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January 29, 2022

Forex Market Recap (23-28 January 2022)

Bart Kurek

The US Dollar was on top this week as traders anticipated and reacted to a hawkish monetary policy statement from the Fed. The high inflation environment and a global monetary policy tightening regime continued to dominate the markets. Risk currencies didn't do very well to this news with NZD and AUD fading lower through the rest of the week with USD strength and risk-off vibes.

USD:

  • Flash Manufacturing PMI at 55.0 in January vs 57.7 in December
  • Home Prices rose 18.8% y/y on the S&P CoreLogic Case-Shiller National Home Price Index
  • Q4 GDP exceeding expectations, economy expanded at 6.9% annualised rate
  • Durable goods orders fell by 0.9% in December after soaring by an upwardly revised 3.2% in November
  • University of Michigan’s final Consumer Sentiment Index for January came in at 67.2 vs 70.6 in December
  • Core PCE price index rose 4.9% from a year ago, the fastest gain since 1983

EUR:

  • French Flash Services PMI tumbled from 57.0 to 53.1 vs 55.3 forecast
  • French Flash Manufacturing PMI dipped from 55.6 to 55.5
  • German Flash Services PMI up from 48.7 to 52.2 vs 47.9 forecast
  • German Flash Manufacturing PMI up from 57.4 to 60.5
  • Flash Eurozone PMI Composite Output Index falls to an 11-month low of 52.4 vs 53.3 in December
  • Bundesbank says "German economy likely shrunk in Q4"
  • Euro area Economic Sentiment Indicator falls to 112.7 in January

GBP:

  • Flash Manufacturing PMI dipped in January to 56.9 vs 57.9 in December
  • CBI says "Factory costs rising at fastest pace since 1980"
  • UK borrows less than expected in December as Covid impact eases
  • The latest Confederation of British Industry (CBI) Industrial Trends survey said UK output volumes in the previous quarter to January grew at a slower pace

CAD:

  • The BOC surprisingly kept interest rates at 0.25% but signaled future rate hikes

JPY:

  • BOJ’s Kuroda vows easy policy as wage talks begin
  • Core CPI for December: +0.9% vs +0.8% previous
  • BOJ Summary of Opinions "Seeing higher inflation but unlikely to go past target"
  • IMF urges Japan to scale back emergency pandemic support and consider raising taxes after the recovery

AUD:

  • Flash Manufacturing PMI down from 57.7 to 55.3
  • Flash Services PMI tumbled from 55.1 to 45.0
  • AU NAB business confidence slides 24 points to -12 in December, as surge in coronavirus cases affects consumer spending and staffing
  • Quarterly CPI accelerates from 0.8% to 1.3% vs 1.0% forecast in Q4 2021
  • Annual inflation closer to middle of RBA’s 2–3% target range at 2.6% vs 2.3% expected
  • Trimmed mean CPI jumps from 0.7% to 1.0% vs 0.7% forecast

NZD:

  • The BNZ Business New Zealand Performance of Services Index for December was 49.7 vs 47.5
  • Fonterra raises farmgate milk price forecast to a range of NZ$8.90-9.50
  • Credit card spending rebounded by 1.2% after previous 0.4% dip
  • Consumer prices up by 5.9% from a year ago in Q4 2021, the highest in 30 years and much faster than the RBNZ’s 1–3% target range

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