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HFMarkets (hfm.com): New market analysis services.
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[QUOTE="HFM, post: 217816, member: 32345"] [b]Date : 21st February 2023. Aussie & Kiwi Post RBA, Ahead Of RBNZ.[/b] [URL='https://analysis.hfm.com/wp-content/uploads/2023/02/AUDJPY.jpg'][IMG]https://analysis.hfm.com/wp-content/uploads/2023/02/AUDJPY-696x364.jpg[/IMG][/URL] The minutes of the [B]RBA meeting[/B] showed that the committee believes the cash rate is currently lower than in many economies, while the data showed a higher than expected breadth and persistence of inflation. They supported continued rate hikes in the coming months ([B]25 bps or 50 bps may be considered[/B], with medium-term inflation expectations holding up well.) On peak interest rates, the Committee noted that this would depend on household income and expenditure outflows, employment and price movements. [URL='https://analysis.hfm.com/wp-content/uploads/2023/02/20230221-1-1.png'][IMG]https://analysis.hfm.com/wp-content/uploads/2023/02/20230221-1-1.png[/IMG][/URL]Chart 1: Japanese manufacturing and services PMI. source: Trading Economics On the other hand, the Asia Pacific trading session saw a mixed performance from Japan’s PMI data for February. In [B]manufacturing[/B], the data was pressured below the waning line for the fourth consecutive month and posted the[B] largest decline since August 2020[/B] at 47.4 vs. 48.9. The report showed that [B]weak global demand[/B] led to a further decline in buying activity and that foreign sales were contracting at a faster pace, leading to the largest decline in both output and new orders since July 2020. In the [B]services[/B] sector, the figure was recorded at 53.6, the highest since June last year. This was mainly due to a faster rate of growth in new orders and a modest increase in new business from abroad. Overall, the performance of the manufacturing and services PMIs offset each other, with the final Japanese composite PMI remaining unchanged at 50.7 in February. [URL='https://analysis.hfm.com/wp-content/uploads/2023/02/20230221-1-2.png'][IMG]https://analysis.hfm.com/wp-content/uploads/2023/02/20230221-1-2.png[/IMG][/URL]Figure 2: Japanese inflation rate. Source: Trading Economics [B]Japanese inflation remains high.[/B] In December 2022, inflation in Japan rose to 4% year-on-year, the highest level since January 1991. A weaker Yen and higher imported raw material prices have contributed to the price spike. Not only that, but core inflation also recorded a 4% annual increase, the biggest rise since December 1981. BOJ Governor [B]Haruhiko Kuroda[/B] said later that wages would rise in line with rising labour demand and inflation, but “[I]believe inflation will slow down in the middle of fiscal 2023[/I]“. [B][URL='https://www.reuters.com/markets/asia/kazuo-ueda-who-is-new-bank-japan-governor-what-can-we-expect-him-2023-02-10/']Haruhiko Kuroda[/URL] [/B]will attend his last monetary policy meeting in office next month. He will be succeeded by [B]Kazuo Ueta, an academic[/B] and former member of the Bank of Japan’s policy committee. This figure is “an unknown quantity” to many, but according to Professor Shibu Takahashi, who has worked with him, Kazuo Ueta cannot be classified as a Hawk or a Dove. [URL='https://asia.nikkei.com/Spotlight/The-Big-Story/Kazuo-Ueda-Next-BOJ-chief-inherits-world-s-toughest-central-bank-job']“[B]He is a “pragmatic problem solver[/B]“.[/URL] Kuroda’s decision on yield curve control (YCC) at the last meeting will be a key one. If he chooses not to act, then Kazuo Ueta could face “[B]massive bond sell-off[/B]” pressure after taking office. The next key event meanwhile for the Asia region is the [B]RBNZ policy announcement tonight.[/B] The RBNZ last announced an interest rate decision around three months ago, when they raised rates by 75bp to bring rates to 4.25%. 400bp has been added to the tightening cycle, with November’s 75bp hike being the cycle’s most extreme increase. The decision is now between adding an additional [B]75bp to raise rates to 5%[/B] or sticking with [B]50bp to bring rates to 4.75%.[/B] Not only has inflation fallen short of the RBNZ’s own expectations, but measures of corporate confidence have also fallen to an all-time low, and their business PSI has barely expanded, suggesting that the economy should have slowed. The inflation forecast over the next two years fell from [B]3.6% to 3.3%,[/B] but the forecast for next year is still historically high at 5.1%. Overall, [B]a 50bp increase is the most likely scenario,[/B] but a 75bp increase is also a possibility. Therefore, the focus is on how hawkish or not the RBNZ’s statements are perceived to be and whether or not they signal that the tightening cycle is coming to an end. [B][B]Technical Analysis: NZDUSD & AUDJPY[/B][/B] [URL='https://analysis.hfm.com/wp-content/uploads/2023/02/CADJPY-1.png'][IMG]https://analysis.hfm.com/wp-content/uploads/2023/02/CADJPY-1.png[/IMG][/URL] NZDUSD [B]NZDUSD[/B], D1 – This currency pair has slipped below the 200-day EMA slope to test [B]0.6190[/B] support. A break of this price level would show that the [B]0.5510[/B] rebound has ended at [B]0.6537[/B] (50% FR of [B]0.7463[/B] – [B]0.5510[/B] drawdown) and instead, the decline from the [B]0.7463[/B] peak will resume back towards lower price levels. As long as the [B]0.6190[/B] support remains intact, the upside movement could test [B]0.6389[/B] and the [B]0.6537[/B] interim high. Overall, the price bias is still neutral despite the RSI mark at 39 and MACD is still in the selling zone. So certainly, the RBNZ event will be the next trend parameter. [B][B][URL='https://analysis.hfm.com/wp-content/uploads/2023/02/20230221-1-3.png'][IMG]https://analysis.hfm.com/wp-content/uploads/2023/02/20230221-1-3.png[/IMG][/URL][/B][/B] AUDJPY The daily chart shows the [B]AUDJPY[/B] rebounding from a 9-month low on 20 December last year, then rising and in an uptrend channel area. The pair is currently testing the key FR50.0% resistance at [B]92.70[/B]. A successful break would mean a continuation of the upside pattern for AUDJPY with the next resistance at [B]94[/B] (FR 61.8%) and [B]96[/B] (FR 78.6%), which intersects the top line of the uptrend channel. If pressured, it could fall back and test the 100-day SMA, then [B]91.40[/B] (FR 38.2%; bottom line of the rising channel) and [B]89.70[/B] (FR 23.6%). [b]Always trade with strict risk management. Your capital is the single most important aspect of your trading business. Please note that times displayed based on local time zone and are from time of writing this report.[/b] Click [url=https://www.hfm.com/hf/en/trading-tools/economic-calendar.html][b]HERE[/b][/url] to access the full HFM Economic calendar. Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click [url=https://www.hfm.com/en/trading-tools/trading-webinars.html][b]HERE[/b][/url] to register for FREE! [url=https://analysis.hfm.com/][b]Click HERE to READ more Market news.[/b][/url] [b] Larince Zhang and Ady Phangestu Market Analyst – HF Educational Offices Disclaimer:[/b] This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission. [/QUOTE]
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