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Ahead of the weekend, the Japanese Yen weakened following the BoJ’s monetary policy meeting, with the BoJ resolute in keeping its dovish stance, and the Yield Curve Control (YCC). On the other hand, the Euro sharply rallies on Friday.
The EUR/JPY pair managed to bounce off the day’s lows at 139.03 and hit a daily high of 141.19 before losing momentum. The pair has reclaimed and achieved a daily close above the 200-day EMA keeps bulls hopeful of higher prices.
Economic Data
The UK Retail Sales arrived at -1.0% over the month in December vs. -0.5% previous. The Core Retail Sales, stripping the auto motor fuel sales, fell by 1.1% MoM vs. -0.3% previous. On an annualized basis, the UK Retail Sales plunged 5.8% in December versus -5.7% prior while the Core Retail Sales tumbled 6.1% in the reported month versus -5.6% previous.
Existing home sales declined for the 11th straight month, dropping 1.5% from November to December. This decline was shallower than expected and a softer drop than November, which was revised to a weaker 7.9% decline.
The better-than-expected outcome for December still left existing home sales at a 4.02 million-unit annual pace, the lowest level since November 2010. Year-over-year, existing home sales were down 34.0%.
The market’s risk-on impulse favoured risk sensitive currencies including the NZD, CAD, NOK, SEK and of course the Australian Dollar. The US housing market continues to deteriorate, as shown by declining Existing Home Sales.
Key Developments
Fed’s policymakers favour a deceleration of rate hikes, though the higher-for-longer stance remains unchanged. The AUD/USD pair edged higher in the mid-US session on Friday, following the Thursday’s weak employment report in Australia that triggered a fall below 0.6900.
US indexes surged on Friday after Netflix kicked off the earnings season for growth stocks with positive move, while Google parent Alphabet gained on news of job cuts.
Shares of Netflix jumped 6.8% as the company added more subscribers than expected in the Q4 and said co-founder Reed Hastings was stepping down as chief executive. Quarterly update comes as the technology sector faces gloomy expectations because of rising interest rates and economic concerns that forced companies such as Microsoft Corp and Amazon to lay off thousands of employees.
Alphabet was the latest to join the list as it said it was cutting 12,000 jobs on Friday. The company’s shares rose 4.1%. The gains made communication services stocks the top gainer among major S&P 500 sectors, climbing 2.7% with information technology in tow, helped by a 2.9% rise in Microsoft.
WTI crude oil futures edged higher on Friday, putting the market in a position to post a second straight weekly gain. The catalysts triggering this price action obviously include rising economic hopes that China could boost fuel demand in the reopened big economy.
March WTI crude oil trades at $81.64, up $1.03 or +1.28% versus Thursday’s closing price at $80.61 per barrel. On Thursday also, the US Oil Fund ETF (USO) settled at $70.59, up $1.08 or +1.55%.
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