Forex Daily Market Analysis: 29 Jan 2024

CURRENCIES:

Overview:

• The final week of January is known for its high activity, and this year is no exception.
• The economic calendar is packed with crucial events, including decisions from the Federal Reserve and Bank of England, US nonfarm payrolls, German and Euro Area Q4 growth data, Chinese manufacturing and services PMIs, and German and Euro Area inflation data.

Tech Company Earnings:

• Alongside economic events, significant US tech companies will release their Q4 results.
• On Tuesday, Alphabet (GOOG) and Microsoft (MSFT) present their financial reports, followed by Amazon (AMZN), Apple (APPL), and Meta Platform (META) on Thursday.
• To stay updated on earnings releases, check the DailyFX Earnings Calendar.

Market Trends:

• Despite record-breaking performances in US equity markets, the upcoming earnings reports from the Big 7 tech companies may impact indices due to their substantial weight.
• Last week, Tesla (TSLA) faced a market slump of around 12% post-earnings release.
• Investors continue to adopt a risk-on approach.

Euro and US Dollar Dynamics:

• Despite the ECB maintaining unchanged monetary policy settings, the Euro faced pressure as markets anticipate potential interest rate cuts in Germany and the Euro Area due to sluggish economic growth.
• The Euro Area and German GDP data scheduled for the upcoming week will be closely observed.
• The US dollar remained in focus, with a stable performance despite slightly better-than-expected US Core PCE report and a robust advanced Q4 GDP release last week.

STOCK MARKET:

• Economic data: Dallas Fed manufacturing activity, January (-9.3 prior)
• Earnings: Cleveland Cliffs (CLF) Phillips (PHG), SoFi Technologies (SOFI), Whirlpool (WHR)
• Earnings Highlights:
• Earnings reports from major tech giants, including Apple (AAPL), Alphabet (GOOGL, GOOG), Microsoft (MSFT), Amazon (AMZN), Meta (META).
• 106 S&P 500 companies, including six Dow components, set to report this week.
• Federal Reserve Meeting (Wednesday):
• Expected announcement of latest policy decision.
• Anticipation of interest rates remaining unchanged (5.25% to 5.50%).
• Investors closely watching for insights during Fed Chair Jerome Powell’s conference, particularly regarding potential future rate cuts.
• January Jobs Report (Friday):
• Economists expect a modest decrease in job additions.
• Unemployment rate projected to stay flat at 3.7%.
• Additional Highlights:
• Updates on activity in the manufacturing and services sectors.
• Latest data on job openings.
• Key earnings reports from AMD, Starbucks, Pfizer, Chevron, Exxon Mobil, and Boeing.
• Market Trends:
• Stocks ending the week near record highs.
• The S&P 500 and Nasdaq Composite up over 2% in January.
• Dow Jones Industrial Average up more than 1%.
• Federal Reserve Outlook:
• Shift in market narrative since December; investors initially priced in a March cut.
• Inflation at its lowest in nearly three years.
• Expectations for a potential future rate cut.
• Market pricing in a 47% chance of a March cut and an 88% chance of lower rates by May.
• Earnings Impact on Market Narrative:
• Excluding Tesla, the top six earnings drivers for the S&P 500 are expected to be the “Magnificent Seven” tech stocks.
• Anticipation that these tech giants will contribute to a 53.7% year-over-year earnings growth, while the remaining 494 companies may report a 10.5% earnings decline.
• Critical market direction anticipated based on stock price reactions to tech companies’ reports.

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Please note that the dividends of the following products will be adjusted accordingly. Index dividends will be executed separately through a balance statement directly to your trading account, and the comment will be in the following format “Div & Product Name & Net Volume ”.

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Dear Client,

Please note that the dividends of the following products will be adjusted accordingly. Index dividends will be executed separately through a balance statement directly to your trading account, and the comment will be in the following format “Div & Product Name & Net Volume ”.

Please refer to the table below for more details:

The above data is for reference only, please refer to the MT4/MT5 software for specific data.

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Looking ahead from the final week of January, traders and investors are gearing up for a bustling week filled with significant economic events. These developments are poised to shape market dynamics, with a particular focus on inflation trends, economic growth pace, and central bank strategies. Let’s delve into the crucial data points that will impact financial markets.

Australia’s Consumer Price Index (31 January 2024)

Market participants are closely monitoring the upcoming Consumer Price Index (CPI) data in Australia. After a dip in the year-on-year CPI from 4.9% in October 2023 to 4.3% in November 2023, the projected increase in CPI by 3.7% in December 2023 is of paramount importance. This inflation indicator holds significance as it could sway the Reserve Bank of Australia’s monetary policy decisions, potentially affecting the Australian Dollar.

