The banking worries in the US this week were triggered by:

• New York Community Bancorp cutting its dividend on higher capital rules and commercial strain
• A Japanese bank reporting unexpected losses on US commercial real estate
• Deutsche Bank highlighting losses on US commercial real estate

Despite all the economic data this week, it was those headlines that left US 10-year yields 14 basis points lower on the week.

There are echos of subprime here as no one really knows the size of the problem, who is holding the losses and how it could be managed. What’s clear is that office real estate is severely impaired because of work-from-home changes following the pandemic. Vacancies are high and tenants have incredible leverage in asking for lower rents.

Banking rules require taking impairments once losses are reasonably foreseeable but that hasn’t really happened yet, in part because it’s still not clear how many workers will be called back to the office and how many companies will move out.

Under any circumstances, it’s fair to say that losses will be high. How high? Goldman Sachs estimates $1.2 trillion of commercial
mortgages are scheduled to mature this year and next, or about a quarter of all outstanding commercial mortgages, and the highest
recorded level going back to 2008.
The biggest single holders are banks
with a 40% share. Other estimates put the „maturity wall“ as high as $1.5 trillion, according to Reuters.

„The office market has an existential crisis right now,“ Barry Sternlicht, CEO of Starwood Capital Group ($115b AUM) told
the Global Alts conference. „It’s a $3 trillion asset class that is
probably worth $1.8 trillion. There’s $1.2 trillion of losses spread
somewhere, and nobody knows exactly where it all is.“

To illustrate, the entire size of the subprime US mortgage market in 2007 was $1.3 trillion.

There are two things that make this a particularly precarious situation:

• Small/regional banks hold much of the losses and they don’t have the ability to take much pain
• Due to hold-to-maturity bond market losses, raising new capital is prohibitively expensive and in many cases, impossible

There’s a reason the bond market got very skittish, very quickly this week.

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

I posted this on Friday but ICYMI, Federal Reserve Chair Powell recorded an interview on Thursday with US TV show 60 minutes. He was questioned on inflation risks and the economy, the timeline for cutting rates, and more.

The interview will air at 7pm US Eastern time, which is midnight (0000) GMT.

Asia FX will be trading when the interview airs, it’ll be

• 11am in Sydney,
• 9 am in Tokyo,
• and 8 am in Singapore, Hong Kong and Shanghai.

Globex will be open for the Sunday evening session.

I doubt there will be anything much to surprise us, Powell spoke on Wednesday and was clear on no March rate cut. However, there could well be something in what he says to move markets around and keep at least the scalpers happy.

Like I said, the interview was recorded Thursday, prior to the bombshell jobs report, but, did Powell know the number?

• Is this why Powell ruled out a March rate cut on Wednesday?

This article was written by Eamonn Sheridan at www.forexlive.com.

• Stocks roar with the Nasdaq/Meta leading the way
• First US retaliatory strikes underway in Syria – report
• Crude oil settles at $72.28.
• Fed’s Goolsbee is fueling the ‚productivity boom‘ talk
• How US equity markets have found the ultimate sweet spot
• Breaking: S&P Index hits all-time highs – Unveiling the roadmap to next targets
• European equity close: The Mag 7 aren’t in London
• Former FOMC George: Jobs report raises questions about the timing and number of rate cuts
• Univ. of Michigan Sentiment final for January 79.0 vs 78.8 preliminary. Last month 69.7.
• US December factory orders +0.2% vs +0.2% expected
• ECB’s Nagel: It’s looking like a soft landing for the eurozone is possible
• US jobs were much stronger, sending the US dollar higher. What are the technicals saying?
• US January non-farm payrolls +353K vs +180K expected
• BOE’s Pill: Time when rate cuts will be possible is some way off for me
• The AUD is the strongest and the JPY is the weakest as the NA session begins
• BOE’s Pill: The time when rate cuts will be possible is some way off for me
• ForexLive European FX news wrap: Markets wait on the US jobs report

The week ended with a bang as the US jobs data came much stronger than expectations.

