Forex Markets Update: 22 Jan 2024

CURRENCIES:

Equities Forecast:

• US equities, including the S&P 500 and Dow Jones, reach fresh all-time highs, propelled by a robust performance in big tech stocks.
• The ongoing Q4 earnings season, especially results from the ‘Magnificent Seven’ companies, is anticipated to further boost US indices.
• Notably, Microsoft alone holds a significant 7.29% weighting in the S&P 500 index.

US Dollar Performance:

• The US dollar initiates the year with strength, attributed to Federal Reserve Members countering overly optimistic interest rate cut expectations.
• US Treasury yields support the USD against various currencies.
• Precious metals, particularly gold, face pressure as they test the $2,000/oz. level.

Upcoming Events and Releases:

• A multitude of Q4 US earnings releases is scheduled for the upcoming week.
• Key economic events include the closely monitored Bank of Japan Quarterly Outlook Report, significant given elevated USD/JPY levels.
• Thursday brings the European Central Bank (ECB) policy decision, while Friday features the US core PCE release, positioning them as the week’s main attractions.

Monday

• Economic data: Leading Index, December (-0.3%, expected, -0.5% prior)
• Earnings: United Airlines, Logitech, Zions Bancorporation Top of Form

STOCK MARKET:

Market Highlights:

• US equities achieve new record highs with S&P 500, Dow Jones, and Nasdaq Composite in positive territory for January.
• Consumer sentiment data from the University of Michigan boosts positive vibes as consumers express confidence in the economy.

Corporate Earnings:

• Tech results take center stage with Netflix (NFLX) earnings on Tuesday and Tesla (TSLA) on Wednesday.
• Other notable reports include Johnson and Johnson (JNJ), United Airlines (UAL), Verizon (VZ), and AT&T (ATT).
• Overall, one of the busiest weeks for quarterly reports on Wall Street.

Economic Data:

• First reading of Q4 economic growth expected on Thursday.
• Release of the Personal Consumer Expenditures (PCE) Index, the Fed’s preferred inflation gauge, scheduled for Friday.

Economic Growth Outlook:

• Resilient data indicates a potential 2% annualized growth in the US economy for Q4.
• Oxford Economics expresses confidence in the ongoing economic expansion, citing a strong labor market, deceleration in inflation, and looser financial conditions.

Inflation and Rate Cut Speculations:

• Key debate centers on when the Federal Reserve will cut interest rates.
• Investors shift from an 81% chance of a March rate cut to 49%.
• Goldman Sachs chief economist anticipates a March rate cut, driven by a decline in inflation to the target of 2%.

Upcoming Events:

• Federal Reserve in blackout period, focusing attention on earnings as a key driver of stock market sentiment.
• Technology earnings, particularly from large-cap companies, may influence short-term market direction.
• Focus on Netflix demand for new advertising tier and Tesla’s margins, with CEO Elon Musk’s comments under scrutiny.
• Fourth quarter earnings show a weak start, but the narrative is expected to shift to Technology and Communication Services, where growth is anticipated.

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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.

Recent decisions by central banks have significantly influenced global markets. In December 2023, the Bank of Japan (BoJ) and the Bank of Canada maintained key interest rates, while the European Central Bank (ECB) sustained multi-year high rates to combat inflation. Analysts expect these measures to continue. Key economic indicators, including manufacturing and services sector data, GDP, and inflation figures, will provide insights into the near-term market outlook.

Bank of Japan Rate Statement (23 January 2024)

In the final meeting of the year, the Bank of Japan (BoJ) unanimously decided to maintain its key short-term interest rate at -0.1% and 10-year bond yields at around 0%. Analysts are anticipating that the central bank will continue with the current interest rate levels in its upcoming meeting on January 23, 2024.

Bank of Canada Rate Statement (24 January 2024)

In December 2023, the Bank of Canada kept the overnight rate at 5%, marking the third consecutive meeting with unchanged rates. Analysts project a continuation of the current levels.

European Central Bank Rate Statement (25 January 2024)

In the European Union, the European Central Bank (ECB) sustained interest rates at multi-year highs for the second consecutive meeting in December 2023. This included signaling an early conclusion to its remaining bond purchase scheme as part of efforts to combat high inflation. Analysts are expecting a continuation of these interest rate levels at the ECB’s upcoming meeting on January 25, 2024.

Flash Manufacturing PMI (24 January 2024)

Turning to economic indicators, Germany’s manufacturing Purchasing Managers’ Index (PMI) increased from 42.6 to 43.3 between November and December 2023. In contrast, the UK and the US saw decreases in manufacturing PMIs, from 47.2 to 46.2 and 49.40 to 47.90, respectively. Forecasts for January 24, 2024, indicate anticipated manufacturing PMIs of 43.7 for Germany, 46.7 for the UK, and 47.6 for the US.

