Daily Market Update

This represents a key decision point for the Federal Reserve – an uptick could very well raise market expectations for further rate hikes beyond the current terminal rate projections of 5.00%-5.25%. Currently, surveyed projections are expecting such an uptick and waiting to hear what changes (if any) the Fed may make to its current path.

Global equities are focused on the continuing saga in the skies over Lake Michigan as the United States shot down a fourth unidentified flying object over the weekend. Investor sentiment, primarily in the tech indices, is turning sour as many begin to consider the possibility of increased sanctions on China. As Beijing and Washington continue to butt heads, new developments bring geopolitical risk back to the forefront, and the world awaits further comment from both nations.

What to Watch Today…

• No major economic events are scheduled for today
• Monex USA Online is always open

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GBP ⇑

Pound Sterling has started the week a bit on the back foot before entering into a very busy data week starting tomorrow with UK employment data. This is followed by a CPI reading on Wednesday and retail sales data Friday, which will all help to provide some clarity inside an increasingly murky economic picture out of the United Kingdom.
 
Following the news last week that the UK very narrowly escaped a technical recession, the UK is hoping that headline CPI will show at least some decrease in inflation. Currently, markets are anticipating an overall worsening of economic conditions through the region coupled with another rate hike in March from the Bank of England of 25 basis points.

 

JPY ⇓

The Japanese Yen opens the morning down 1% from Friday’s closing prices on the expected formal announcement of Kazuo Ueda tomorrow morning as Governor of the Bank of Japan. As something of an outsider, his plans for the Bank of Japan are a relative unknown, and markets wait to hear whether he will continue the BOJ’s path of quantitative easing.

Questions remain as to whether the current Governor Kuroda will make an early exit from the helm or use the March 10^th policy decision to make final tweaks before handing over the reins to Ueda. Though unlikely that Kuroda would make any substantial changes at this last meeting, market pressures are making it clear that BoJ’s current playbook is largely unsustainable.