• Non-farm payroll rose by 353K much higher than the 180K estimate (and the ADP rise of 107K released earlier this week). T
• Unemployment rate came in at 3.7% versus 3.8% expected
• Average yearly earnings rose by 0.6% versus 0.3% expected MoM
• Average yearly earnings rose by 4.5% versus 4.1% expected YoY
• The average workweek in hours and fall to 34.1 hours from 34.3 hours last month (that was the estimate too).

Looking at the jobs by sectors, Private education and health services led the way with a gain of 112K. Professional and business services rose by 74K. Both sectors, are relatively high-paying jobs . Manufacturing advanced by a solid 23K (another high paying sector). Leisure and hospitality – a proxy for service economy – was relatively subdued at 11.0K

The stronger-than-expected jobs data put the wheels in motion in all markets:

The US bond yields moved higher:

Looking at the yield curve for the day:

• 2- year yield 4.372% +17.8 basis points.
• 5-year yield 3.985% +18.9 basis points.
• 10-year yield 4.023% +16.1 basis points
• 30-year yield 4.223% +12.0 basis points

Those are big moves to the upside, but for the week yields were moving lower until today and apart from the two year yield for the other part of the yield curve moved lower. That included a Fed which said a March cut was not likely and an non farm payroll that surges 353K (with large revisions too). For the week, the:

• 2-year yield rose 1.9 basis points
• 5-year yield fell -5.2 basis points
• 10-year yield fell -11.5 basis points
• 30-year yield fell -14.7 basis points

The USD surged to the upside.

Looking at the strongest to the weakest of the major currencies, the USD was the runaway winner in the rankings. The JPY was the weakest followed by the NZD.

The US stocks moved higher:

Stocks were a different story. Normally, you might expect stocks to move lower given the surge in yields and the higher USD. However, stocks moved sharply to the upside helped by

1. A feeling that a strong economy is good for earnings. Who cares if the Fed holds off on lowering rates, if inflation can remain steady/not move higher/move marginally lower, that is good for stocks.
2. Meta and Amazon earnings were gangbuster good. Microsoft earnings earlier this week were also good but the market still sold off their shares. For Meta, their shares rose over 20% on the day. Amazon shares were up nearly 8% but had to take a backseat.

For the day,

• Dow industrial average rose 134.58 points or 0.35% at 38654.43
• S&P index rose 52.44 points or 1.07% at 4958.62
• NASDAQ index rose 267.30 points or 1.74% at 15628.94.

For the trading week, the gains today in the index turned a negative weed into a positive week. The major indices rose for the fourth consecutive week:

• Dow Industrial Average +1.43%
• S&P index +1.38%
• NASDAQ index +1.12%

Looking at some of the other markets:

• Crude oil fell $-1.40 percent or -1.95% to $72.38. The price decline despite the strong economy, concerns about the breakdown of the cease-fire rumors in the Middle East, and also the story of retaliatory bombings by the US in response to the killing of US servicemen.
• Gold prices moved sharply lower by -$15.01 or -0.73% to $2039.54 as it reacted to higher rates and the higher USD.
• Bitcoin is trading at $42,987.

Over the weekend, an interview with Fed Chair Powell will be broadcast on the Sunday evening news program 60-Minutes. The comments will be the first from the chair after the FOMC rate decision. It is unsure if the interview was before the stronger jobs data was reported.

On Tuesday morning in Australia (evening on Monday in the US), the RBA will announce its most recent rate decision. The expectations are for no change in policy 4.35%. Also on Tuesday Cleveland Fed Pres. Mester will be speaking.

On Wednesday, Feds Kugler and Barkin will both be speaking. On Wednesday the morning in New Zealand, employment statistics for the quarter will be released

China CPI will be released on Thursday morning in China (Tuesday night in the US).

