• Broader indices plow forward. Record close for S&P and first close above 5000.
• Crude oil settles at $76.84,
• Fed’s Logan: Labor market is very tight but loosening
• Fed’s Bostic: Inflation has been too high for too long
• European equity close: A double doji on the weekly
• More on the US CPI revisions
• Kickstart your FX trading with a detailed technical look at the EURUSD, USDJPY & GBPUSD.
• US Treasury yields fall on CPI revisions, then rebound
• US benchmark CPI revisions: December CPI revised to +0.2% from +0.3%
• Canada January employment 37.3K versus 15.0K estimate
• The NZD is the strongest and the CHF is the weakest as the NA session begins
• ECB Publishes Paper on Forward-looking Trackers of Negotiated Wages
• Next Week’s Key Economic Events

The USD is ending the session lower to end the trading week with most of the declines coming vs the AUD and the NZD. Overnight, ANZ reported that is now predicts that the Reserve Bank of New Zealand (RBNZ) will increase the Official Cash Rate (OCR) by 25 basis points in both February and April, bringing it to a total of 6%, which deviates from the consensus view. This forecast is based on a series of small, but unwelcome surprises in economic data, leading ANZ to believe that the RBNZ will not feel confident that it has sufficiently met its inflation targets. The OCR is currently at 5.5%, and while the market is largely expecting the RBNZ to maintain rates in the upcoming February meeting, with a 90% anticipation of a hold decision, ANZ stands out by anticipating rate hikes in both the February 28 and April 10 meetings.

That news helped to propel the NZDUSD to a near 1% gain on the day. The AUDUSD moved up 0.54%. The USD was mixed vs the other currencies in a subdued up and down trading session in the US. Overall, for the day, the NZD was the strongest of the major currencies while the CHF was the weakest.

In the session today, the Canada employment data showed a gain of 37.6K but all the gain was in part time jobs. Full time jobs fell by -11.6K. The unemployment rate did fall to 5.7% from 5.8% last month. The USDCAD ended the day little changed in up and down trading.

There were no US economic data today. However, there was some additional Fed talk from Fed’s Logan and Bostic.

Fed’s Logan emphasized that the labor market remains very tight, although there are signs of loosening, signaling a nuanced view of current economic conditions. She acknowledged significant progress made on inflation but noted that further efforts are necessary to fully address it. Logan advocated for a careful and data-driven approach, suggesting there is no immediate urgency to adjust interest rates at this time. Her comments reflect a priority on building confidence in the long-term stability of inflation rates. While she noted that supply chains have largely normalized, Logan also acknowledged ongoing supply chain issues in certain industries, indicating these may need more time to resolve fully. She expressed a strong focus on monitoring potential risks that could undermine progress on inflation, highlighting the Fed’s vigilance in maintaining economic stability.

Fed’s Bostic, in a discussion with NPR, expressed concern that inflation has been excessively high for an extended period. He conveyed optimism about the United States being on track to regain its pre-pandemic economic vitality, emphasizing the importance of preventing a new surge in inflation. Bostic highlighted that current data indicate the potential for continued real wage gains over the next several months. He pointed out that businesses are primarily challenged by difficulties in finding employees and affordable housing. Furthermore, Bostic reassured that banks are aware of the risks present in their portfolios and are equipped to manage them effectively, suggesting a level of preparedness within the banking sector to navigate potential economic fluctuations.

For the trading week, the US dollar index rose 0.10% (DXY) but was mixed vs the major currencies. Looking at the major currencies, the USD was virtually unchanged vs the EUR and GBP, it was the strongest vs the CHF and the weakest vs the NZD:

• EUR, unchanged
• JPY, +0.65%
• GBP, unchanged
• CHF, +0.90%
• CAD, -0.02%
• AUD, -0.20%
• NZD, -1.49%

Today, yields were mixed with the shorter end higher, and the longer end lower.

• 2-year 4.484%, +2.8 basis points
• 5-year, 4.140%, +1.6 basis points
• 10-year, 4.177%, +0.7 basis points
• 30 year, 4.374%, -0.6 basis points

For the trading week, yields moved higher as the market started to dial back the number of tightening.

