Financial Markets Today: Quick Take – February 6, 2023 Financial Markets Today: Quick Take – February 6, 2023 Financial Markets Today: Quick Take – February 6, 2023

Financial Markets Today: Quick Take – February 6, 2023

Macro 6 minutes to read
Saxo Strategy Team

Summary:  A wildly strong January US jobs report sparked a massive resurgence in the US dollar as US treasury yields jumped on wildly strong payrolls growth and a rebound in the ISM Services. Risk sentiment took the news on the chin as well as Fed rate expectations were adjusted back higher. In Japan, reports of a firmly dovish BoJ deputy governor being approached to possibly head the central bank on Kuroda's exit took the JPY lower across the board.

What is our trading focus?

Equities (US500.I and USNAS100.I): Good news is bad news for inflation

Last Friday delivered what the market would usually find positive in a strong January jobs reports and strong January PMI Services Index suggesting the US economy is powering on despite the attempts from the central bank to reduce demand to lower inflation. The Fed has done little the past six months to talk against the easing financial conditions and with one rate hike left the question is now whether must do more instead of cutting rates as the market believes. S&P 500 futures reacted negatively to the good macro news erasing the Thursday session’s gains and today’s session has started with a gap lower followed by a continued decline to the 4,130 level putting the index futures in sight for the 4,100 level.

Hong Kong’s Hang Seng (HIG3) and China’s CSI300 (03188:xhkg) in consolidation mode

The Hang Seng Index declined around 2% on Monday, extending the benchmark’s retreat from the January 27 high to over 6%. Digital health platform, mega-cap internet, tech hardware, and Chinese developer names were among the biggest laggards. HKEX (00388:xhkg) plunged 5% despite the Special Administrative Region’s Chief Executive in Saudi Arabia pitching Saudi Aramco to have a second listing in Hong Kong. Renewed geopolitical tension over the Chinese surveillance balloon incident, overall risk-off sentiment spilled over from pricing out some of the rate cut expectations in the U.S., and profit-taking after the sharp rises in the Hong Kong and mainland Chinese stocks weighed on the market. CSI300 slid by 1.5%, with Chinese white liquor one of the worst-performing industries, following reportedly a large state-owned enterprise is prohibiting consuming liquor at business events.

FX: All eyes on JPY again on BoJ chatter; dollar remains bid after strong Friday data

The Japanese yen weakened on Friday after the US jobs report, along with the upside surprise in ISM services, brought the US 10yr yields up some 13bps and 2yr up 18bps. The weakness in the yen was further aggravated this morning in Asia after reports that BOJ deputy governor Amamiya was approached to be the new chief (read below). USD traders will have their eyes on Chair Powell’s speech and a host of other Fed speakers due in the week to assess if last week’s dovish stance is maintained even after the strong jobs and ISM services reports. NZDUSD testing support at 0.6300 after being the weakest on the G10 board on Friday, and AUDUSD testing 0.6900 ahead of tomorrow’s RBA decision (more below). GBPUSD broke below 1.2100 after being rejected at 1.2400 last week, and the GDP report this week could cause jitters as expectations of a delayed recession have kicked in. EURUSD below 1.0800 while USDCAD tests 1.3400.

Crude oil (CLH3 & LCOJ3) bounces after heavy week of long liquidation

Crude oil slumped to a one-month low on Friday after strong US job and ISM Services reports hurt risk sentiment as bond yields and the dollar both rose on expectations the US rate hike process will extend beyond what had prior been expected. Overnight the ship steadied as the EU import ban on Russian fuel products starts along with a $100 price cap on diesel and the IEA said that a strong rebound in China would boost demand for crude. Last week’s price weakness was exacerbated by hedge funds being forced to exit recently established longs as prices turned sharply lower, and despite of this, the prompt spread in Brent remains in backwardation, a bullish pattern, signalling tightness. Brent support at $77.75, the January low with resistance not until $84.30.

