<ul><li><a target=“_blank“ href=“https://www.forexlive.com/news/us-december-pce-core-inflation-44-vs-44-expected-20230127/“>US December PCE core inflation +4.4% vs +4.4% expected</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/umich-final-january-consumer-sentiment-649-vs-646-expected-20230127/“>UMich final January consumer sentiment 64.9 vs 64.6 expected</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/us-december-pending-home-sales-25-vs-09-expected-20230127/“>US December pending home sales +2.5% vs -0.9% expected</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/dallas-fed-trimmed-mean-pce-price-index-23-annualized-in-december-vs-30-prior-20230127/“>Dallas Fed trimmed mean PCE price index +2.3% annualized in December vs +3.0% prior</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/canadian-federal-government-budget-deficit-shrinks-dramatically-20230127/“>Canadian federal government budget deficit shrinks dramatically</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/elon-musk-faces-sec-probe-for-role-in-tesla-self-driving-claims-20230127/“>Elon Musk faces SEC probe for role in Tesla self-driving claims</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/how-do-credit-card-companies-view-the-health-of-the-consumer-20230127/“>How do credit card companies view the health of the consumer?</a></li></ul><p>Markets:</p><ul><li>Gold down $1 to $1928</li><li>US 10-year yields up 2.5 bps to 3.51%</li><li>WTI crude oil down $1.63 to $79.37</li><li>S&P 500 up 0.25% to 4070</li><li>JPY leads, EUR lags</li></ul><p>The week is winding down and FX is largely flat on the day. There was some USD buying into the London fix but it reversed in the hour following and then the market coasted sideways to the finish with the market turning its gaze towards next week’s big central bank decisions (Fed, ECB and BOE).</p><p>EUR/USD touched a low of 1.0836 into the fix but bounced 30 pips from there to finish the week largely flat. Cable was similar with a fall to 1.2345 to match yesterday’s low (also at the fix) before a bounce to 1.2398 late. It was also flat on the week as it consolidates below 1.2400.</p><p>USD/JPY continues to consolidate just off the bottom of the January low. JPG yields tested 0.50% today for the first time since the BOJ decision in a sign that the squeeze is over. The range was narrow this week and the market is likely to go with the next break in the pair.</p><p>Commodity currencies largely traded sideways on the day, which was a bit of surprise given the reversal and decline in oil. CAD finished slightly higher on the day but there were some warning signs with selling in copper and some China-related markets.</p><p>I’m going to start asking ChatGPT to write Friday poems that summarize the mood of the market.</p><p>Meme stocks, oh how they soar,Like a cat playing with a door,Retail investors, they flock,To buy in, like a rooster on a rock.Gamestop, AMC, and more,The memes they’re worth fighting for,But watch out, don’t get too caught,The market’s a roller coaster, it’s hot.Redditors, they hold the key,To memes that will make you glee,But beware, it’s not always sunny,Meme stocks can make you feel like a dummy.So hold on to your wallets tight,And don’t believe in everything that’s bright,In the world of memes, it’s all a game,Just remember to always do your own research, and don’t be lame.</p>

This article was written by Adam Button at www.forexlive.com.

<p>Closing changes in North American equities:</p><ul><li>S&P 500 +0.5%</li><li>Nasdaq +1.3%</li><li>Russell 2000 +0.8%</li><li>Toronto TSX Comp +0.1%</li></ul><p>On the week:</p><ul><li>S&P 500 +2.7%</li><li>Nasdaq +4.6%</li><li>Russell 2000 +2.7%</li><li>Toronto TSX Comp +1.1%</li></ul><p>The story of the week is the revival of the high flyers of 2021 with Tesla leading the way in a back-to-back 11% rally. With today’s rally, the Nasdaq blasted above the Nov/Dec highs.</p>

This article was written by Adam Button at www.forexlive.com.

<p>There is going to be some kind of reckoning around claims about ’self-driving‘ and robotaxis. Elon is currently in a lawsuit that’s in court right now about his ‚funding secured‘ tweets and he’s a guy who has pushed the limits of truth.</p><p>Consumer Reports this week ranked Tesla’s driver assistance features as 7th among car makers and his competitors certainly aren’t calling theirs ’self-driving‘. There’s a matter of truth in advertising here and I don’t think adding ‚beta‘ to the end of it changes that. But if I were Tesla, I’d make the claim that it was ignored by regulators for so long as it’s tantamount to endorsement that the strategy was legal.</p><p>In any case, this market no longer cares about reality or fundamentals, it’s all momentum and <a target=“_blank“ href=“https://www.forexlive.com/terms/o/options/“ class=“terms__main-term“ id=“d0430eb9-1764-409c-ab53-4952eb20940d“ target=“_blank“>options</a> activity. Shares of Tesla are up 11% in back-to-back days.</p><p><a target=“_blank“ href=“https://www.bloomberg.com/news/articles/2023-01-27/elon-musk-faces-sec-probe-for-role-in-tesla-self-driving-claims?srnd=premium&sref=h2AwP2mF“ target=“_blank“ rel=“nofollow“>Here’s the Bloomberg report</a>.</p>

This article was written by Adam Button at www.forexlive.com.

<p>We saw the Bank of Canada signal a shift to the sidelines this week but that’s not likely to be the case with the trio of major central banks due to weigh in next week.</p><p>First up is the FOMC decision on Wednesday and the market isn’t pricing in any drama around Powell and the Fed. They’ve strongly signaled a slowdown in the pace of rate hikes and that has the market pricing in a 97% chance of 25 bps and only the slightest tail risk of 50 bps. Given the enthusiasm in markets, I’d put the odds of 50 bps slightly higher.</p><p>The following day features both the ECB and BOE decisions. The ECB is expected to hike rates by 50 bps to 2.50% and that’s priced at 86% but there’s a 14% chance of 75 bps. I think the odds here of 75 bps are too high. There have been so many signals about back-to-back 50 bps moves from the ECB that I don’t see the need to shift.</p><p>Of the three, the BOE is the least certain in terms of market pricing. The rates market sits at 70% for 50 bps and 30% for 25 bps. The market will be looking at the voting here as the uncertainty is high around the future rate path.</p>

This article was written by Adam Button at www.forexlive.com.

<p>The lesson of the year so far is that markets will do what people least expect. The strong consensus coming into the year was that rate and recession fears would keep stocks cheap before an H2 rally. Well, the market didn’t wait and now the S&P 500 is poised to close above some key levels, including the long-term downtrend.</p>

This article was written by Adam Button at www.forexlive.com.