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Risk Appetite Sends Stocks and Oil Higher, Yen and Swiss Franc Weak

Risk-on sentiments continue in Asian session today with Nikkei hitting 30-year higher, while oil prices are also back at pre-pandemic level. Yen and Swiss Franc are currently the weakest one, together with Euro. On the other hand, commodity currencies are leading the way up naturally. Dollar and Sterling are mixed in between.

Technically, EUR/USD is pressing 1.2052 support turned resistance for now. Firm break there will confirm near term bottoming and bring stronger rebound. But rejection by the resistance could prompt another round of selloff in Euro. On the other hand, GBP/USD is on track to take on 1.3758 resistance and break will resume larger up trend, and could indicate some more Dollar weakness ahead. The interplay is something to note for the early part of the week.

In Asia, Nikkei is currently up 1.99%. Hong Kong HSI is up 0.44%. China Shanghai SSE is up 0.98%. Singapore Strait Times is up 0.86%. Japan 10-year JGB yield is up 0.007 at 0.067.

US Yellen: A long way to dig out the deep hole in job market

US Treasury Secretary Janet Yellen told said over the weekend the job market is “stalling”. “We’re in a deep hole with respect to the job market and a long way to dig out,” she added. It could take until 2025 for the US market to recovery without adequate support. But the administration’s USD 1.9T stimulus ” will generate will create demand for workers.”

“As Treasury secretary, I have to worry about all of the risks to the economy,” Yellen added. “And the most important risk is that we leave workers and communities scarred by the pandemic and the economic toll that it’s taken, that we don’t do enough to address the pandemic and the public health issues, that we don’t get our kids back to school.”

Fitch affirmed Japan’s rating at A with negative outlook

Fitch affirmed Japan’s sovereign credit rating at “A”, with a “negative outlook”. The rating agency said that “balance the strengths of an advanced and wealthy economy, with correspondingly robust governance standards and public institutions, against weak medium-term growth prospects and very high public debt.”

On the one hand, “strong external finances are underpinned by a persistent current account surplus, a large net external creditor position, and the yen’s reserve currency status.” But the negative outlook was retained, “given continued downside risks to the macroeconomic and fiscal outlook from the coronavirus shock.”

Also, Fitch expected BoJ to maintain the currency monetary policy stance over the coming year. “The BOJ’s policies entail longer-term risks to the central bank’s balance sheet, particularly the purchase of ETFs and fluctuations in underlying equity prices,” it added.

WTI continues up trend on supply cut and recovery hope, on track to 58.26

WTI crude oil’s up trend continues and hits as high as 57.37 so far. Oil is now back at pre-pandemic level, partly supported by Saudi Arabia’s move on extra supply cuts in February and March. Traders are also betting on a strong recovery ahead with mass vaccine rolls out.

WTI is on track to 100% projection of 47.24 to 53.92 from 51.58 at 58.26. Reaction to this projection level will indicate the underlying momentum for further upside acceleration. Sustained break would likely bring even quicker rally to 161.8% projection at 62.38.

Break of 56.38 minor support will bring some consolidations. But wouldn’t be any change in the up trend as long as 53.92 resistance turned support holds.