Asian Open: NZ business sentiment sours, USD/JPY rises ahead of BOJ

US Futures:

• S&P 500 E-minis are index down -0.25 points (-0.01%)
• Nasdaq 100 E-minis are index down -36.5 points (-0.23%)
• Dow Jones E-minis are index up 37 points (0.1%)

Asian Futures:

• Australia’s ASX 200 futures rose 0 points (0.176%), the cash market is currently estimated to open at 7417.3
• Japan's Nikkei 225 futures have risen 60 points (0.21%), the cash market is currently estimated to open at 28393.52
• Hong Kong's Hang Seng futures are up 42 points (0.17%), the cash market is currently estimated to open at 24260.03

Wall Street was closed overnight due to the 3-day weekend in the US. Futures markets have opened slightly lower in the US although Asian futures are marginally higher. The Bank of Japan meeting today is the main event in today’s Asian session, although no time is scheduled.

Economic outlook the key focus in today’s BOJ meeting

The BOJ (Bank of Japan) announce their monetary policy decision today. In all likelihood, they will maintain interest rates at -0.1% and continue to target around 0% for their 10-year JGB. Yesterday, Reuters reported that ‘sources’ had said that the BOJ never said they and to wait for inflation to reach 2% before raising rates. Under other circumstances this may have had us on high alert for some policy action sooner than later, yet the rise of coronavirus and restrictions in Japan quashes such hopes. Daily new infections are just below 20k and quickly closing the gap with its third-wave peak. And that is likely to negatively impact the central bank’s economic outlook over the near-term, although we may even see an upgrade further out as fiscal policy needs to be factored in. So today’s focus is really about seeing when and by how much they adjust their outlook, taking the above issues into account.

USD/JPY catches a bid ahead of BOJ

From a purely technical viewpoint, we suspect the swing low was seen on Friday. A bullish pinbar formed above a support zone which include the 100-day eMA, monthly and weekly S1 pivots. Furthermore, its correction from the 116.35 high has been relatively deep and likely due pullback of its own. Overnight price action saw it break above the hammer high and 50-day eMA, wo today we’re looking for prices to ideally hold above yesterday’s high and rise further. And a more-dovish than expected BOJ meeting along with a slight risk-on vibe (weaker yen) could help with that.

NZ business sentiment continues to sour

ASX 200 stabilises around 7400

The ASX 200 has found support around 7400, near the 50-day eMA and trendline. And this leaves the potential for a minor bounce from current levels, although we are also mindful of the fact that bearish days have been the more dominant since it stumbled below 7600, and each attempt to reach 7500 since has failed and instead triggered another sell-off to trend support. We are therefore on guard for a break of trend support.

ASX 200: 7417.3 (0.32%), 17 January 2022

• Utilities (-0.15%) was the strongest sector and Information Technology (0.75%) was the weakest
• 8 out of the 11 sectors closed higher
• 3 out of the 11 sectors closed lower
• 7 out of the 11 sectors outperformed the index
• 64 (32.00%) stocks advanced, 127 (63.50%) stocks declined

Outperformers:

• +7.8% - Pendal Group Ltd (PDL.AX)
• +4.29% - Whitehaven Coal Ltd (WHC.AX)
• +4.22% - Magellan Financial Group Ltd (MFG.AX)

Underperformers:

• -6.49% - AVZ Minerals Ltd (AVZ.AX)
• -4.42% - Zimplats Holdings Ltd (ZIM.AX)
• -3.98% - Paladin Energy Ltd (PDN.AX)

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