Defensive Markets Ahead of Busy Session, New Premium Insights

Japanese jawboning; Eurozone CPI as expected; Swiss retail sales rose but below expectations; German auction. Markets await CPI, TIC flows, capacity utilization and IP, Beige book. 18 new trades are added today to the Premium Insights, including 3 charts on EURUSD & US crude oil. See details below for access.Sticking with our USD shorts while cautiously issuing constructive bias in metals and oil at the expense of the Japanese yen.

JPY was gaining across the board throughout the Asian and London sessions. Jawboning continued as the secretary general Ishiba said that weaker yen is worrisome for some industries and firms. Japanese equities experienced significant losses and Nikkey225 closed over 2.5% weaker. USDJPY fell to 87.80 and now trades around 88.20 while EURJPY fell to 116.46 and now trades around 117.40.

On the data front we learned that Eurozone CPI was in line with expectations as it was steady in December at 2.2% y/y but the core figure rose to 1.5% from previous 1.4% and that Swiss retail sales disappointed as they rose only 2.9% in November from 2.7% but market expected a 3.3% growth.

Germany allotted only EUR 4.007 bln of 2023 bund vs. EUR 5.0 bln target. The average yield rose to 1.56% from 1.4% and cover rose to 1.7 from 1.5.

The US session kicks off at 8:30 am ET with CPI that is forecasted to remain steady in December at 1.8% on annual basis. The core figure is also seen without change at 1.9%.

Net long term TIC flows are due at 9:00 am and they are seen higher in November at USD 19.8 bln from prior USD 1.3 bln. Capacity utilization and industrial production will be announced 15 minutes later and they are expected higher at 78.6% respectively lower at 0.2%. The last item on the list is the Beige book that is due at 2:00 pm.