• 2 year, +11.4 basis points
• 5 year, +15.4 basis points
• 10 year, +15.3 basis points
• 30 year, +15.1 basis points

US stocks today continued it move to the upside with solid gains for the broader indices. The S&P index closed above the 5000 level for the first time ever. The Nasdaq index traded above 16K for the first time since November 2021. The S&P closed at a record level and although the Dow as lower today, it traded to record levels this week.

The final numbers are showing:

• Dow industrial average fell -54.64 points or -0.14% at 38671.70
• S&P rose 28.70 points or 0.57% at 5026.62
• Nasdaq rose 196.94 points or 1.25% at 15990.65

For the week, the major indices closed higher for the 5th week in a row after starting 2024 with a sharp decline in the 1st trading week of the year.

• Dow industrial average, rose 0.04%
• S&P rose 1.37%
• Nasdaq rose 2.31%

In other markets this week,

• Crude oil rose $4.26 or 5.89% to $76.54
• Gold fell -$15.02 or -0.74% to $2024.42
• Silver fell $0.08 or -0.34%
• Bitcoin surged by $4975 or 11.6% as risk on flows pushed the digital currency higher.

Next week US CPI will highlight the economic releases

Monday:

• BOE Gov. Bailey speaks

Tuesday:

• NZ inflation expectations
• UK Employment
• US CPI

Wednesday:

• UK CPI
• UK Gov. Bailey speaks

Thursday:

• AUD employment
• UK GDP
• US Retail Sales
• US unemployment claims

Friday:

• UK Retail sales
• US PPI
• US Michigan Consumer Sentiment.

On the earnings calendar next week, Shopify, Coca Cola, AIG, Cisco and Coinbase are companies of interest. The Big Daddy of perhaps the entire earnings season will be released on February 21, when Nvidia is scheduled to report. The fate of AI and Ai stocks rests with the chip supplier:

Tuesday:

• Shopify
• Coca Cola
• Marriott
• Lyft
• AIG

Wednesday:

• Kraft Heinz
• Albemarle
• Twillio
• Cisco

Thursday:

• John Deere
• Coinbase

Thank you for your support. Wishing you all a great weekend.

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

The broader US stock indices continued to plow forward with the S&P closing above 5K for the first time ever. The Nasdaq traded above 16K for the first time since November 2021 and is now within 67 points of a new all time high close.

The Dow did fall today but as Chevron, Disney and Caterpillar move lower.

The final numbers are showing:

• Dow industrial average fell -54.66 points or -0.14% at 38671.70
• S&P index rose 28.70 points or 0.57% at 5026.62
• NASDAQ index rose 196.94 points or 1.25% at 15990.65. It’s intraday high reached up to 16007.29. The all-time high closing level was at 16057.44.

The small-cap Russell 2000 rose 30.29 points or 1.53% to 2009.99.

For the trading week, each of the major indices rose for the fifth consecutive week:

• Dow Industrial Average eeked out a 0.04% gain for the week
• S&P index rose 1.37%
• NASDAQ index rose 2.31%

The small-cap Russell 2000 rose 2.4079%.

For 2024:

• Dow Industrial Average 2.61%
• S&P index is up 5.38%
• NASDAQ index is up 6.52%

The Russell 2000 is down -0.842%.

Happy days are here again….

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

The price of oil is settling at $76.84. That is up $0.62 or 0.81% on the day. The high price reached $77.29. The low price was at $75.93.

For the trading week, the prices soared 6.27% which comes after a -7.35% decline last week, and a 6.5% rise the week before. So price action has been up-and-down over the last few trading weeks.

Looking at the weekly chart, the price low dipped below its 200-week moving average at $72.04. Looking at the chart below, the last 10 trading weeks has been skimming along that 200-week moving average with six of the 10 weeks moving below the moving average intra-week. However, there have been no closes below that moving average – keeping the buyers in play technically.

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

• We have made tremendous progress on inflation, more work to do
• Need to take time to look at data
• Don’t see any urgency to adjust rates
• Need to build confidence on inflation
• Supply chains have pretty much normalized
• Some industries still have supply chain issues, may take time to heal
• Highly focused on possible risks to progress on inflation
• Some industries still have supply chain issues, may take some time to heal

This is right out of the Fed textbook right now. Everyone wants more time to see more data.

