MNI US OPEN - PCE, Michigan Data to Round Off the Week

NEWS

UK (MNI): 'Best Tax Cut Is Cut in Inflation' - Chancellor

Speaking at the Bloomberg HQ in London, Chancellor of the Exchequer Jeremy Hunt states that he 'understands the importance of low taxes', but that the 'best tax cut right now is a cut in inflation'. The Chancellor added that the UK has some concerns over the US' Inflation Reduction Act, and that while there is some short-term disruption from Brexit, it is an opportunity and the UK can make it a success.

OIL (BBG): Goldman Warns Next Russian Oil Sanctions May Be More Disruptive

The planned price cap on Russian oil products and an EU import ban are likely to be more disruptive than an earlier round sanctions on the nation’s seaborne crude flows, according to Goldman Sach Group Inc.

JAPAN (MNI): BOJ Faces Policy Debate If High Inflation Persists

Bank of Japan officials will become more concerned about the persistency of price pressures if the year-on-year rise in core inflation doesn't start slowing in or after February, possibly triggering debate about policy changes, though not immediately as policymakers await crucial wages data, MNI understands.

JAPAN (MNI): BOJ To Hold 5-Yr Fund-Injecting Operation on Tuesday

The Bank of Japan will conduct a fund-providing operation of 5-year liquidity under the Funds-Supplying Operations against pooled collateral on Tuesday, and the scale of loans will be announced on the day, the BOJ said on Friday.

DATA

FRANCE DATA (MNI): Confidence Edges Down as Consumers Remain Wary

• FRANCE JAN CONSUMER CONFIDENCE 80 (FCST 83); DEC 81r

French consumer confidence weakened by one point to 80 in January, implying below-average confidence (sub-100) since October 2021. Despite a slide in future financial situation outlooks, the major purchase intentions outlook remained stable implying little effect on actual consumer spending.

SPAIN Q4 FLASH GDP +0.2% Q/Q, +2.7% Y/Y (MNI)

SWEDEN DEC RETAIL SALES -8% Y/Y (MNI)
SWEDEN DEC UNEMPLOYMENT 6.9% (MNI)

JAPAN DATA (MNI): Japan Jan Tokyo CPI Rises 4.3%; Highest Since 1981

• JAPAN JAN TOKYO CORE CPI +4.3% Y/Y; DEC REV +3.9%
• JAPAN JAN TOKYO CORE-CORE CPI +3.0% Y/Y; DEC +2.7%
• JAPAN JAN TOKYO CPI FOOD EX-PERISHABLES +7.4% Y/Y; DEC +7.5%
• JAPAN JAN TOKYO CPI ENERGY COSTS +26.0% Y/Y; DEC +26.0%
• JAPAN JAN TOKYO CPI H’HOLD DURABLE GOODS +10.6% Y/Y; DEC +11.0%

The year-on-year rise in Tokyo core inflation rate accelerated to 4.3% in January from December’s revised 3.9%, indicating that the nationwide core CPI will likely rise above 4% in January compared to 4% in December, data from the Ministry of Internal Affairs and Communications showed on Friday.

AUSTRALIA DATA (MNI): Aussie PPI Eases; Export Prices Fall

A deceleration in the Q4 Producer Price Index provided the Reserve Bank of Australia with a modicum of good news after Wednesday's stronger-than-expected Q4 Consumer Price Index firmed the odds of another 25bp hike. PPI rose 0.7% q/q, down from 1.9% in Q3, and the annual pace fell to 5.8% from 6.4%, according to the Australian Bureau of Statistics.

FOREX: EUR Inside Shallow Corrective Pullback, Bias Remains Higher

• JPY trades firmer, gaining against all others in G10 after a spell of interest in early Asia-Pac hours. EUR/JPY's pullback, however, has been shallow as the single currency undergoes a shallow corrective pullback. For now, EUR/USD remains in a broader uptrend, with Thursday's 1.0929 print highlighting the upside bias. Key short-term support levels remain intact and note that moving average studies continue to highlight positive market sentiment. The next objective is 1.0954, the Apr 11 2022 high.
• At the other end of the table, GBP is softer amid a minor pullback in rate hike expectations for the front-end of the UK curve. GBP/USD remains above yesterday's lows of 1.2345, a break below which opens 1.2264/59 the Jan 24 Low and the 20-day EMA respectively.
• A softer SEK puts NOK/SEK closer to the week's best levels, but the cross is running into congestion at 1.0451 - 55. The moves follow a higher than expected Swedish unemployment rate for December, which ticked higher to 7.5% from 7.2% previously.
• Focus Friday rests on US personal income/spending data as well as the December PCE release. Pending home sales and final Michigan sentiment data round off the week.
• The central bank speaker slate is light, with ECB's Villeroy the sole speaker - although he's expected to comment on climate rather than monetary policy.