Canada employment statistics will be released on Friday.

On the earnings calendar next week:

Monday:

• Caterpillar
• McDonald’s
• Palantie

Tuesday:

• Lilly
• BP
• Toyota
• Ford
• Chipotle
• Fortinet

Wednesday:

• Alibaba
• Uber
• CVS Health
• Paypal
• Disney

Thursday:

• Conoco Phillips
• Pinterest
• Expedia

Friday:

• Pepsico

Thank you for all your support. Have a good and safe weekend.

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

It sucks to be Amazon and have to take a backseat when your stock soars by 7.67% on the day. However, it was Meta and Mark Zuckerberg’s day to roar, and roar they did. Share’s of Meta moved up $80.21 or 20.32% after beating expectations, announcing a first ever dividend, and announcing a $50B buyback of shares.

Overall, all the major indices moved higher and all three closed higher for the week as well. It is the 4th week in a row higher after starting the year with a sharp fall. The S&P index in the Dow Industrial Average“ levels today.

The final numbers are showing:

• Dow Industrial Average is up 134.56 points or 0.35% at 38654.41
• S&P index is up 52.44 points or 1.07% at 4958.62
• NASDAQ index is up 267.30 points or 1.74% at 15628.94

For the trading week:

• Dow Industrial Average rose 1.43%
• S&P index rose 1.38%
• NASDAQ index rose 1.12%

The small-cap Russell 2000 did not like the sharp rise in yields after the stronger-than-expected US jobs report. As a result,that index fell -11.68 points or -0.59% to 1962.73. For the week, the Russell 2000 fell by -0.788%

The regional bank KRE ETF did advance today by 0.25 points or 0.52% to $48.40, but still closed down by -7.16% in trading this week.

For the trading week which saw 5 of the Magnificent 7 announce earnings (Microsoft, Alphabet, Apple, Meta, Amazon, announce earnings):

• Meta rose 20.51%
• Alphabet-6.44%
• Microsoft rose 1.80%
• Apple-3.39%
• Amazon, rose 7.99%

The other two of the 7, Tesla and Nvidia rose this week. Today Nvidia soared by 4.97%:

• Tesla rose 2.54% despite falling -0.50% today (already announced earnings on January 24)
• Nvidia rose 8.40% (won’t announce earnings until February 21).

One of the biggest high flyers this week Super Micro Computer gave back some of its gains with the decline of – $-3.87 or -0.66%. For the trading week, shares were up 22.25%.

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

It’s no surprise but bombs are reportedly falling in Syria right now in response to the US soldiers killed last weekend.

Earlier this week there were reports that Biden had authorized strikes in Iraq and Syria in response. So long as no bombs fall in Iran, I don’t think this will matter for markets, including oil.

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

For those who have seen my daily posts/videos on the GBPUSD (any of them), the pair has been trading in an up-and-down trading range going back to December 14. That range is between 1.2600 and 1.2800.

Today, the price moved sharply lower after the stronger US jobs report, and the price move to a lower swing area between 1.2602 to 1.26137. The low price today reached 1.26147 – just above the high of that swing area – and has bounced. The bounce has taken the price up to around 1.2640.

What next?

There is some resistance at 1.2647 area. If that level holds, then we should see a move back down to retest the low extreme target.

If it moves below 1.2602, the next key target comes in at the 200-day MA at 1.25607. The price of the GBPUSD has not traded below the 200 day MA since November. On a test, I would expect buyers to lean on the first look (with stops on a break below).

If the price does move above 1.2647, there could be some disappointment on the failure to get outside of the range. Be aware.

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

The snapshot now is not that much changed from the start of the session, as traders lack any real appetite in European morning trade. That isn’t surprising as we are awaiting the main event later today. It is all about the US jobs report with no other distractions so far on the session.