Gold (XAUUSD) trades lower, but so far, the correction is a weak one

Gold’s long overdue correction accelerated on Friday after stronger than expected US job and ISM reports saw the price tumble below support-turned-resistance at $1900, before bouncing overnight over rising US-China tensions. The trigger being the stronger dollar and higher yields on concerns the Fed would have to maintain its rate hike cycle for longer, while the driver was long liquidation from recently established hedge funds long. So far, however, given the length gold has travelled since the November low, the correction has been small with gold already finding support below $1870, and if that held it would send a signal about a weak correction within a strong uptrend. Next level of support at $1845 followed by $1828. Bullion-backed ETF holdings meanwhile remain stuck near a 3-year low with no sign of support from long-term investors.

Yields on US Treasuries (TLT:Xmas, IEF:xnas, SHY:xnas) surge all along curve on strong US data

The US 2-year yield closed 18 basis points higher on Friday and the 10-year some 13 basis points higher after wildly strong US payrolls growth and the unemployment rate hitting its lowest level in a half century. The 2-10 yield curve inversion jerked to –80 basis points overnight, near its cycle low of –84 bps. This came after treasury yields had dropped and were poking near the cycle lows on a dovish interpretation of the FOMC last Wednesday. Fed-speak bears watching this week for further evidence of the Fed pushing back against the market’s FOMC takeaway last week. Fed Chair Powell will sit for an interview tomorrow and other FOMC voters are speaking all week.

What is going on?

US January jobs data to question the peak rates narrative

A shocking +517k gain in the US nonfarm payrolls on Friday vs. expectations of +188k, along with a net revision of +71k to the prior two months’ data, continued to suggest that the labour market in the US remains far too tight despite abundant news of layoffs in January. Other aspects of the report were also robust. Unemployment rate saw a surprise fall again to 3.4% from 3.5% (exp. 3.6%), the lowest since 1969. Average hourly wage growth was unchanged at the 0.3% M/M pace, while the Y/Y fell to 4.4%, still more than the expected 4.3%, and the prior was upwardly revised to 4.8% from 4.6%. An unusual 0.4 jump in Average Weekly Hours suggests that hourly pay rose far more than total pay. With market focusing on data more than what Fed Chair Powell said last week, this is likely to send some jitters as it questions the peak rates narrative for the Fed and lifted the entire US treasury yield curve sharply on Friday.

The world’s two largest gold miners are in talks to combine

The US-listed gold miner Newmont is attempting to acquire Australian listed Newcrest in a bid that values the gold miner at $17bn. If the deal goes through it would reunite the two gold miners after being separated for over quarter of a century.

Goldilocks US ISM services report for January

After the jobs report, the January ISM Services also surprised on the upside on Friday. The index rose to 55.2 (vs. expected 50.4) from 49.2 in December, in what was the biggest monthly gain since June 2020 (although the surprising and large drop in December was perhaps the outlier, as this January print puts the survey back almost exactly where it was in November). Business activity accelerated to 60.4 (prev. 53.5, exp. 54.5). Employment lifted back into expansionary territory at 50.0 (prev. 49.4), and new orders surged higher to 60.4 (prev. 45.2). Moreover, the inflationary gauge of prices paid dipped a notch to 67.8 from 68.1 but remained elevated by historical standards.

JPY drops on reports Amamiya was approached to be the next BOJ Governor

Japan’s Nikkei reported that the government has approached Bank of Japan Deputy Gov. Masayoshi Amamiya as a possible successor to central bank chief Haruhiko Kuroda. The week was supposed to bring possible BOJ chief nominations, as the nominees list must be presented to parliament on February 10. However, FM Suzuki refused to confirm Amamiya’s nomination. Amamiya has helped Kuroda since 2013 on monetary policies, and is considered the most dovish among the contenders, which is thrashing hopes that BOJ policy normalization could progress under the new chief.

Weekly COT report delayed following cyberattack

The US CFTC (Commodity Futures Trading Commission) said on Friday that the weekly Commitment of Traders report, normally published Friday evening with data covering the week to the previous Tuesday, was being delayed because of last week's cyberattack on ION Trading UK. The regulator said that the incident was impacting some clearing members’ ability to provide accurate data to the CFTC. The weekly report gives market participants across commodities and other financial markets insight into positions held by money managers, producers and consumers, and swap dealers in futures and options contracts on derivatives exchange CME and other exchanges. It’s closely watched especially as an indicator of speculators’ market sentiment.

