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Germanys October PPI rose 1.8% year-on-year, compared with an expected decline of 1.9% and a previous decline of 1.70%.Germanys October PPI rose 0.1% month-on-month, in line with expectations and down from -0.10% previously.Switzerlands trade balance in October was CHF 4.319 billion, revised from CHF 4.073 billion to CHF 3.99 billion in the previous month.On November 20th, analysts stated that Moodys will review Italys credit rating on Friday, potentially offering its first upgrade in nearly 25 years, reflecting growing market confidence in the public finances of the Eurozones third-largest economy. In May, Moodys upgraded Italys rating outlook from "stable" to "positive," while maintaining its "Baa3" rating, the lowest investment grade. At the time, Moodys cited stronger-than-expected fiscal performance and a more stable political environment as the main reasons for the outlook adjustment. Subsequently, the Meloni government further lowered its 2025 budget deficit target to 3% of GDP, complying with the EUs maximum deficit limit a year ahead of schedule. Since May 2002, when Moodys downgraded Italy from Aa3 to Aa2, it has not upgraded its rating. And since its downgrade in October 2018, it has remained unchanged. UniCredit stated that a potential upgrade would further confirm the continued positive trend in the overall assessment of Italys creditworthiness. Among major rating agencies, Moodys remains the most cautious.Barclays has raised its year-end 2026 target for the S&P 500 to 7,400, up from its previous forecast of 7,000.

US Dollar/JPY Yields May Fall Below 131,000 Ahead of Vice President Joe Biden's SOTU Address

Daniel Rogers

Feb 08, 2023 14:39

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At 130.90, the USD/JPY is under pressure, extending yesterday's decline from the highest level in a month. In doing so, the Yen pair tracks the recent decrease in US Treasury bond yields despite a dismal start to Tokyo trading on Wednesday. In recent times, geopolitical concerns have combined contradictory Japan data and Fedspeak to weigh on the market.

 

At the time of publication, rates on 10-year US Treasury notes reversed a three-day increase while retreating from a one-month high of approximately 3.68 percent to 3.67%. The US Dollar Index (DXY) has fallen for the second consecutive day to approximately 103.30. In spite of this, S&P 500 Futures exhibit minor losses, mirroring Wall Street and reflecting a negative sentiment.

 

Japan's trade deficit decreased to -1,225.6B from -1,814.6B expected and -1,537.8B earlier, while the Current Account balance decreased to 33.4B from -1,803.6B and 98.4B.

 

President of the Federal Reserve Bank of Minneapolis Neel Kashkari told CNN, "We may have to maintain higher interest rates for a longer period of time," adding that he does not anticipate a recession. Jerome Powell, chairman of the Federal Reserve, then declared, "Expect 2023 to be a year of large declines in inflation," adding that if data continued to come in better than anticipated, he would certainly boost rates further.

 

Notably, optimism surrounding the Japanese government's wage negotiations with labor leaders in March appears to have fuelled optimism at home. However, China's denial of the Pentagon's request maintains the geopolitical tension at a high level.

 

Traders of the USD/JPY pair should rely on Bank of Japan (BoJ) discussions to target more losses, especially in light of recent hawkish concerns surrounding the Japanese central bank. Today's State of the Union (SOTU) speech by United States Vice President Joe Biden will also be vital to follow. Reuters said prior to the event, "US Vice President Joe Biden will face Republicans who question his legitimacy and a public apprehensive about the country's direction during Tuesday's State of the Union address, which is expected to serve as a blueprint for a 2024 re-election attempt,"


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