2024.1.29 The dollar was stable and the focus shifted to the Fed meeting and economic data
one. Blockbuster news preview:
On Tuesday, January 30th
18:00 Annual GDP for the fourth quarter
On Wednesday, January 31st
21:15 US January ADP jobs (10,000)
23:30 US EIA crude stocks (10,000 barrels)
On Thursday, February 1st
03:00 US-January 31 Fed rate decision (ceiling)
20:00 UK bank rate decision until February 1
21:30 U. S. initial jobless claims (10,000) for the week ended January 27
On Friday, February 2nd
21:30 The U. S. unemployment rate in January
Us quarterly non-farm payrolls in January (10,000)
23:00 The University of Michigan consumer confidence index for January
two. This week for the global markets
1. The dollar was stable and the focus shifted to the Fed meeting and economic data
The dollar was solid earlier in the week, as investors assessed U. S. economic data on the eve of the Fed’s policy meeting, and rising geopolitical tensions in the Middle East dampened risk sentiment.
The dollar index edged up 0.01% to 103.55 on Monday and is expected to rise 2% this month as traders lowered their expectations of a sharp U. S. rate cut.
In December, the Fed took a dovish tone and forecast a 75 basis point rate cut by 2024, shocking markets and causing markets to absorb expectations of significant early easing. Now expect a rate cut as early as March. However, strong economic data and resistance from central bankers prompted traders to adjust their expectations. The CME FedWatch tool says the market now sees a 48% chance of a rate cut in March, compared with an 86% chance at the end of December.
Data on Friday showed us prices rose moderately in December, keeping annual inflation below 3 percent for the third month in a row, reinforcing expectations of a possible rate cut this year.
This week investors will watch the Fed’s upcoming two-day policy meeting, where the Fed is widely expected to remain unchanged on interest rates, focusing on the comments of Fed Chairman Jerome Powell.
In addition to the Fed, investors will also focus on a range of economic data, including the US nonfarm payrolls report, which helps measure the strength of the labor market.
Red Sea missile strike raises oil prices: supply worries drive market volatility
On January 29, a missile hit a tanker in the Red Sea, raising concerns about fuel supply, sending oil prices up 1% Monday. In addition, Russian refined oil exports are expected to fall as several refineries are under repair. The attack was carried out by drone.
Both contracts rose for a second straight week and closed Friday at their highest level in nearly two months, as supply concerns in the Middle East and Russia, and signs of positive U. S. economic growth and stimulus from China boosted demand expectations. According to traders and the London Stock Exchange Group (LSEG), Russia could reduce naphtha exports by about 127,500 to 136,000 barrels a day, or about one third of the total, as the fire disrupted Baltic and Black Sea refineries.
Key ministers of the Organization of the Petroleum Exporting Countries (OPEC) and their Russia-led Allies (OPEC +) will hold an online meeting on February 1st. However, OPEC + sources say OPEC + could decide on April and beyond for oil production levels in the coming weeks because the meeting is too early to make a decision on further production policy.
The Bank of Japan has held in-depth discussions on withdrawing measures from negative interest rates
On January 26, the minutes showed that boj policy makers actively discussed the conditions for phasing stimulus in December and agreed to discuss in depth the appropriate pace of future rate hikes, suggesting that they are preparing to exit negative interest rates in the short term. The minutes came after the BoJ said Tuesday it was increasingly confident that conditions for phasing out the massive stimulus were being implemented, suggesting it would soon pull short-term interest rates out of negative territory.
According to the minutes of the December meeting, some on the board said the BOJ was likely to maintain a loose bond-yield control framework even after pulling short-term interest rates out of negative territory, suggesting that they were already pooling ideas.
Some also called for an analysis to end the potential impact of negative interest rates on the market and discuss whether to maintain the framework for buying risky assets. However, the minutes showed that there appeared to be no consensus on the possible timing and order of the exit, which members said would depend on economic conditions at the time.
Since taking office last year, Bank of Japan Governor Kazuo Uhita has begun abolishing his predecessor’s complex stimulus package, which includes negative short-term interest rates, yield curve control (YCC) and large purchases of bonds and risky assets. Many analysts expect that following last year downdown the YCC, the BoJ will end negative interest rates sometime this year, most likely in April.
three. Technical analysis of gold and crude oil:
[Gold XAUUSD]
Trading strategy:
Turning point: 2016.00
Above 2016.00, bullish, with a target of 2029.00, then 2037.00.
Alternative strategy
At 2016.00, bearish, target 2011.00 and then 2004.00.
Technical comments
The RSI technical indicators have a complex running trend and tend to rise.
[crude oil WTI]
Trading strategy:
Turning point: 77.50
Above 77.50, bullish with a target of 79.65, then 80.60.
Alternative strategy
At 77.50, bearish, with a target price set at 76.80, then at 76.05.
Technical comments
Even if we cannot rule out the possibility of continuous adjustment, the length of time, should be limited.
[USDJPY USDJPY]
Trading strategy:
Turning point: 147.75
Above 147.75, bullish, with a target of 148.35, then 148.60.
Alternative strategy
At 147.75, bearish, with a target price set at 147.45, then 147.10.
Technical comments
From a technical perspective, the RSI technical index is above the 50% neutral area.