US stocks close sharply higher with the S&P index closing at a new record level and above the 4800 level. The NASDAQ index led the way.

For the week, the major indices all closed higher for the 2nd consecutive week after sharp declines in week 1 of the 2024 trading year.

The final numbers are showing:

• Dow Industrial Average rose 395.19 points or 1.05% at 37863.83
• S&P index rose 58.87 points or 1.23% at 4839.82
• NASDAQ index rose 255.31 points or 1.70% at 15316.96

Small-cap Russell 2000 got involved as well with a 20.73 point rise or 1.08% at 1944.39.

For the trading week, the major indices all closed higher led by the NASDAQ points again:

• Dow Industrial Average +0.72%
• S&P index rose 1.17%
• NASDAQ index rose 2.26%

For the first 3-weeks of the new trading year, all three major indices are now up on the year:

• Dow Industrial Average is up 0.46%
• S&P index is up 1.47%
• NASDAQ index is up 2.0%

How are the Magnificent 7 doing in the first three weeks of the trading year?

• Nvidia up 20.15%
• Meta-+8.33%
• Apple -0.51%
• Alphabet +4.79%
• Microsoft +6.02%
• Amazon +2.23%
• Tesla -14.60%

Next week, the earnings for the fourth quarter start to kicking with some large-cap movers. Below is a sampling of some of those earnings releases:

Monday, January 22

• United Airlines
• Logitech

Tuesday, January 23

• Verizon
• 3M
• GE
• Johnson & Johnson
• Halliburton
• Procter & Gamble
• Netflix
• Intuitive Surgical
• Texas Instruments

Wednesday, January 24

• AT&T
• Tesla
• IBM
• servicenow
• Lam Research

Thursday, January 25

• American Airlines
• Southwest Airlines
• Dow
• Intel
• Visa
• T-Mobile

Friday, January 26

• American Express
• Colgate-Palmolive

Looking at next week’s economic calendar, key events and releases include:

Tuesday:

• Bank of Japan interest-rate decision

Wednesday:

• New Zealand CPI quarter on quarter 0.5% expected reaches 1.8% last quarter
• Germany, France, UK flash manufacturing and services PMI data
• Bank of Canada interest-rate decision. No change expected
• US flash manufacturing and services PMI

Thursday

• ECB rate decision. No change expected
• US advanced GDP. 2.0 expected. Atlanta Fed GDPNow estimate 2.4%
• US unemployment claims

Friday

• US PCE data

This article was written by Greg Michalowski at www.forexlive.com.

As the NY trading day winds down, keep in mind that the first event on the economic calendar next week is the Loan Prime Rate meeting at the People’s Bank of China.

Governor Pan Gongsheng left the MLF rate unchanged last week so expectations are for no change but given the rough ride in Chinese markets so far this year, I wouldn’t rule anything out.

The LPR rate was last changed in August: PBOC Loan Prime Rate cut: 1-year 3.45% (prior 3.55%) & 5-year 4.2% (prior 4.20%).

PBOC’s Loan Prime Rate:

• It
  is an interest rate benchmark used in China, set by the People’s Bank
  of China each month. While set on the 20th of the month or the first business day afterwards. The new LPR takes effect on the first day of
  the following month.
• The LPR serves as a
  reference rate for banks when they determine the interest rates for
  (primarily new) loans issued to their customers.
• Its calculated based on the interest rates that a panel of 18 selected commercial banks in China submit daily to the PBOC.
  • The
    panel consists of both domestic and foreign banks, with different
    weights assigned to each bank’s contributions based on their size and
    importance in the Chinese financial system.
  • The LPR is based on the average rates submitted by these panel banks, with the highest and lowest rates excluded to reduce volatility and manipulation. The remaining rates are then ranked, and the median rate becomes the LPR.

The LPR was last left unchanged on December 20.

There is also talk about an RRR cut as the lever to stimulate growth in Q1. At this point, I think it will take some forceful moves to stimulate growth.

After China, the focus on Tuesday will move to the Bank of Japan rate decision. Again, no change is expected but the BOJ could offer signals on its willingness to begin normalizing rates in the springtime.