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

• The US is on a pathway to get back to pre-pandemic economic strength, wants to avoid a new spike of inflation
• Data suggest real wage gains will continue for several more months
• Businesses say biggest challenges are finding employees and affordable housing
• Banks understand the risk on their books and are prepared to deal with them

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

The
Japanese yen experienced significant growth at the end of 2023, appearing to
mark a long-awaited turning point as it broke away from the previous year’s
trend. The USD’s drop was easy to explain. However, following the New Year, the
situation took a sudden turn. Let’s delve into why the US dollar reclaimed its
position and what happened with the yen.

In
December, the yen was the preferred choice for bulls, which is pretty
understandable. In 2022 and 2023, the Japanese currency stood out among major
currencies because of its adherence to a negative interest rate policy. It’s an
exception to the rule, as you realize.

At the
end of 2023, it seemed like the turning point had been reached. The USD
to JPY rate saw a nearly 6% decrease in November and December.

The
chart above represents two key moments. The first one is linked to the
expectations that the Federal Reserve will initiate a rate-cutting cycle in
2024, potentially reducing interest rates at least three times. The second
reflects the expectations surrounding the Bank of Japan’s policy. Many experts
forecasted that the BoJ would abandon its negative rate approach. This
contrast allowed the yen to make an encouraging leap.

In 2024,
this movement should have been continued. But one month was enough for the US
dollar to recover the most losses.

To
understand the scale of the problem, take a look at the chart below, which
illustrates the USDJPY movements since the start of 2022. That’s what happened
to the currency, traditionally considered a safe haven alongside, for instance, the Swiss
franc.

The
chart above provides insight into why market participants anticipated changes
from the BoJ. However, it didn’t happen at the central bank’s January meeting.
The regulator also continued its yield curve control policy, maintaining a
1%-as-a-reference yield cap on 10-year government bonds. Plus, there was a
slight decrease in the inflation rate, diverting attention from the potential
rise in interest rates.

Another
factor affecting USD/JPY was the increase in retail sales data in the US.
Higher consumer spending allows the Fed to maintain higher interest rates.

After
all these developments, USD/JPY returned to roughly the same level as a few
months prior. In other words, investors still expect a potential interest
rate decrease by the Fed and a contrasting move by the BoJ. If so, perhaps it’s
an opportune moment to have faith in the yen.

As
you’re aware, the forex market situation can change rapidly, even within this
text. Hence, any decision should be based on your own analysis and opinion.

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

As traders gear up for the week ahead, there’s no shortage of important economic events on the horizon that could impact the market.

The week will kick off with bank holidays in Japan and China, marking National Foundation Day and the Spring Festival, respectively. These holidays may lead to subdued trading activity in the Asian markets, so traders’ attention will shift to other regions.

In the United Kingdom, the focus will be on Bank of England Governor Bailey’s speech at Loughborough University. His remarks could provide insights into the central bank’s monetary policy outlook.

On Tuesday, New Zealand will release inflation data, while the U.K. will unveil data on claimant count change, average earnings index and the unemployment rate. Additionally, Switzerland will publish its Consumer Price Index, and the eurozone will get the ZEW economic sentiment.

The most important event of the week will be the inflation data for the U.S., also expected on Tuesday.

Wednesday will see the U.K. releasing inflation figures.

Thursday Australia will publish the employment change and unemployment rate data, while the U.S. will get the retail sales figures, the Empire State Manufacturing Index and the unemployment claims.

Finally, on Friday, attention will shift back to the U.K. for retail sales data and to the U.S. for the Producer Price Index (PPI) m/m, as well as building permits, housing starts, preliminary University of Michigan consumer sentiment and inflation expectations figures.

This article was written by Gina Constantin at www.forexlive.com.

Yesterday,
the Nasdaq Composite increased further its gains following the better than
expected US
Jobless Claims as the market continues to be supported by the
goldilocks economy. There’s no notable event now until the US CPI report next
Tuesday, so it won’t be surprising if we start to see a pullback as some profit
taking into the data should be expected.

