There is no particular headline driving the move but at the same time, risk appetite looks to be sapped after a mildly positive open earlier. European indices are now down around 0.1% to 0.3% with bond yields sitting a little higher on the day. The early flows are translating to a positive start for the dollar, gaining across the major currencies board.

USD/JPY is up 0.6% to 145.75 and is pushing back towards a test of the 50.0 Fib retracement level of the swing lower from November to December, seen at 146.07.

Elsewhere, GBP/USD is down 0.3% to 1.2715 at the lows for the day while USD/CAD is also up 0.1% to 1.3420 from around 1.3390 earlier. The antipodeans are also struggling with AUD/USD down 0.4% to 0.6655 and NZD/USD down 0.9% to 0.6185. The latter is threatening a steeper technical drop as highlighted earlier here.

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

• Prior -0.7%

The reading matches estimates with the breakdown as per the following:

• Durable consumer goods -2.0%
• Capital goods -0.8%
• Intermediate goods -0.6%
• Energy +0.9%
• Non-durable consumer goods +1.2%

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

• Prior €11.1 billion

The seasonally adjusted trade balance also shows an improving surplus of €14.8 billion, where exports were seen up 0.9% on the month while imports fell by 0.6% on the month.

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

Last week, the S&P 500 closed around the highs
as the market continued to trade on the soft-landing narrative. In fact,
despite the slightly higher than expected US CPI figures,
the US Jobless Claims improved
further and the US PPI data
missed forecasts. Moreover, the Fedspeak has been generally neutral with no
strong pushback against the market’s rate cuts expectations. Today, the market
will be closed for MLK Day, but we will have some important events throughout
the week.

S&P 500 Technical
Analysis – Daily Timeframe

On the daily chart, we can see that the S&P 500
ended the last week around the highs with the market continuing to see a
goldilocks economy with falling inflation and stable employment and growth. We
can expect the sellers to step in around the all-time high with a defined risk
above it to position for a drop into the 4700 support first
and upon a further break, target the 4547 level.

S&P 500 Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that the
price is diverging with
the MACD right
at the all-time high. This is generally a sign of weakening momentum often
followed by pullbacks or reversals. This might be another bearish confluence for
the sellers and should give them a bit more conviction for a correction into
the 4700 level. The buyers, on the other hand, will likely increase the bullish
bets on a break of the all-time high.

S&P 500 Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can see more
closely the current price action and we can see that we have a minor trendline
defining the current bullish momentum. The buyers will likely keep on leaning
on the trendline to position for further upside. The sellers, on the other
hand, will want to see the price
breaking lower to pile in and target the 4700 support.

Upcoming Events

Tomorrow, all eyes will be on Fed’s Waller as the
market will be eager to see if he decides to pushback against the aggressive
rate cuts expectations. On Wednesday, we will get the US Retail Sales report
while on Thursday we will see the latest US Jobless Claims figures. Finally, on
Friday, we conclude the week with the University of Michigan Consumer Sentiment
survey.

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

UPCOMING EVENTS:

• Monday: PBoC
  MLF, US Markets closed for MLK Day, BoC Business Outlook Survey.
• Tuesday: UK
  Labour Market report, Canada CPI, Fed’s Waller.
• Wednesday: China
  Industrial Production and Retail Sales, UK CPI, US Retail Sales, US
  Industrial Production, US NAHB Housing Market Index.
• Thursday:
  Australian Labour Market report, ECB Minutes, US Building Permits and
  Housing Starts, US Jobless Claims, New Zealand Manufacturing PMI.
• Friday: Japan
  CPI, UK Retail Sales, Canada Retail Sales, US University of Michigan
  Consumer Sentiment.

Monday

The PBoC will conduct the MLF operation on
Monday and we will see if they decide to lower the rate or keep it unchanged at
2.50%. There are some
expectations for a 10 bps cut
tomorrow which would set the stage for a cut for the LPR rates as well.
The latest Chinese
inflation data continues to show
deflationary pressures which gives the PBoC ample room to ease their policy
further.

Tuesday

The UK Unemployment Rate is expected to
tick higher to 4.3% vs. 4.2% prior.
The average earnings excluding bonus are seen at 6.6% vs. 7.3% prior, while
those including bonus are seen at 6.8% vs. 7.2% prior. This report is unlikely
to change anything for the BoE as the central bank continues to support a “wait
and see” approach, but the market’s pricing will certainly be influenced by
the data with more to come the following day with the release of the UK CPI
report.

The Canadian CPI Y/Y is expected at 3.3%
vs. 3.1% while the M/M measure is seen at -0.3% vs. 0.1% prior. The BoC is
focused on the underlying inflation measures (common, median and trimmed-mean)
and although the rates are getting closer to the 1-3% target range, Governor
Macklem said that they want to see more progress both on inflation and wage
growth fronts. As a reminder, the last reports went in the opposite
direction with underlying inflation
measures ticking higher and wage
growth accelerating.

Given the recent aggressive easing in
financial conditions, it’s worth noting that Fed’s Waller will give a speech at
Brookings on the economy and monetary policy with a Q&A session to follow. Waller
is a key FOMC member because he’s been a “leading indicator” for changes in
Fed’s policy. He was the first one talking about QT in December 2021 and
the first one mentioning rate cuts in November 2023.

