In the fast-paced world of trading, staying vigilant and well-informed is paramount for success. The upcoming week is filled with crucial economic events that traders should closely monitor to navigate the markets effectively. From employment figures in the UK to price trends in Canada and inflation rates worldwide, each data point narrates a compelling story. The canvas of our economic puzzle extends to include US retail sales and Australian employment statistics, offering valuable insights that guide our understanding of the global financial terrain.

UK Claimant Count Change (16 January 2024)

Keep an eye on the UK Claimant Count Change, set to be released on January 16, 2024. After witnessing an increase from 8,900 to 16,000 in November, expectations are that the figure will rise further to 18,100 in the upcoming release.

Canada Monthly Consumer Price Index (16 January 2024)

An additional event in January 16, Canada unveils its Monthly Consumer Price Index (CPI). In November 2023, consumer prices in Canada defied expectations by rising 0.1%, contrary to the anticipated 0.1% decline. However, the December 2023 data, expected to be released on January 16, 2024, forecasts a 0.3% decline in the monthly Consumer Price Index.

UK Annual Consumer Price Index (17 January 2024)

On January 17, 2024, the focus turns to the UK Annual Consumer Price Index. After a slowdown to 3.9% in November 2023 from 4.6% in October, analysts anticipate a further decrease to 3.8% in the December 2023 data.

US Retail Sales (17 January 2024)

Discover the trajectory of US retail sales on January 17. Following an unexpected 0.3% increase in November 2023, the upcoming release is projected to show a further uptick, with an expected growth of 0.4% in December 2023.

Australia Employment Change (18 January 2024)

Turn your attention to Australia on January 18, as the Employment Change data unfolds. After a notable increase of 61,500 in November 2023, the forecast for December 2023 suggests a more modest rise, with expectations set at 18,000.

UK Retail Sales (19 January 2024)

As we approach January 19, anticipation builds for the release of UK Retail Sales data. Despite a robust 1.3% month-over-month growth in November 2023, December 2023 is expected to show a contraction of 0.5%.

US Prelim University of Michigan Consumer Sentiment (19 January 2024)

Closing out the week, all eyes will be on the US preliminary consumer sentiment from the University of Michigan for January 19. Projections indicate a slight dip to 69.6 from the previous month’s 69.7 in December 2023, offering insights into the mood of the American consumer.

FX Daily Analysis: 12 Jan 2024

CURRENCIES:

• The US Dollar gains strength in response to higher-than-expected US inflation data and a decrease in unemployment claims.
• Despite inflation exceeding the target and a robust labor market, the Federal Reserve may hesitate to cut interest rates prematurely.
• The technical analysis in this article focuses on EUR/USD and GBP/USD, examining critical price levels post the US CPI report.
• The DXY index, measuring the US Dollar, rises by 0.3% following the release of the December inflation survey and weekly jobless claims data.
• Headline CPI surprises on the upside, registering 3.4% year-on-year, surpassing the expected 3.2%, while the core gauge comes in at 3.9%.
• Jobless benefits applications hit a three-month low, indicating a resilient labor market and ongoing hiring despite the late business cycle stage.
• With consumer prices above the 2.0% target and a strong labor market, the Fed is unlikely to make significant interest rate cuts, contrary to market expectations.
• Monitoring Fedspeak in the upcoming days and weeks will provide insights into the monetary policy outlook, with a potential shift towards a more hawkish stance favoring yields and the US Dollar.

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STOCK MARKET:

• Banks stocks, coming off their strongest quarter since 2021, are poised for a significant earnings event where top executives will provide insights into the US economy.
• JPMorgan Chase & Co., Bank of America Corp., Citigroup Inc., and Wells Fargo & Co. are set to kick off the earnings reporting cycle after US bank stocks gained 23% in the last quarter, outperforming the broader market.
• Bank shares faced pressure in 2023 but surged in late October amid confidence that the Federal Reserve would conclude its rate-hike campaign without causing a recession.
• The focus now shifts to the timing of policy easing, with investors closely examining its implications for various aspects of the banking business, including loan portfolios and deposit rates.
• Analyst Richard Ramsden from Goldman Sachs Group Inc. notes that while banks are not as cheap as before, their valuations are not perceived as stretched.
• Positive outcomes regarding net interest income, loan growth, capital markets, and deposit pricing are expected to contribute to greater earnings and potential outperformance by some banks.
• The KBW Bank Index fell about 1% on Thursday, underperforming the broader market.
• Morgan Stanley and Goldman Sachs’ earnings on Tuesday will be closely watched, along with PNC Financial Services Group’s results, which will serve as a bellwether for regional lenders.
• Big banks are anticipated to report subdued fourth-quarter results due to higher funding costs, with net interest income expected to decline, and elevated expenses and weak trading revenue likely weighing on earnings.
• Companies are also expected to disclose payments to the Federal Deposit Insurance Corp. related to regional bank failures from the previous year.
• The rally in bank shares last quarter was driven by optimism about reduced recession risks and expectations of Fed rate cuts in 2024, alleviating concerns about net interest margins.
• Despite positive momentum, caution is advised, with concerns about the inflation rate remaining above the Fed’s target and potential wild swings in sentiment.
• Hedge funds have been selling the financial sector in the past four weeks, but financial companies are the only sector where the majority of analyst earnings revisions were upward over the past month.
• DWS Group’s David Bianco maintains an overweight position on big banks, including JPMorgan, Bank of America, Citigroup, and Wells Fargo, citing their robust profitability and stable credit.

In a market shaped by unexpected inflation rates and resilient labor trends, join VT Markets to expertly navigate the shifting currents of the forex and stock markets.

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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 ”.

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Daily Forex Analysis: 11 Jan 2024

CURRENCIES:

Key Points:

• The December U.S. inflation report, releasing on Thursday, will be a focal point for markets.
• While core CPI is expected to moderate on a year-over-year basis, the headline gauge is predicted to reaccelerate, posing challenges for the Federal Reserve.
• Gold prices, yields, the U.S. dollar, and the Nasdaq 100 are expected to be highly sensitive to the consumer price index data.

Market Overview:

• Wall Street will closely monitor the U.S. Bureau of Labor Statistics‘ consumer price index report on Thursday.
• The data could influence the Federal Reserve’s future monetary policy decisions, including the timing of the first interest rate cut.
• December headline CPI is projected to increase by 0.2% month-over-month, pushing the annual rate to 3.2%, a setback for the Fed aiming for a 2.0% inflation target.
• The core gauge is forecasted to rise by 0.3% month-over-month, with the 12-month reading easing to 3.8% from the previous 4.0%.

Market Response Scenarios:

• Market response will depend on how the inflation figures align with consensus estimates, considering two scenarios: an upside surprise or lower-than-projected numbers.

Potential Outcomes:

• A hot CPI report exceeding forecasts may prompt traders to unwind dovish bets on the Fed’s path, resulting in higher Treasury yields and a stronger U.S. dollar. This could bear negatively on gold, stocks, and indices like the S&P 500 and Nasdaq 100.
• Conversely, a benign report with figures milder than anticipated, especially on core metrics, may validate aggressive wagers on rate reductions in 2024. This scenario could be bullish for gold and risk assets.

Market Dynamics:

• Current market pricing suggests around 130 basis points of easing for the new year. The resilience of the U.S. economy and signs of stabilization may make the FOMC hesitant to significantly cut borrowing costs, adding significance to the December CPI report.