After the Fed has said put out the narrative that March isn’t the base case for rate cuts, it is now time to walk the talk. And the non-farm payrolls release today will be the first key hurdle in that sense. Here’s a preview: December non-farm payrolls by the numbers

As we await the data, the dollar is just marginally lower with losses more evident against the aussie only. But even so, it isn’t anything too substantial on the week. The other major currencies are little changed after the moves yesterday.

Elsewhere, Treasury yields are slightly higher but that picture could all change once again when we get to US trading later. In the equities space, the rally in tech shares is carrying over to today. S&P 500 futures are up 0.6% and Nasdaq futures up 1.0% on the day. Meanwhile, Dow futures are only seen up 0.1% but at least that helps with keeping a more positive risk mood for now.

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

Yesterday, the Nasdaq Composite erased all the
losses from the Fed’s selloff as the market continues to trade the goldilocks
economy. In fact, the ISM Manufacturing PMI
surprised to the upside with the new orders index, which is regarded as a
leading indicator, jumping back into expansion. Moreover, after the close we
had some good earnings reports from the big names with META not only tripling
profits but even announcing its first-ever dividend. Today all eyes will be on the US NFP report
which is expected at 180K with estimates ranging from a low of 120K to a high
of 290K.

Nasdaq Composite Technical
Analysis – Daily Timeframe

On the daily chart, we can see that the Nasdaq Composite
yesterday bounced from the key support zone
around the 15150 level where we had the confluence of the trendline, the
38.2% Fibonacci retracement level
and the red 21 moving average. This is
where the buyers stepped in with a defined risk below the trendline to position
for a rally into new highs. The sellers, on the other hand, will want to see
the price reversing and breaking below the trendline to invalidate the bullish trend
and position for a drop into the 14477 level.

Nasdaq Composite Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can see more clearly the bounce
from the support at the 15150 level. Given the strong gains after the close
from the major stocks, we can expect the index to open around the highs. The
buyers might want to pile in to join the bullish momentum and look for new
higher highs. The sellers, on the other hand, could fade the reaction to the
earnings and position short with a defined risk above the high looking for a
break below the trendline.

Nasdaq Composite Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that we
had an important level around 15400 where there was also the confluence with
the red 21 moving average and the 50% Fibonacci retracement level. If we get a
pullback from the highs, the buyers will likely lean on the level as they will
have a better risk to reward setup to target new highs. The sellers, on the
other hand, will want to see the price breaking lower to increase the bearish
bets into new lows.

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

Key Highlights

· Since the
start of the year, crude oil has seen
a 6.50% increase, with a 0.80% gain observed in the past week.

· US oil
prices have witnessed a significant rally during January, reaching their
highest levels in nearly two months, driven by robust economic growth in the US
and the anticipation of Chinese economic stimulus.

· Geopolitical
tensions in the Middle East, particularly around the Red Sea, have further
supported prices due to concerns over potential supply disruptions.

Economic
Drivers

Global
Economic Outlook: The International Monetary Fund has raised its forecast for
global economic growth, positively impacting the outlook for both the U.S. and
China. This revision is based on a faster-than-expected easing of inflation.

IEA Predicts
Increased Oil Demand: The International Energy Agency forecasts a global oil
demand increase of 2 million barrels per day (mb/d) in 2024.

US Economic Indicators Boost Oil
Demand Outlook: Encouraging signs from the US economy, including
quicker-than-anticipated GDP growth in Q4 and diminishing inflation rates, have
enhanced expectations for oil demand.

Chinese
Economic Stimulus Lifts Market Sentiments: Economic initiatives by China to
stimulate growth have positively influenced market sentiments, indicating
possible boosts in oil demand from the leading global crude importer.

Geopolitical
Tensions: Escalating tensions in the Middle East, particularly relating to the
recent drone attack in Jordan and the US response, have heightened market
sensitivity and influenced oil prices.

Unexpected
Rise in US Crude Inventories: The latest EIA report showed a surprising
increase of 1.234 million barrels in US crude oil inventories for the week
ending January 26, 2024, defying market expectations for a 0.217-million-barrel
decrease.

