European Open: EUR/JPY holds the 200-day eMA (but for how long?)

Asian Indices:

• Australia's ASX 200 index rose by 9.9 points (0.14%) and currently trades at 7,342.40
• Japan's Nikkei 225 index has risen by 305.7 points (1.11%) and currently trades at 27,772.93
• Hong Kong's Hang Seng index has risen by 632.14 points (2.62%) and currently trades at 24,759.99
• China's A50 Index has risen by 265.75 points (1.74%) and currently trades at 15,496.44

UK and Europe:

• UK's FTSE 100 futures are currently up 36 points (0.48%), the cash market is currently estimated to open at 7,625.66
• Euro STOXX 50 futures are currently up 12.5 points (0.29%), the cash market is currently estimated to open at 4,280.78
• Germany's DAX futures are currently up 33 points (0.21%), the cash market is currently estimated to open at 15,842.72

US Futures:

• DJI futures are currently up 135 points (0.39%)
• S&P 500 futures are currently up 78.25 points (0.52%)
• Nasdaq 100 futures are currently up 17.75 points (0.39%)

PBOC ‘takes it easy’ with another rate cut

China’s central cut their 1 and 5-year prime loan rates today, making it the second time this week PBOC have eased to provide stimulus. On Monday they cut their MLF just hours ahead of their GDP, which shows that the world’s second largest economy grew at a faster rate than expected (even the rate of growth was lower compared with Q3). UD/CNH continues to cling onto 6.35 support, a level it has struggled to hold below in recent weeks before bouncing higher. The Hang Seng broke to a 2-month high as shorts continue to capitulate after a multi-month bear trend.

AUD is the strongest major after decent employment report

The Australian dollar was the strongest major currency overnight after a decent employment report. Unemployment fell to its lowest level of 4.2% back in 2008, and around 65k jobs were added with full-time employment making up around two thirds of the headline figure. We will still need to wait until the next report to have a better idea of how the Omicron wave fared in December, but that didn’t prevent the Aussie rising across the board.

AUD/CAD hit out upside target near the March 2020 high before heading back most of the day’s gains. In our Asian Open report we had noted it made a likely target for bulls and area for bears to consider fading into. And that appears to be what has happened thus far.

EUR/JPY tries to reclaim 130 as it retraces

After a false break below the 200-day eMA around 129.64, EUR/JPY has formed a higher low and is now trading to break above 130. It just may do it as well looking at near-term momentum in the intraday charts. Yet as outlined in yesterday’s analysis, we favour an eventual downside break of the 200-day eMA given the size of Tuesday’s bearish candle. So whilst bulls could seek to take a few pips to the upside we are more interested in fading into areas of weakness below 130.50 (the weekly pivot) with interim resistance sitting around 130.20

7600 in focus for FTSE bulls

The reality is that 7600 has been a focal point for bulls all week. They keep trying to break above it yet failing to close above it, and the longer that goes on the great the risk we may see a countertrend move. Still, as long as any pullback holds above 7500 then bulls may feel inclined to step back in as the FTSE remains one of the stronger indices this past month.

FTSE 350: 4299.63 (0.35%) 19 January 2022

• 166 (23.61%) stocks advanced and 173 (24.61%) declined
• 10 stocks rose to a new 52-week high, 18 fell to new lows
• 23.61% of stocks closed above their 200-day average
• 23.47% of stocks closed above their 50-day average
• 5.55% of stocks closed above their 20-day average

Outperformers:

• + 7.59% - Polymetal International PLC (POLYP.L)
• + 7.09% - WH Smith PLC(SMWH.L)
• + 6.32% - Burberry Group PLC (BRBY.L)

Underperformers:

• -4.36% - Ashtead Group PLC(AHT.L)
• -3.98% - TUI AG(TUIGn.DE)
• -3.91% - John Wood Group PLC(WG.L)

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