Nasdaq Composite Technical
Analysis – Daily Timeframe

On the daily chart, we can see that the Nasdaq Composite
broke the resistance at 15635
and rallied to new highs. The index is approaching the all-time high mark and
that’s certainly what the buyers are targeting at the moment. If we get a
bigger pullback from here, we can expect the buyers to lean on the trendline to
position for the all-time high. 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 14477 level.

Nasdaq Composite Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that the price
continues to diverge with the
MACD which is
generally a sign of weakening momentum often followed by pullbacks or
reversals. In this case, it should be a signal for a pullback at least into the
resistance now turned support at
15635. From a risk management perspective, the buyers shouldn’t chase this
rally and wait for a pullback to either the support or the trendline. The
sellers, on the other hand, will want to see some downside breaks before
stepping in and target new lower lows.

Nasdaq Composite
Technical Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that the
price action after the breakout has been choppy with weak momentum. This should
be a sign that the market is primed for a pullback. The buyers will step in
both at the 15635 support and the trendline, while the sellers will pile in at
every break lower.

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

USD

• The Fed left interest rates unchanged as
  expected while dropping the tightening bias in the statement but adding a
  slight pushback against a March rate
  cut.
• Fed Chair Powell stressed
  that they want to see more evidence of inflation falling back to target and
  that a rate cut in March is not their base case.
• The latest US GDP beat
  expectations by a big margin.
• The US PCE came
  mostly in line with expectations with the Core 3-month and 6-month annualised
  rates falling below the Fed’s 2% target.
• The US NFP report
  beat expectations across the board by a big margin.
• The ISM Manufacturing
  PMI
  surprised to the upside with the new orders index, which is considered a
  leading indicator, jumping back into expansion. Similarly, the ISM Services PMI beat
  expectations across the board with the employment sub-index erasing the prior
  drop and prices paid jumping above 60.
• The US Consumer
  Confidence report came in line with expectations but
  the labour market details improved considerably.
• The market now expects the first rate cut in May.

GBP

• The BoE left interest rates unchanged as expected at the last meeting
  removing the tightening bias but reaffirming that they will keep rates high for
  sufficiently long to return to the 2% target.
• The latest employment report showed job losses in December and
  lower than expected wage growth.
• The UK CPI beat expectations across the board, which gives
  the BoE a reason to remain patient.
• The latest UK PMIs showed the Manufacturing sector improving but
  remaining in contraction while the Services sector continues to expand.
• The latest UK Retail Sales missed expectations across the
  board by a big margin as consumer spending remains weak.
• The market expects the BoE to start
  cutting rates in June.

GBPUSD Technical Analysis –
Daily Timeframe

On the daily chart, we can see that GBPUSD broke
out of the range following the strong US NFP report and pulled back to retest
the support now turned resistance around
the 1.2612 level. The price was overstretched after the quick selloff 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. Here we got a pullback into the moving
average, and we can now expect the sellers to step in with a defined risk above
it to target a break below the 1.25 handle.

GBPUSD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that we got a
reaction yesterday as the price sold off into the 1.2570 level but eventually
rebounded back into the resistance zone.
The buyers will want to see the price breaking above the recent high at 1.2642
to invalidate the bearish setup and position for a rally back into the top of
the range around the 1.28 handle.

GBPUSD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see more
closely the recent price action with the pair now consolidating right around
the resistance zone. If the price were to break below the minor support at
1.2605, we can expect the sellers to pile in to increase the bearish bets into
the 1.25 support. Conversely, a break above the 1.2642 level should lead to a
rally into new highs with the buyers increasing the bullish bets into the 1.28
handle.

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

The Italian industrial production index measures the output of industrial activities in Italy, including manufacturing, mining, and utilities, but excluding construction. It is a key economic indicator that provides insight into the health and performance of the Italian industrial sector. Industrial production is often measured in terms of the volume of goods produced over a certain period, typically on a monthly or quarterly basis.

The previous month the Italian industrial production index had printed at -1.5%. The negative figure indicated a decrease in the volume of goods produced by the Italian industrial sector, a contraction of 1.5% during the reported period. Today’s data shows an improvement m/m, but the three-month average is -0.5% compared to the previous quarter.

More information available in the full report.

This article was written by Gina Constantin at www.forexlive.com.