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Daily Market Outlook, December 21, 2022 The Bank of Japan’s surprise announcement regarding a modification in its yield curve control policy, by widening its 10-year target to a plus or minus 0.5% versus its prior plus or minus 0.25%, has left markets grappling with the implications as the global anchor of rates is finally lifted, market participants believe that this is likely the first salvo in a significant regime shift that will unfold in 2023, this belief is contrary to the BoJ’s official stance but nevertheless as is often the case once markets sense weakness or a shift in policy stance they will seek to test the position, with some major hedge funds already openly discussing plans to build positions in the Japanese Yen to take advantage of the potential for future announcements, given the sizeable moves already witnessed in favoured carry trade positions in the likes of AUDJPY and NZDJPY which have already seen reversals of just under 5%. The BoJ move had initially pressured global risk sentiment with equity markets responding negatively to the last bastion of easy monetary policy seemingly giving way, however, a reversal in sentiment developed during yesterday’s European and US sessions as dwindling liquidity and positive comments from FEDEX sparked the fuse for a short covering rally, with the benchmark SP500 snapping a four-day losing streak, this reversal in risk sentiment has carried into Asian trade overnight, with most Asian markets posting positive returns on the day, even the Nikkei managed to stabilise losses showing only marginal decline on the day. European markets are set to open with a positive tone this morning, investors will be hoping for no further ‘tape bombs’ for the remainder of the week as holiday-thinned trading conditions start to set in and investors hope for a Santa rally, the Scrooge’s amongst market participants are starting to opine on what was going on behind the scenes at the BoJ that meant they needed to make this historical policy announcement the week before Christmas?Overnight HeadlinesUS Target China Potential Chip Star With New RestrictionsUS Hopes To See China Defeat Current Covid-19 OutbreakUS Senate Advance $1.66 Trillion Government-Funding BillBeijing Braces For Cases Surge, World Watches In ConcernJapan Warns Of Covid Situation, Cuts Factory Output ViewGoldman: BoJ Could Remove Negative Interest Rates NextUK Business Confidence Sees Best Rebound Since April 21Zelenskiy Plans To Address Congress In-Person WednesdayOil Holds Two-Day Gain On Stockpile Decline, Supply RisksTC Energy Delays Full Keystone Pipeline Restart Next WeekFedEx Profit Top As Higher Prices Offset Shipments DeclineNike Beats Estimates As Boosted By Discounts, PromotionsFX Options Expiring 10am New York CutEUR/USD: 1.0400-10 (890M), 1.0500 (272M), 1.0700 (258M)USD/CHF: 0.9300 (1.0BLN). EUR/CHF: 0.9800 (274M)AUD/USD: 0.6655 (207M), 0.6900 (867M)USD/CAD: 1.3485 (250M)Technical & Trade ViewsSP500 Bias: Bullish Above Bearish Below 3900Primary support is 3900Primary downside objective is 3700Above 3950 opens a test of 400020 Day VWAP bearish, 5 Day VWAP bearishEURUSD Bias: Bullish Above Bearish below 1.0650Primary resistance is 1.0650Primary downside objective is 1.0450Above 1.0680 opens a test of 1.073520 Day VWAP bullish, 5 Day VWAP bullishGBPUSD Bias: Bullish Above Bearish below 1.2250Primary resistance is 1.2250Primary downside objective 1.20Above 1.2275 opens a test of 1.234020 Day VWAP bearish, 5 Day VWAP bearishUSDJPY Bias: Bullish above Bearish Below 132.50Primary resistance is 132.50Primary downside objective is 130Above 133 opens a test of 133.6020 Day VWAP bearish, 5 Day VWAP bearishAUDUSD Bias: Bullish Above Bearish below .6740Primary resistance is .6740Primary downside objective is .6535Above .6775 opens a test of .689020 Day VWAP bearish, 5 Day VWAP bearishBTCUSD Bias: Intraday Bullish Above Bearish below 16200Intraday 16200 is primary supportPrimary upside objective is 17200Failure at 16000 opens a test of 1550020 Day VWAP bearish, 5 Day VWAP bearish
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