Macro-News round-up:

Yesterday, US Treasury yields increased, but not significantly. Two-year yields increased by 2.9bp to 4.718% and 3.1bp to 4.28%, respectively. Despite the rise in US yields, the EURUSD has surged higher and is currently 1.0849.

The dollar has continued to retreat, but at the moment, it is in a very interesting area from a technical point of view. We would be in front of supports confirmed by double moving averages of 55 and 200, as well as the neck line of the bullish figure identified and shared in a few days. Three indications that we are in front of a support in the dollar index that will push it upwards?

Yellen commented yesterday in her speech that she sees stronger than expected global growth, inflation will fall in 80% of economies this year.

Japan: Good news. Japan’s annual inflation rate reached a record low of 2.2% in January 2024 compared to 2.6% in the previous month. This is the lowest level since March 2022. After reaching the Bank of Japan’s 2% objective for 21 months, the core inflation rate dropped to a 22-month low of 2.0% from 2.3% in December, above the 1.8% market consensus.

This means that the historic moment we are experiencing of an extremely cheap yen against the dollar, at levels not seen in decades, could continue even beyond the expected limits, reaching a new high in the vicinity of 160 USDJPY, a figure not seen since 1990. Given that the inflation rate is adjusting without the need for the policy rate figs, and, therefore, there would not be a measure that strengthens the yen against the dollar.

Meanwhile, Japan’s stock market seems to be happy in the face of this scenario. the Nikey225 reach all-time highs after years of stagnation. The charts we have shared on social media show a definite singing symmetry between the above cycles, giving us possible upside targets for this index in the 41,500 point area in the near future.

China: China’s foreign minister mentioned yesterday that they are prepared to increase their cooperation with the Netherlands to enhance AI development and energy transition (remember that the US banned under sanctions the Netherlands’ largest semi-conductor related company from exporting to China). 

Geopolitics: The French president, Macron, announced yesterday that they were even considering the possibility of sending French troops to Ukraine to prevent Russia’s victory. Something that would mean a direct confrontation of France against Russia, that is, NATO. Remember that weeks ago in this same report we informed you that 60 French mercenaries would have been killed in a Russian attack on Ukrainian territory. In the meantime, French citizens who are protesting against the green policies of the Macron administration do not seem very interested in a war against Russia.