Morning Brew January 11 2023

Good Morning,

Jerome Powell yesterday managed not to spook markets and we traded risk on pretty much across the board. In equities, US indexes gained with the Dow up 0.6%, the S&P 500 up 0.7% and the Nasdaq up 1%, The GER40 rose to above 14800 and the Eurostoxx 50 above the 4000. The USD index moved little to trade at 103.20, EURUSD at 1.0750, GBPUSD 1.2160 and USDJPY 132.30.

With the calendar being basically empty, traders as well as investors are focusing on the US CPI tomorrow. While investors would normally not focus on a single number, Fed Speakers are using the Consumer Price index to assess their strategy going forward – the rate path can be crucial on a short and long term.

Tomorrows release is especially interesting as many assets are trading at key technical levels. EURUSD, EURCHF, USDJPY, XAUUSD, the GER40, the US500, the SWISS 20 as well as Apple and Tesla are at or near important marks and any positive or negative surprise is likely to cause significant moves.

Next to the CPI, Fridays bank earnings are being watched closely and option traders are rather bearish. Put options are being bought 80% more often than calls. On Friday, we are expecting numbers from Bank of New York Mellon, Bank of America, JPMorgan Chase, Wells Fargo, Citigroup, First Republic Bank also BlackRock and Delta Airlines. 

One thing that was rather interesting in Powell`s speech yesterday was that he saw the FED`s role outside politics and climate policy outside it`s mandate – rather different from the ECB.

Trade safely

Wednesday 11 January

• Australia retail sales (Nov)
• Australia CPI (Nov)
• U.S. MBA mortgage applications (Jan 6)

Thursday 12 January

• Australia trade (Nov)
• U.S. CPI (Dec)
• China CPI & PPI (Dec)
• Fed's Harker discusses the economic outlook

Friday 13 January

• U.S. U of Michigan Consumer Sentiment (Jan, preliminary)
• Eurozone: Industrial production (Nov)
• UK: Monthly GDP (Nov)
• Japan: Money supply (Dec)
• China: Imports, exports and trade balance