The dollar is holding strong
Japan came back from holiday and things started rumbling. The BoJ pared bond purchases in one of its regular operations. As a result, the yen strengthened and Asian equities are amidst their best start to a year since 2006.
The euro was under stress this morning in the face of protracted German coalition talks. WTI kept trading above 62 bucks, whereas bitcoin kept hovering around $15,000.
The yen jumped as much as half a percent versus the dollar after Bank of Japan lowered its purchases of government bonds, that mature in more than 10 years by 10 billion yen ($88 million), as opposed to last month’s.
And whereas some analysts do expect the BoJ to tweak its stimulus program in 2018, governor Kuroda has repeatedly reiterated that there will be no shift on the immediate horizon.
Here’s what to watch out for this week:
Talks between North and South Korea will take place on Tuesday, Chinese consumer and producer prices are coming out on Wednesday plus U.S. inflation numbers.
Earnings season is at the gates
A great start of the year indeed! And just before that nice time at the beginning of every quarter when the earnings reports get out.
Well today was definitely a rehearsal, because the dollar went up versus developed peers. But unlike most cases, where stocks suffer because of that today they didn’t.
The S&P 500 rose for a 5th straight session, while the Dow resumed its advance. In Europe shares rose for a fifth day encouraged by the lowest unemployment since 2009.
China’s renmimbi fell back as the Bank of China adjusted its currency-fixing mechanism. The 10-year Treasury notes surpassed 2,5% in yield as Bank of Japan cut purchases of long-period bonds.
This week we expect corporate profits from US banks the likes of which are JP Morgan & Chase and Wells Fargo & Co. They will set the tone, as traders will look for more reasons for stocks to go higher.