing the border, according to the city government’s No. 2 official. The “ultimate target” is to do away with both restrictions, Chief Secretary Eric Chan said at a media session Sunday.

NEW ZEALAND (MNI): Education Minister Hipkins New NZ PM

The Labour party's Chris Hipkins was chosen unanimously to replace Jacinda Ardern as Prime Minister. He is due to be sworn in as PM on Wednesday after Ardern resigned last Thursday. Hipkins, Police and Education Minister, was the only one to stand for the position.

ASIA/NATO (MNI): Stoltenberg to Visit Japan, South Korea Near Month-End

NATO Secretary General Jens Stoltenberg will visit Japan and South Korea at the end of this month, the military alliance's press office confirmed following source reports circulated by local media.

FOREX: USD/JPY Falters Ahead of Friday High

• JPY is the poorest performing currency across G10, although price action is largely within recent ranges. USD/JPY continues to oscillate either side of the Y130.00 handle, but intraday strength through the European open faltered ahead of any test on the Friday high at 130.61.
• By a small margin, Scandi currencies are outperforming, putting both SEK and NOK at the top of the pile, but macro drivers are few and far between ahead of the NY crossover.
• EURGBP continues to trade closer to its recent lows and maintains a softer tone following last week’s move lower. The cross has traded below the 50-day EMA, at 0.8755. The average represents a key short-term support and a clear break of it would signal scope for a deeper retracement.
• The Chinese Lunar New Year and the beginning of the Fed's pre-rate decision media blackout period have made for a quiet start to the week, with a light data docket likely to keep a lid on price action going forward. The December US Leading Index and Eurozone consumer confidence make up the risk events for the rest of the session.

BONDS: Core FI Drifting Lower

• Core fixed income has drifted lower this morning but moves on the whole have been fairly subdued and limited to a just over a basis point. Even so Bund and gilt futures are all lower than Friday's lows.
• Today's calendar is relatively light and with the Fed already in its blackout period and no BOE speeches scheduled there will be even more focus on today's ECB speakers. We are due to head from Vujcic, Visco, Panetta and Holzmann during the European trading session while are also due to hear from Lagarde at 17:45GMT / 18:45CET. Knot will join Vujcic and Lagarde as speakers tomorrow.
• TY1 futures are down -0-3 today at 114-31 with 10y UST yields up 1.4bp at 3.495% and 2y yields up 1.1bp at 4.183%.
• Bund futures are down -0.32 today at 137.95 with 10y Bund yields up 1.7bp at 2.189% and Schatz yields up 1.1bp at 2.575%.
• Gilt futures are down -0.44 today at 103.92 with 10y yields up 1.2bp at 3.386% and 2y yields up 0.5bp at 3.468%.

EQUITIES: Bearish Threat in E-Mini S&P Present Following Pullback From Jan 18 High

EUROSTOXX 50 futures traded lower last Thursday. The broader trend outlook remains bullish, however, the cycle is overbought and this warns of the potential for a short-term pullback. A move lower would allow the overbought reading to unwind. A resumption of weakness would open 4046.30, the 20-day EMA and a key near-term support. Key short-term resistance and the bull trigger has been defined at 4206.00, the Jan 18 high. S&P E-Minis have found support at 3901.75, the Jan 19 low. A short-term bearish threat remains present following the pullback last week from 4035.25, the Jan 18 high. Price has traded through support at the 50-day EMA. The average intersects at 3933.04 and a clear break would highlight a potential bearish reversal and expose 3891.50, Jan 10 low. On the upside, the contract needs to clear 4035.25 to cancel any developing bearish threat.

• Japan's NIKKEI closed higher by 352.51 pts or +1.33% at 26906.04 and the TOPIX ended 18.51 pts higher or +0.96% at 1945.38.
• Across Europe, Germany's DAX trades higher by 15.77 pts or +0.1% at 15049.38, FTSE 100 higher by 15.34 pts or +0.2% at 7785.62, CAC 40 down 6.28 pts or -0.09% at 6989.71 and Euro Stoxx 50 up 6.38 pts or +0.15% at 4126.28.
• Dow Jones mini up 2 pts or +0.01% at 33476, S&P 500 mini down 1.25 pts or -0.03% at 3987, NASDAQ mini down 2.5 pts or -0.02% at 11674.5.

COMMODITIES: Trend Conditions in Gold Bullish After Printing Fresh Cycle High Friday

WTI futures traded higher last week but prices pulled back from $82.66, the Jan 18 high. The move lower warns of a potential bearish threat and attention is on support at $78.29, the 20-day EMA. A break of this average would highlight a stronger bear threat and expose support at $72.74, the Jan 5 low. On the upside, clearance of $82.66 would reinstate the recent bullish theme and instead expose $83.14, the Dec 1 high. Trend conditions in Gold remain bullish and the yellow metal traded to a fresh cycle high last week. This confirms an extension on the uptrend and maintains the price sequence of higher highs and higher lows. Note that moving average studies are in a bull mode position - reflecting the uptrend. The focus is on $1963.0 next, a Fibonacci retracement. Support to watch lies at $1873.0, the 20-day EMA. Short-term pullbacks are considered corrective.

• WTI Crude down $0.14 or -0.17% at $81.54
• Natural Gas up $0.28 or +8.66% at $3.445
• Gold spot down $1.22 or -0.06% at $1924.63
• Copper up $3.25 or +0.76% at $428.7
• Silver down $0.15 or -0.64% at $23.7663
• Platinum up $3 or +0.29% at $1048.1