BONDS: Core FI Moves Lower Ahead of Next Week's CB Meetings

• Core fixed income has been moving lower going into next week's Fed, ECB and BOE meetings with curves bear steepening.
• Looking ahead its a relatively busy Friday afternoon for US data with personal income / spending due along with core PCE as well as pending home sales.
• TY1 futures are down -0-10 today at 114-17+ with 10y UST yields up 3.7bp at 3.538% and 2y yields up 2.0bp at 4.204%.
• Bund futures are down -0.52 today at 137.23 with 10y Bund yields up 4.5bp at 2.254% and Schatz yields up 2.9bp at 2.601%.
• Gilt futures are down -0.28 today at 104.46 with 10y yields up 2.8bp at 3.343% and 2y yields up 2.1bp at 3.448%.

EQUITIES: E-Mini S&P Steadies Following Turbulent Post-GDP Price Action

EUROSTOXX 50 futures remain above support at 4097.00, Jan 19 low and the contract is trading just ahead of key short-term resistance at 4206.00, the Jan 18 high. A break of this level would confirm a resumption of the uptrend and pave the way for a climb towards 4215.00, a Fibonacci projection. Note that the trend remains overbought. A pullback, if seen, would be seen as a healthy bull trend correction. Support to watch is 4085.4, the 20-day EMA. S&P E-Minis traded higher Thursday and confirmed a resumption of the current uptrend. The breach of resistance paves the way for strength towards 4090.75, the Dec 14 high and leaves the 4100.00 handle exposed. Further out, an extension higher would open 4180.00, the Dec 13 high and a bull trigger. Initial firm support has been defined at 3949.56, the 50-day EMA. A move below the average would be seen as a bearish development.

• Japan's NIKKEI closed higher by 19.81 pts or +0.07% at 27382.56 and the TOPIX ended 4.26 pts higher or +0.22% at 1982.66.
• Across Europe, Germany's DAX trades higher by 15.56 pts or +0.1% at 15148.35, FTSE 100 higher by 5.72 pts or +0.07% at 7766.91, CAC 40 up 10.07 pts or +0.14% at 7106.06 and Euro Stoxx 50 up 3.18 pts or +0.08% at 4177.16.
• Dow Jones mini down 43 pts or -0.13% at 33982, S&P 500 mini down 14.25 pts or -0.35% at 4061.5, NASDAQ mini down 79.25 pts or -0.65% at 12029.

COMMODITIES: Pullback in Gold Considered Corrective, Trend Conditions Still Bullish

WTI futures are consolidating and the contract remains below Monday’s high of $82.64. Key short-term resistance is located at $82.66, the Jan 18 high. Clearance of this hurdle would reinstate the recent bullish theme and expose $83.14, the Dec 1 high and $85.33, a Fibonacci retracement. On the downside, the support to watch lies at $78.45, the Jan 19 low. A break of this level would signal a potential reversal. Trend conditions in Gold remain bullish and the latest pullback is considered corrective. Recent cycle highs confirm an extension of the uptrend and maintain the price sequence of higher highs and higher lows. Moving average studies remain in a bull mode position - reflecting the uptrend. The focus is on $1963.0 next, a Fibonacci retracement. Initial firm support to watch lies at $1893.7, the 20-day EMA.

• WTI Crude up $0.74 or +0.91% at $81.77
• Natural Gas down $0.03 or -1.02% at $2.914
• Gold spot down $2.95 or -0.15% at $1926.32
• Copper up $0.85 or +0.2% at $427.75
• Silver down $0.2 or -0.83% at $23.7143
• Platinum down $5.36 or -0.52% at $1016.15