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STOCK MARKET ANALYSIS:

• Focus: Investors seeking clues on Federal Reserve’s interest rate decisions
• Expected Inflation Rates:
  • Annual Headline Inflation: 3.2%
  • Annual Core Inflation: 3.8% (excluding food and energy)
• Importance: Critical for investors, influencing the Fed’s monetary policy and potential interest rate cuts
• Market Expectations:
  • Bank of America expects slightly higher readings than consensus, leaving room for a Fed rate cut in March.
  • Markets currently price in a roughly 67% chance of a Fed rate cut in March.
• Monthly Changes (December):
  • Overall Prices: Expected to increase by 0.2%
  • Core Inflation: Expected to increase by 0.3%
• Key Areas to Watch (Goldman Sachs):
  • Car prices and shelter expected to continue declining.
  • Airfares could pose an upside risk, with a potential 5% increase in December.
• Fed Officials’ Comments:
  • Fed officials, including Governor Michelle Bowman and Atlanta Fed President Raphael Bostic, show a measured approach.
  • Bowman suggests a potential rate cut if inflation falls further, while Bostic emphasizes the need to evolve with the economy.
• Market Reaction Expectations: Wall Street strategists temper expectations for stock reactions, considering an already aggressive rally and potential asymmetric risk in CPI numbers.

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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.

Analyzing USD Stability and Stock Market Trends

CURRENCIES:

• Stagnant US Dollar: The US dollar remains relatively unchanged in today’s opening trade, leading to a state of uncertainty for USD pairs.
• Consolidation Phase: The US dollar index is currently consolidating its recent upward movement. The lack of direction from the rates market is expected to persist until the release of the upcoming US inflation report on Thursday at 13:30 UK time.
• Market Expectations: Financial markets are currently factoring in a total of 150 basis points in US interest rate cuts for the year. The initial 25 basis point adjustment is anticipated at the March 20th FOMC meeting.
• Chart Analysis: The US dollar index chart illustrates a short-term consolidation, with last Friday’s jobs report candle acting as a constraining factor. Conflicting moving averages, including the 20-day sma supporting the dollar index and the 50-/200-day sma forming a potential negative ‘death cross,’ present a mixed outlook.
• Fibonacci Retracement: The dollar index is positioned on the 61.8% Fibonacci retracement of the mid-July to early-October movement.

Financial Markets Analysis:

STOCK MARKET:

• Market Turbulence: The crypto community experienced a surge in Bitcoin’s price to nearly $48,000 following an apparent announcement on X (formerly Twitter) by the Securities and Exchange Commission (SEC) regarding the approval of spot Bitcoin exchange-traded funds (ETFs).
• SEC Chair’s Clarification: Within fifteen minutes, SEC Chair Gary Gensler declared the message as “unauthorized” and inaccurate, stating that the SEC’s X account had been “compromised,” and the tweet was unauthorized. He emphasized that the SEC had not approved spot Bitcoin ETFs.
• Price Fluctuation: Bitcoin’s value retreated to $45,500 after Gensler’s clarification, resulting in a loss of $63 billion in market value within minutes.
• Official Statement: The SEC, through a spokesperson, clarified that the unauthorized message on X was not made by the SEC or its staff. The agency confirmed unauthorized access to its X account and pledged to investigate the incident.
• ETF Approval Speculation: The incident added to the market frenzy around the potential approval of Bitcoin ETFs, seen as a significant development for widespread acceptance of the cryptocurrency.
• Market Expectations: Some applicants anticipated SEC approval on Wednesday, with trading potentially commencing on Thursday. However, Gensler’s statement contradicted these expectations.
• Notable Applicants: Major names on Wall Street, including BlackRock and Franklin Templeton, applied for spot Bitcoin ETFs. JPMorgan Chase and Goldman Sachs offered assistance to these money managers.
• Industry Impact: Stakeholders believe that spot Bitcoin ETFs could attract substantial capital into Bitcoin, potentially elevating its price.
• Price Prediction: Analysts estimate that financial products related to spot Bitcoin ETFs could attract $10 billion or more in investment flows by the end of 2024, potentially pushing Bitcoin’s price higher.
• Crypto Risks Warning: Gensler, in a recent statement, reiterated the risks associated with crypto investments, emphasizing their volatility and susceptibility to insolvency.
• Optimistic Outlook: Despite past challenges, the crypto industry anticipates wider acceptance and regulatory clarity, with optimism surrounding Bitcoin’s “halving” in April and potential interest rate cuts in 2024.
• Long-Term Prediction: Analysts predict Bitcoin reaching $150,000 by 2025, considering various factors, including regulatory developments and industry changes.

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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.