Gasoline
Stocks Increase Less Than Expected: Gasoline inventories increased by 1.156
million barrels, which was below the anticipated gain of 1.483 million barrels.

Impact of
U.S. Interest Rate Outlook: The market is adjusting to the likelihood of
prolonged higher U.S. interest rates following the Federal Reserve’s dismissal
of expectations for a rate cut in March.

China’s
Economic Slowdown Concerns: Economic indicators from China, including
manufacturing activity remaining in contraction as per January’s official
purchasing managers index, raise alarms over demand prospects, contributing to
the cautious outlook on oil prices.

Technical
Overview and Key Levels

Shift in
Market Sentiment: Since October 2023, the oil market experienced a structured
downtrend, bottoming out at $68, before breaking out of its downward trend
channel in January. This breakout, particularly moving above $75 and the 45
daily EMA channel, shifted momentum towards a bullish sentiment.

Breakout and
Retest: Despite breaking the December high of $76 and momentarily surpassing
$79, the market has not been able to sustain its momentum and is now retesting
the $76 level as support, with potential for a new uptrend initiation if
support holds.

Resistance
at $80: The $80 resistance level is highlighted by the November highs and the
upper boundary of the 200 EMA channel, marking it as a critical resistance
level.

$80 Mark as
Trend Confirmation: A move above the $80 mark would confirm a new uptrend in
the US oil market. However, significant resistance near the November highs,
just below $80, challenges this potential shift.

Bearish
Momentum and Downward Trajectory: If the market cannot maintain levels above
$75, it would re-align to a downward trend, potentially accelerating bearish
momentum and leading to a sideways consolidation within January’s price range.

USOIL 4Hour
Chart:

Looking
Ahead

Market
Outlook Influenced by Key Factors: The upcoming week’s market direction is anticipated to be
shaped by developments in US-China economic policies, Middle East geopolitical
tensions, and changes in US crude inventory levels.

OPEC+
Meeting Outlook: While analysts do not anticipate a definitive decision on
April’s oil policy at today’s OPEC+ meeting, there is hope for insights into
future production plans.

Anticipation
for China’s Economic Stimulus: Investors are closely monitoring potential
additional stimulus measures from China, crucial for influencing the global
economic landscape and oil demand forecasts.

US Response
to Middle East Tensions: The potential impact on the oil market is closely
watched, as the US’s approach to ongoing Middle East tensions could
significantly influence global oil supply and prices.

Importance
of Middle East Developments: Continuous monitoring of Middle East tensions is critical,
as escalations could significantly impact global oil supply chains, potentially
driving oil prices upwards.

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

A slight rebound in Treasury yields, at least for now, is helping to keep USD/JPY up a little by 0.2% to 146.67. However, the dollar is looking sluggish elsewhere and trading near the lows for the day in European trading. EUR/USD is up 0.2% to 1.0893 after a bounce off 1.0800 and its 100-day moving average yesterday:

That sees buyers back in control, hoping for a stronger rebound after the stuttering start to the year. The euro side of the equation hasn’t been of much help but a steep decline in Treasury yields this week has been a key contributing factor to the rebound. We’ll have to see if the strong bids in the bond market will continue later on in the day.

Elsewhere, GBP/USD is also seen up 0.2% to 1.2765 while AUD/USD is up 0.5% to 0.6605 currently. Both pairs are stuck in a bit of a consolidative phase but may search for breakouts just before the weekend. The ceiling for GBP/USD is closer to 1.2800 while for AUD/USD, it is around 0.6615-25. Those will be key levels to be mindful of going into US trading later.

The main event coming up later will be the US jobs report. That will certainly be a key driver in the session ahead, alongside the potential continuation in the strong bids in Treasuries this week. Those are the two main factors that will impact dollar sentiment before the weekend comes along.

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