Canada’s Gross Domestic Product (31 January 2024)

With stability observed in the Canadian economy over the past few months, the forthcoming Gross Domestic Product (GDP) data is expected to reflect a growth of 0.1%, serving as a key gauge of Canada’s economic well-being. Traders focused on the Canadian Dollar will closely analyse this release for insights into the Bank of Canada’s future monetary policy.

The Fed Interest Rate Decision (1 February 2024)

After maintaining the federal funds rate at 5.50% since December 2023, the Federal Reserve’s upcoming interest rate decision is highly anticipated. Despite previous indications of potential rate cuts in 2024, analysts expect the Fed to hold the rate steady. This decision is critical for the US Dollar and could significantly influence the equity and bond markets.

Bank of England Interest Rate Decision (1 February 2024)

Having maintained its benchmark interest rate at a 15-year high of 5.25% since December 2023, the Bank of England’s anticipated decision to hold steady will be crucial for the GBP. Given the divided vote in the previous meeting, any shifts in the voting pattern could offer insights into the central bank’s future policy direction.

US Jobs Report (2 February 2024)

The US jobs market, a focal point of attention, witnessed the addition of 216,000 jobs in December 2023, but with the unemployment rate holding steady at 3.7%. The January 2024 report, forecasted to show an addition of 173,000 jobs and a stable unemployment rate, will serve as a key indicator of the US economic health. This data holds substantial influence over the US Dollar and overall market sentiment, especially in light of the Federal Reserve’s monetary policy considerations.

Daily Forex Analysis: 27 Jan 2024

CURRENCIES:

Event Overview:

• US Dollar Forecast focuses on upcoming Core Personal Consumption Expenditures (core PCE) data.
• Release date: January 26, 2024, at 12:30 AM +02:00.

Importance of Core PCE Data:

• The U.S. Bureau of Economic Analysis is set to release core PCE data.
• Core PCE is the Fed’s favored inflation gauge, influencing the U.S. dollar’s near-term trajectory.
• Results may impact the Federal Open Market Committee’s (FOMC) guidance at the January meeting.

Estimates for Core PCE:

• Forecast suggests a 0.2% rise in core PCE for December.
• Anticipated annual rate decrease to 3.0% from November’s 3.2%.

Policy Context:

• Policymakers aim to restore price stability post-pandemic through a historic streak of interest rate hikes.

Dollar’s Response to Core PCE:

• For the US dollar’s recovery, PCE data should indicate a stall in disinflation progress.
• A positive scenario could make the Fed cautious about substantial borrowing cost cuts, potentially delaying the easing cycle.

Potential Market Impact:

• If core PCE falls below 3.0%, the greenback might experience a sharp downside turn.
• Weak inflation numbers could support expectations of deep interest rate cuts, leading to lower Treasury yields.
• Lower yields could reduce the attractiveness of the U.S. currency.

Key Consideration:

• The outcome of the core PCE reading will likely shape market expectations and influence the U.S. dollar’s short-term performance.

Analyst Perspective:

• Diego Colman, Contributing Strategist, shares insights on the importance of Core PCE data in guiding markets ahead of the Fed decision.

Further Reading:

• Most Read: Gold Price Forecast – Core PCE Data to Guide Markets Ahead of Fed Decision.

Save our Forex Daily Market Analysis for more financial world updates.

STOCK MARKET:

Media Industry Consolidation Overview:

• Wall Street anticipates the next significant media merger, but companies seem hesitant.

Company Responses:

• Comcast (CMCSA) CEO Brian Roberts expressed contentment with the current company status, setting a high bar for any potential moves beyond the existing plan.
• Netflix (NFLX) dismissed merger speculation, particularly in acquiring linear assets, believing further M&A among traditional entertainment companies wouldn’t substantially alter the competitive landscape.

Analyst Predictions:

• Bank of America analyst Jessica Reif Ehrlich suggests Paramount (PARA), Warner Bros. Discovery (WBD), and Comcast’s NBCUniversal could be impacted by consolidation within the next 18 to 24 months.
• Speculation arises that two of these three players might merge.

Market Impact:

• Paramount’s stock rose 5% following reports of production studio Skydance Media’s interest in taking Paramount private.
• Media giants have been taking measures to address Wall Street concerns, including mass layoffs, cost reductions, and strategic shifts in their business models.

Challenges in the Industry:

• Media companies faced challenges in appeasing investors despite cost-cutting efforts and strategic adjustments.
• Valuation levels remain depressed, and profitability in streaming services, except for Netflix, is a concern.

Expert Analysis:

• Experts predict that challenges in the industry, such as valuation and streaming profitability, may drive companies to explore potential deals and consolidation.

Focus on Comcast’s Peacock:

• Comcast’s streaming service, Peacock, has been central to the consolidation debate.
• Full-year losses for Peacock were $2.7 billion, slightly exceeding company estimates.
• Comcast remains committed to Peacock, expecting meaningful improvement in 2024 despite the 2023 peak in annual losses.