Flash Services PMI (24 January 2024)

Shifting to the services sector, Germany experienced a decline in its PMI from 49.6 to 49.3 between November and December 2023. In the same period, the UK’s services PMI increased from 50.9 to 53.4, and the US witnessed a rise in its services PMI from 50.8 to 51.4. Forecasts for January 24, 2024, suggest expected services PMIs of 49.1 for Germany, 53.0 for the UK, and 51.0 for the US.

US Advance GDP (25 January 2024)

In the United States, the American economy expanded at an annualised rate of 4.9% in the third quarter of 2023, slightly below the 5.2% second estimate but matching the initially reported 4.9% in the advance estimate. Looking ahead to the advance GDP release for the fourth quarter on January 25, 2024, analysts expect a slower growth rate of 2%.

US Core PCE Price Index (26 January 2024)

Finally, in the realm of inflation, Core PCE prices in the U.S., excluding food and energy, recorded a 0.1% increase from the previous month in November 2023. With data for December 2023 set to be released on January 26, 2024, analysts are forecasting a growth of 0.2%.

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.

Dear Client,

As part of our commitment to provide the most reliable service to our clients, there will be server maintenance this weekend.

Maintenance Hours :
20th of January 2024 (Saturday) 02:00-00:00 (GMT+2)

Please note that the following aspects might be affected during the maintenance:

1. The price quote and trading management will be temporarily disabled on MT5 during the maintenance. You will not be able to open new positions, close open positions, or make any adjustments to the trades.

2. There might be a gap between the original price and the price after maintenance. The gaps between Pending Orders, Stop Loss and Take Profit will be filled at the market price once the maintenance is completed. If you don’t want to hold any open positions during the maintenance, it is suggested to close the position in advance.

3. Please refer to MT5 for the latest update on the completion and market opening time. Our services will be back online once the maintenance is completed.

Thank you for your patience and understanding about this important initiative.

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.

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 Daily Analysis: Currency Strength & Stock Market Shifts

CURRENCIES:

Overview:

• The U.S. dollar regained strength against major counterparts on Tuesday.
• Supported by higher U.S. Treasury yields, market expectations for a March interest rate cut fell below 59%, down from 77% just one day prior.

Fed Governor’s Comments:

• Fed Governor Christopher Waller’s statement suggested a cautious approach, indicating that the Federal Open Market Committee (FOMC) doesn’t need to ease its stance as rapidly as in the past.
• This stance contributed to the strengthening of the U.S. dollar.

Currency Performance:

• Euro, British pound, and Australian dollar experienced sharp declines against the U.S. dollar.
• Notable thresholds were breached during this pullback.

Fed March Meeting Probabilities:

• The probability chart from CME Group highlights the diminishing likelihood of a rate cut in March.

EUR/USD Technical Analysis:

• EUR/USD exhibited a decline, breaking the lower boundary of a short-term rising channel at 1.0930.
• The pair moved towards the 200-day simple moving average, a crucial support at just above 1.0840.
• Maintenance of this support is imperative; failure may lead to a retracement towards 1.0770.
• If downward pressure eases and prices rebound, technical resistance is anticipated at 1.0930, followed by 1.1020.
• Further strength could shift focus to 1.1075/1.1095 and subsequently 1.1140.

STOCK MARKET ANALYSIS:

Market Overview:

• US stocks encountered challenges on Tuesday as investors remained attentive to the trajectory of interest rates.
• The lackluster start to the earnings season, particularly with big bank results, influenced market sentiment.

Performance Indicators:

• Dow Jones Industrial Average (^DJI) concluded the session down 230 points, influenced notably by Boeing’s (BA) negative performance (-7.89%).
• S&P 500 (^GSPC) experienced a 0.4% decline.
• Nasdaq (^IXIC) closed slightly lower despite intermittent shifts into positive territory, driven by movements in chipmakers Nvidia (NVDA) and Advanced Micro Devices (AMD).

Key Stock Movements:

• Goldman Sachs (GS) stock edged slightly higher following a reported fourth-quarter earnings increase of 51% year over year.
• Morgan Stanley (MS) shares dipped up to 4% during the session but posted fourth-quarter revenue that exceeded Wall Street expectations.

Upcoming Retail Sales Report:

• Investors await Wednesday’s retail sales report, anticipating its impact on the Federal Reserve’s data-driven policy decisions.
• Last week’s unexpected cooling in US wholesale inflation increased hopes for a potential interest rate cut in March.

Fed Governor’s Perspective:

• Fed Governor Chris Waller expressed belief in the Fed’s ability to lower interest rates in the coming year, contingent on inflation remaining in check.
• He emphasized that the timing and extent of rate cuts will hinge on incoming economic data.

Corporate Developments:

• A federal judge intervened in the merger deal between Spirit Airlines (SAVE) and JetBlue (JBLU) due to antitrust concerns.
• Spirit Airlines faced a significant 47% drop in its stock value following the news of the blocked merger.

Overall Sentiment:

• The market remains cautious and attentive to various factors, including corporate earnings, interest rate expectations, and economic data, influencing trading decisions and overall sentiment.

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