What are we watching next?

RBA meeting ahead, putting AUDUSD and EURAUD on watch for a potential whipsaw

The Melbourne Institute Inflation gauge for Australia rose more than expected, bot MoM & YoY, while Australian retail sales beat expectations. These indicators, coupled with building approvals seeing one of their biggest jumps in a decade, will likely see the RBA continuing to hike rates, with a 25-bp hike expected by most at tomorrow's meeting. Guidance will be key, as the market is pricing the RBA for another ~37 bps of tightening thereafter into a peak in either June or July. We are watching AUDUSD and EURAUD with the AUD having nose-dived as commodity prices fell from their highs, while the USD gathers strength.

Earnings to watch

Last week’s earnings were mixed. On the one hand they showed better than expected Q4 figures, but on the other hand the Q1 outlook was generally bad and below the market’s consensus view. This week we get more earnings from Europe which has been the best performing region in the Q4 earnings season. The week’s three most important earnings releases are Walt Disney, Siemens, and AP Moller – Maersk, each providing a different angle on the global economy across the consumer discretionary sector, the industrial activity in the economy, and global trade flows. Today’s US earnings focus is Activision Blizzard which may provide additional information on Microsoft’s acquisition of the company and the potential rejection from US antitrust authorities.

  • Monday: Activision Blizzard, IDEXX Laboratories
  • Tuesday: Carlsberg, BNP Paribas, Siemens Energy, SoftBank Group, Nintendo, BP, Linde, Vertex Pharmaceuticals, KKR & Co, Fortinet, DuPont, Illumina, Enphase Energy
  • Wednesday: A.P. Moller – Maersk, Vestas Wind Systems, TotalEnergies, Societe Generale, Deutsche Boerse, Adyen, Equinor, Yara International, Walt Disney, CVS Health, Uber Technologies
  • Thursday: KBC Group, Brookfield, Thomson Reuters, L’Oreal, Vinci, Credit Agricole, Siemens, Toyota Motor, NTT, Honda Motor, AstraZeneca, Unilever, British American Tobacco, ArcelorMittal, DNB Bank, Volvo Car, Zurich Insurance Group, Credit Suisse, AbbVie, PepsiCo, Philip Morris, PayPal, Cloudflare
  • Friday: Enbridge, Constellation Software

Economic calendar highlights for today (times GMT)

0840 – UK Bank of England’s Catherine Mann to speak

1000 – Eurozone Dec. Retail Sales

1500 – Canada Jan. Ivey PMI

1700 – UK Bank of England Chief Economist Huw Pill to speak

2330 – Japan Dec. Labor Cash Earnings / Real Cash Earnings

0330 – Australia Dec. Trade Balance

0330 – Australia RBA Cash Rate Target


The Saxo Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
- Notification on Non-Independent Investment Research (
- Full disclaimer (

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments. Saxo does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo or its affiliates.

Saxo Capital Markets HK Limited
19th Floor
Shanghai Commercial Bank Tower
12 Queen’s Road Central
Hong Kong

Contact Saxo

Select region

Hong Kong S.A.R
Hong Kong S.A.R

Saxo Capital Markets HK Limited (“Saxo”) is a company authorised and regulated by the Securities and Futures Commission of Hong Kong. Saxo holds a Type 1 Regulated Activity (Dealing in Securities); Type 2 Regulated Activity (Dealing in Futures Contract); Type 3 Regulated Activity (Leveraged Foreign Exchange Trading); Type 4 Regulated Activity (Advising on Securities) and Type 9 Regulated Activity (Asset Management) licenses (CE No. AVD061). Registered address: 19th Floor, Shanghai Commercial Bank Tower, 12 Queen’s Road Central, Hong Kong.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Trading in leveraged products may result in your losses exceeding your initial deposits. Saxo does not provide financial advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo does not take into account an individual’s needs, objectives or financial situation. Please click here to view the relevant risk disclosure statements.

The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit

The information or the products and services referred to on this site may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and services offered on this website are not directed at, or intended for distribution to or use by, any person or entity residing in the United States and Japan. Please click here to view our full disclaimer.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the US and other countries. AppStore is a service mark of Apple Inc. Android is a trademark of Google Inc.