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

I already outlined the technical predicament for AUD/USD earlier here. And the charts for USD/CAD and NZD/USD are also pointing to a lack of technical follow through by dollar bulls on the week.

In the case of USD/CAD, the pair did manage a push above its 200-day moving average (blue line) but is ultimately seeing that falter today. That is similar to AUD/USD as highlighted in the linked post above. For USD/CAD, the ceiling appears to be at the 50.0 Fib retracement level at 1.3538 on the week.

In any case, the fall back below the 200-day moving average of 1.3480 is the more significant development in trading today. And just like AUD/USD, the near-term bias is also shifting as price falls below the 100-hour moving average of 1.3483 currently.

Looking to NZD/USD:

There was a push below 0.6100 during the week but it fell short in breaching the 200-day moving average (blue line). That coincides with the December low, which was also defended by the key level.

As such, buyers are very much still in the game. And even though the near-term chart is favouring sellers for now, the turn in broader market sentiment and resilience among other commodity currencies could help to translate to better fortunes for the kiwi.

Either way, the fact is that buyers have a clear line in the sand to make their stand now. And that is the 200-day moving average at 0.6089.

To sum up, the dollar did make a strong case for a run higher against the commodity currencies this week. But it looks like it is falling short in sealing the deal as we wrap things up before the weekend. Or is there time for yet another twist in the story?

This article was written by Justin Low at www.forexlive.com.

USD

• The Fed left interest rates unchanged as expected at the last meeting with a shift in
  the statement that indicated the end of the tightening cycle.
• The Summary of Economic Projections showed a
  downward revision to Growth and Core PCE in 2024 while the Unemployment Rate
  was left unchanged. Moreover, the Dot Plot was revised to show three rate cuts
  in 2024 compared to just two in the last projection.
• Fed Chair Powell didn’t push back against the strong dovish pricing
  and even said that they are focused on not making the mistake of holding rates
  high for too long.
• The latest US CPI slightly beat expectations but analysts
  expect the Core PCE to print at 0.2% M/M again following the CPI data.
• The labour market continues to soften but remains
  resilient with US Jobless Claims beating expectations week after week.
• The latest ISM Manufacturing PMI beat expectations, while the ISM Services PMI missed by a big margin.
• The US Retail Sales beat expectations across the board.
• The Fed members recently have been pushing
  back on the aggressive rate cuts expectations.
• The market expectation for a rate cut in March fell
  to roughly 50%.

CAD

• The BoC kept the interest rate steady at
  5.00% as expected at the last meeting with
  the usual caveat that it’s prepared to raise the policy rate further if needed.
• BoC Governor Macklem recently has been leaning on a more
  neutral side and even started to talk about rate cuts although he remains
  uncertain on the timing.
• The latest Canadian CPI beat expectations across the board with
  the underlying inflation measures remaining elevated, which should give the BoC
  a reason to wait for more data before considering rate cuts.
• On the labour market side, the latest report missed
  expectations although wage growth spiked to the highest level since 2021.
• The Canadian PMIs continue to fall
  further into contraction as the economy keeps on weakening amid restrictive
  monetary policy.
• The market expects the BoC to start
  cutting rates in Q2.

USDCAD Technical Analysis –
Daily Timeframe

On the daily chart, we can see that USDCAD broke
through the key trendline and
extended the rally into the 1.35 handle. This breakout opened the door for a
move into the swing high resistance around
the 1.36 handle where we can also find the 61.8% Fibonacci retracement level
for confluence. The
buyers should keep on looking for dip-buying opportunities on the lower
timeframes while the sellers will want to see the momentum changing and some
key breaks before piling in more aggressively.

USDCAD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that we have an
upward trendline now that will define the current uptrend. From a risk
management perspective, the buyers will have a much better risk to reward setup
around the trendline where they will also find the previous swing high and the
50% Fibonacci retracement level for confluence. The sellers, on the other hand,
will want to see the price breaking below the trendline to invalidate the
bullish setup and position for a drop into the 1.3225 support zone.