Strategic Moves by Comcast:

• Comcast, relying heavily on linear television, surprises investors by investing approximately $110 million to acquire exclusive rights to an NFL playoff game for Peacock.

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Dear Client,

Please note that the dividends of the following products will be adjusted accordingly. Index dividends will be executed separately through a balance statement directly to your trading account, and the comment will be in the following format “Div & Product Name & Net Volume ”.

Please refer to the table below for more details:

The above data is for reference only, please refer to the MT4/MT5 software for specific data.

If you’d like more information, please don’t hesitate to contact info@vtmarkets.com.

Dear Client,

Please note that the dividends of the following products will be adjusted accordingly. Index dividends will be executed separately through a balance statement directly to your trading account, and the comment will be in the following format “Div & Product Name & Net Volume ”.

Please refer to the table below for more details:

The above data is for reference only, please refer to the MT4/MT5 software for specific data.

If you’d like more information, please don’t hesitate to contact info@vtmarkets.com.

Forex Markets Analysis: 25 Jan 2024

CURRENCIES:

• U.S. Dollar faced a decline despite positive economic data on Wednesday
• Potential for a reversal in the dollar’s fortunes in the upcoming days
• Market attention shifts to the fourth-quarter U.S. GDP report

U.S. Dollar Technical Outlook:

• Analysis focuses on three major FX pairs: EUR/USD, USD/JPY, and GBP/USD
• Despite better-than-expected PMI results, the dollar retreated
• Possibility of a turnaround if key economic data continues to surprise positively

Fourth-Quarter U.S. GDP Report:

• Scheduled for release on Thursday
• Forecasted economic activity expansion of 2% at an annualized rate
• GDP considered backward-looking but provides insights into economic health

Key Points to Monitor:

• Close attention to household expenditures, a significant growth engine
• Consumer spending remains robust, contributing to a positive GDP outlook
• A strong GDP report could impact expectations of a Fed rate cut in March

Implications for the U.S. Dollar:

• Positive GDP scenario may reduce odds of a Fed rate cut
• Traders could adjust dovish expectations for the FOMC’s policy path
• Potential for a more favorable backdrop for the U.S. dollar

STOCK MARKET:

Tesla Q4 Earnings Overview:

• Stock drops due to earnings miss and a cautious full-year production outlook
• CEO Elon Musk confirms the launch of the company’s next-gen vehicle in H2 2025

Financial Performance in Q4:

• Top-line revenue of $25.17 billion, slightly below the estimated $25.87 billion
• Revenue increased by approximately 3% compared to the previous year
• Adjusted EPS at $0.71, missing the estimated $0.73
• Adjusted net income of $2.486 billion, falling short of the $2.61 billion expected by the Street

Full-Year Production Outlook:

• Tesla anticipates a notably lower vehicle volume growth rate compared to 2023
• Launch of the next-gen vehicle at Gigafactory Texas cited as a reason for the production slowdown
• Unlikely to meet Street estimates of 2.19 million vehicle production for 2024, signaling a 21% increase from 2023

Next-Gen Vehicle and Production Plans:

• Progress on the next-gen platform highlighted in the earnings release
• Musk emphasizes the revolutionary manufacturing system for the low-cost vehicle
• Production of the next-gen vehicle scheduled for the second half of 2025

Factors Contributing to Profitability Drop:

• Downward pressure on margins due to cost-cutting efforts initiated in late 2022
• Q4 gross margin at 17.6%, below the estimated 18.1% and a decline from the previous year
• Various challenges, including Hertz shedding EVs, price cuts in China, production halt in Berlin, and Musk’s stock demand, impacting profitability

Delivery and Production Statistics:

• Q4 deliveries surpass Street estimates with 484,507 deliveries
• All-time record quarter for Tesla, beating the previous record of 466,000 units in Q2 of the last year
• Yearly vehicle deliveries grow by 38% to 1.81 million, production increases by 35% to 1.85 million

Cybertruck and Musk’s Concerns:

• Cybertruck deliveries not specified, but demand described as “off the hook”
• Musk addresses concerns about securing greater control for AI ambitions, citing potential loss of influence in the future
• Expresses worries about being voted out by shareholder advisory firms like ISS and Glass Lewis

Elon Musk’s Recent Activities:

• Speaks at a symposium about antisemitism in Krakow, Poland, on January 22, 2024
• Highlights his desire to be an effective steward of powerful technology, expressing concerns about potential loss of control due to shareholder decisions.

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Dear Client,

Please note that the dividends of the following products will be adjusted accordingly. Index dividends will be executed separately through a balance statement directly to your trading account, and the comment will be in the following format “Div & Product Name & Net Volume ”.

Please refer to the table below for more details:

The above data is for reference only, please refer to the MT4/MT5 software for specific data.

If you’d like more information, please don’t hesitate to contact info@vtmarkets.com.