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White House’s Hassett: Studying very closely economic penalties for China

  
  Analysis
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Comments from White House economic advisor Kevin Hassett

  • Says all options on the table for China
Hassett is an odd guy to be commenting on this. He’s the economic guy but he’s not the guy who is usually talking about sanctions or things along those lines.
I keep going back to this comment from the Secretary of State and it’s soft.
Comments from White House economic advisor Kevin Hassett
I mean, “strongly urge”?
I just don’t see the US taking a real stand here. I mean, Russian annexed Crimea and what did they do? Some weak sanctions?
That said, who knows? The US reaction is the spot to watch right now and if they deliver something truly meaningful than it could be a game-changer. All eyes on Trump.

USDJPY has the largest trading range since November 2016

  
Analysis, Forex
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A trading range of 1052 pips

The USDJPY is finishing up a month where the low to high trading range has totaled 1052 pips.  That is the 3rd highest range going back 10 years and the highs in trading range since November 2016 (US election month).   The total range for 2019 was 939 pips. So one month, the range was bigger than one year.
A trading range of 1052 pips
Looking at the monthly chart above, the high for the month stalled near the high from last month and a trend line connecting the 2017 high and the high from February. That trend line cuts across at 112.06. The high for the month reached 111.71. Stay below, helped put a stall in the rallly.  In the new month that trend line will cut across at 111.89, and a move above will be needed to give buyers more upside confidence.
On the downside this month, the price moved below the 100 month (at 105.55) and 200 month MA (at 104.06) after testing the MA twice in 2019 and bouncing.  In 2018, there was two intra-month dips below the MA, but no closes below that MA level.
This month will also not close below the 200 month MA again (it has not closed below the MA since October 2016), but it did seriously break the MA in the month.  The sellers had their shot to send the pair lower and weaken the technical bias from a longer term perspective, but they failed.
In the new month, it will take a move back below those monthly moving averages to hurt the longer term technical picture.

China-US flights to be restricted to 7 airports starting Sunday

  
  Analysis
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China flight entries to be kept to 7 airports

The US also announced that all Americans returning from Hubei province will be quarantined for two weeks.
The French press reported earlier in the week that China demanded that all people being airlifted out of Hubei be quarantined by two weeks. The thinking was that they didn’t want to be responsible for an outbreak elsewhere — something that would trigger anti-China sentiment. The US first said it was going to have a voluntary quarantine but it now appears as though they have fallen in line.

The rates market pulls back BOE rate cut pricing for next week

  
  Analysis
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Odds of a 25 bps rate cut on 30 January falls below 50% from ~70% on Friday

WIRP UK

The pound is pushing higher now as the rates market is suddenly beginning to be less convinced of a BOE rate cut next week. The pricing was still around ~57% less than a half-hour ago but it has dropped further as UK post-election data shows some optimism.
Essentially, this is also the market saying that they are leaning towards post-election PMI data to tip the scales towards no rate cut on 30 January.
Cable has now risen back above 1.3100 to session highs of 1.3120 and is challenging resistance from last week around 1.3118. If buyers can break above that, there is a good chance for the pound to run further towards 1.3150 next.
Ahead of the BOE next week, any rate pricing less than 70% odds tends to see the central bank not being forced into taking action but no doubt the meeting will still be a live one.
That is something to take into account in case the BOE does “surprise” with a rate cut.

Ukrainian airliner had technical problem prior to crash – initial Iran investigation report

  
  Analysis
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Iran maintains that the plane had technical difficulties leading up to the crash

The initial investigation report is being cited by the Iranian Civil Aviation Organisation and adds that the aircraft was headed towards the airport before crashing.

This is a story that will be talked about for quite some time yet. It is almost unfathomable that an aircraft will just spontaneously combust – especially in this day and age.
The fact that Iran is reportedly not wanting to release the blackbox of the aircraft to Boeing also doesn’t help its case in all honesty.

Reuters – FAA has identified a new risk on the Boeing 737 MAX

  
  Analysis
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A report on what the U.S. Federal Aviation Administration says is a new risk that Boeing must address

  • discovered during a simulator test last week
  • not yet clear if the issue can be addressed with a software upgrade or will require a hardware fix
Reuters citing ‘sources with knowledge of the matter’.
  • Means Boeing will not conduct a certification test flight until July 8 in a best-case scenario, the sources said … one source cautioned
A report on what the U.S. Federal Aviation Administration says is a new risk that Boeing must address 
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