USDCAD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that the
pair has been pulling back recently from overstretched levels. We can also
notice that the price diverged with
the MACD which
is generally a sign of weakening momentum often followed by pullbacks or
reversals. In this case, the target for the pullback should be right around the
50% Fibonacci retracement level.

Upcoming Events

Today, the only notable events will be the Canadian
Retail Sales data and the University of Michigan Consumer Sentiment survey.

This article was written by FL Contributors at www.forexlive.com.

The near-term chart for gold tells a better story on price action in the precious metal so far this year:

During the downside push two weeks ago, gold struggled to get above the key hourly moving averages. And after a break of the 100-hour (red line) and 200-hour (blue line) moving averages earlier this week, gold suffered a significant drop and ran close towards a test of the $2,000 mark.

But amid a turn in broader market sentiment yesterday and today, gold has rebounded all the way back up to $2,029.

And that is seeing price run up against a test of the confluence of the 100 and 200-hour moving averages at $2,030.20 to $2,031.75. For sellers, keep below that region and the near-term bias will stay more bearish. For buyers, break above that and the bias will shift towards being more bullish instead.

On the week itself, gold looks poised for yet another drop but it really could’ve turned out worse. After the fall earlier this week, higher rates could’ve threatened a much steeper decline for gold if not for some resilience in broader markets. I still reckon there is a score to settle there but if in doubt, the technicals tend to act as a guide at least.

And in this case, gold is now returning to test a critical point that has defined price momentum so far this year. The next near-term move before the weekend at least will be defined by the battle between traders at the juncture above.

This article was written by Justin Low at www.forexlive.com.

S&P 500 futures are now up 0.4% with tech stocks leading the charge once again after the gains yesterday. Nasdaq futures are up 0.7% while Dow futures are up 0.2% currently. After having struggled earlier in the week, equities are producing quite a solid turnaround in fortunes yesterday and so far today.

The S&P 500 index itself now looks to be setting up for a test of the 4,800 mark once again. That has been a key technical level that has prevented a break to fresh all-time highs, so there is that to watch out for. If that gives way, expect risk sentiment to go running as we look towards the closing stages of this week.

This article was written by Justin Low at www.forexlive.com.

USD

• The Fed left interest rates unchanged as
  expected at the last meeting with a shift in the statement that indicated the
  end of the tightening cycle.
• The Summary of Economic Projections showed a
  downward revision to Growth and Core PCE in 2024 while the Unemployment Rate
  was left unchanged. Moreover, the Dot Plot was revised to show three rate cuts
  in 2024 compared to just two in the last projection.
• Fed Chair Powell didn’t
  push back against the strong dovish pricing and even said that they are focused
  on not making the mistake of holding rates high for too long.
• The latest US CPI
  slightly beat expectations but analysts expect the Core PCE to print at 0.2%
  M/M again following the CPI data.
• The labour market continues to soften but remains
  resilient with US Jobless Claims beating
  expectations week after week.
• The latest ISM Manufacturing
  PMI
  beat expectations, while the ISM Services PMI missed
  by a big margin.
• The US Retail Sales beat
  expectations across the board.
• The Fed members recently have been pushing
  back on the aggressive rate cuts expectations.
• The market expectation for a rate cut in March fell
  to roughly 50%.

AUD

• The
  RBA left interest rates unchanged as expected at the last meeting with
  the central bank maintaining the usual data dependent language.
• The
  recent Monthly CPI report missed expectations across
  the board which is another welcome development for the RBA.
• The
  latest labour market report missed expectations by a big
  margin.
• The
  wage price index surprised to the upside as wage
  growth in Australia remains strong.
• The
  latest Australian PMIs improved but remain in contraction.
• The
  market expects the RBA to start cutting rates in June.

AUDUSD Technical Analysis –
Daily Timeframe

On the daily chart, we can see that AUDUSD bounced
on the key support zone
around the 0.65 handle as the price got overstretched on the downside as
depicted by the distance from the blue 8 moving average. In such
instances, we can generally see a pullback into the moving average or some
consolidation before the next move.

AUDUSD Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that from a risk
management perspective, the sellers will have a much better risk to reward
setup around the downward trendline where
they will also find the confluence with the
Fibonacci retracement levels.
The buyers, on the other hand, will want to see the price breaking above the
trendline to invalidate the bearish setup and increase the bullish bets into
the 0.69 resistance.

AUDUSD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that the
price has been diverging with
the MACD as it
was approaching the key support zone. This is generally a sign of weakening
momentum often followed by pullbacks or reversals. In this case, it should be
an extra confirmation for a pullback into the trendline. At the moment, we have
a minor upward trendline defining the uptrend on this timeframe. The buyers
will likely keep on leaning on it to extend the rally into the major trendline
while the sellers will want to see the price breaking lower to pile in and
target a break below the key support.

Upcoming Events

Today, the only notable event will be the University
of Michigan Consumer Sentiment survey.

This article was written by FL Contributors at www.forexlive.com.

The more bullish upgrade by BofA on Apple shares is the only relevant headline that I can allude to in helping to push US futures higher in the past hour. S&P 500 futures are now up 0.3% with Nasdaq futures up 0.7%, while Dow futures are flat. So, that sort of gives you an idea of where the gains are coming from.

Apple shares are up nearly 2% in pre-market trading and that seems to be lighting up the tech space and equities sentiment ahead of US trading later. That being said, just be wary that action in the bond market could still make things a little messier later in the day.

This article was written by Justin Low at www.forexlive.com.

Yesterday, the Dow Jones remained under pressure as
the market continued to reprice the aggressive rate cuts expectations following
Fed’s Waller
comments. Moreover, the economic data surprised once again to the upside with
the US Retail Sales beating
expectations across the board and Industrial Production edging
up. Overall, the soft-landing narrative is still intact but in the short term
the market is readjusting to tighter monetary conditions.

Dow Jones Technical
Analysis – Daily Timeframe

On the daily chart, we can see that the Dow Jones fell
below the red 21 moving average as the
bearish momentum continues to weigh on the market. We can also see that the
recent upside price action has been diverging with the
MACD which is
generally a sign of weakening momentum often followed by pullbacks or
reversals. In this case, the target for the pullback should be the 37066 level,
while a break below it would confirm a reversal.

Dow Jones Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can see more
clearly the divergence with the MACD and the recent pullback from the all-time
high. The buyers should step in around the 37066 level with a defined risk
below it to position for another rally into a new all-time high. The sellers,
on the other hand, will want to see the price breaking lower to increase the
bearish bets into the 36030 level.

Dow Jones Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that we
have a resistance zone
around the 37400 level where we can also find the red 21 moving average for confluence. If
the price were to pull back into that resistance, we can expect the sellers to
step in to position for a drop into the 37066 level and target a break below
it. The buyers, on the other hand, will want to see the price breaking higher
to invalidate the bearish setup and increase the bullish bets into a new
all-time high.

Upcoming Events

Today, we will see the latest US Jobless Claims
figures, while tomorrow we conclude the week with the University of Michigan
Consumer Sentiment survey.

This article was written by FL Contributors at www.forexlive.com.

A rebound in Chinese stocks and a slight softness in the dollar is helping to keep AUD/USD higher so far today, even with a rather poor Australian jobs report earlier here. The currency pair is up 0.3% to 0.6565, also assisted by a technical bounce off its December low:

However, the pair is now caught in a bit of a technical box in between its 100-day (red line) and 200-day (blue line) moving averages. The former is at 0.6513 with the latter at 0.6580 and that provides two key lines in the sand for buyers and sellers to work with respectively.

To continue the downside momentum, sellers will have to chase a break below the December low of 0.6525 and then the 100-day moving average at 0.6513. Meanwhile, to reverse the momentum, buyers will have to push for a break back above the 200-day moving average at 0.6580 currently.

So, that offers up a range for the pair to do some pushing and pulling before figuring out what the next move is.

The near-term chart dictates that sellers are still in control but the daily chart as seen above, looks to be taking precedent on price action importance. The aussie might be looking steadier so far today on the factors mentioned but it is now up to buyers and sellers to prove their mettle in the technical battle above.

This article was written by Justin Low at www.forexlive.com.