Wednesday

The UK CPI Y/Y is expected at 3.8% vs.
3.9% prior,
while the M/M measure is seen at 0.2% vs. -0.2% prior. The Core CPI Y/Y is
expected at 4.9% vs. 5.1% prior, with no consensus for the M/M figure although
the prior release showed a -0.3% fall. Again, this report will have no
bearing on the February BoE meeting but will certainly affect the market’s
pricing with the first cut expected in May and a total of 125 bps of cuts
seen by year-end.

The US Retail Sales M/M are expected at
0.4% vs. 0.3% prior,
while the ex-autos measure is seen at 0.2% vs. 0.2% prior. Also watch the
Control Group as it’s regarded as a better gauge of consumer spending, and it’s
been beating expectations consistently for several months.

Thursday

The Australian Unemployment Rate is
expected to remain unchanged at 3.9% with 18K jobs added in December compared
to 61.5K seen in November.
This report will have no bearing on the February RBA meeting, but it will
influence the market’s pricing, with a weak report likely increasing rate cuts
expectations after the recent miss in the Monthly
Australian CPI data.

The US Jobless Claims
continue to be one of the most important releases every week as it’s a timelier
indicator on the state of the labour market. Initial Claims keep on hovering
around cycle lows, while Continuing Claims after reaching a new cycle high
started to trend lower. This week the consensus sees Initial Claims at 207K
vs. 202K prior, while there’s no estimate at the
time of writing for Continuing Claims, although the last week’s number was 1834K
vs. 1868K prior.

Friday

The Japanese Core CPI Y/Y is expected at
2.3% vs. 2.5% prior.
The headline inflation measure has been easing steadily in Japan thanks to
energy deflation but the Core-Core measure, which excludes food and energy
prices, has been doing so at a slower pace. The Tokyo
CPI, which is seen as a leading indicator for
National CPI, decreased further recently and the Average
Cash Earnings showed a much slower
than expected growth rate. This has pushed expectations for a normalisation
of monetary policy further away as the conditions the BoJ is looking for are
not materialising.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

On Thursday — just 30 minutes after the launch of the first US spot ETFs — bitcoin touched a 21-month high of $49,051.

The peak of the hype in the first half hour is exactly what you would have expected but in the two days that followed, it’s fallen 12%, raising some big questions about what comes next.

First off, there was no way the results were going to match the hype. US investors already have plenty of ways to access bitcoin, including via Coinbase and other exchanges, the BITO futures ETF and many other highly-correlated products. There’s something to be said about a pure spot ETF that owns the underlying asset but how big is the market for it really?

The results from the first two days are sobering.

I had conservatively estimated at least $4 billion in inflows into the 11 ETFs based on the experience in Canada, where the BTCC ETF attracted $421 million in inflows in the first two days of trading.

Consider:

• The US is 10x bigger than Canada by population
• The US is even larger when adjusting for GDP and FX
• International investors would be much more inclined to buy a US ETF than a Canadian one
• The fees around 0.2% are much lower than the 1.5% in Canada
• The hype was much larger for the US ETFs

Again, because of all that I thought inflows of $4 billion were very conservative.

So what are the results?

Just $1.4 billion is sitting in the 10 truly new ETFs — a drop in the bucket of the $840 billion market cap of bitcoin.

Even worse, the Grayscale GBTC ETF, which converted from a closed end fund, saw $579m in outflows and the pre-existing BITO futures ETF saw $151m in outflows so the net inflows were just $652 million. That’s scarcely 50% more than the Canadian one. In fact, after the first two days of trading, the Canadian ETF at $421 million would rank in third place, only scarcely behind the Fidelity FBTC at $422m and Blackrock’s IBIT at $498 million.

Now, some are trying to spin the individual ETF AUM numers as a success against the long history of 3000 ETFs but comparing these launches to the no-hype, no-demand launches of the myriad of ETFs out there is entirely disingenous. This was the event that spurred a 50% rally in bitcoin’s price; all for just 0.077% of its market cap and got wall-to-wall coverage on CNBC.

To see just how disappointing this is, you only have to go back to some pre-launch estimates.

For some more-credible estimtates:

• Standard Chartered predicted $100 billion of flows into bitcoin ETFs by end of this year.
• Bloomberg predicted $50 billion by year end and as much as $4 billion in day one

Even if you ignore the $30 billion which should flow out of the high-cost GBTC into the 10 low-fee ETFs, those numbers now look wildly optimistic.

A crypto ETF launch is like opening weekend at a box office — especially ETFs as well-advertized as these ones — your opening weekend is highly predictive of the total take-home.

Again, the Canadian ETF is instructive. It’s $421m two-day total only doubled at the end of two months, finished the year at $741m and didn’t sustainably rise above $1 billion until this year (it’s at $2b currently).

If the new ETFs follow that path, they would have just $2.4 billion by year end… and that’s excluding GBTC, BITO, Coinbase and BTCC.U outflows.

The BITO futures ETF brought in $1.1 billion in its first two days in 2021, almost double the to $652m net of these new ETFs. It didn’t get above $1.4 billion until October of 2023.

Looking at the 25 largest ETF launches ever, none of them have had meaningful flows beyond the first day since the stone ages of ETFs.

And here’s a reminder of how bitcoin did after BITO:

Now some are arguing that it will take longer for institutional money to show up and that the post-launch fall in bitcoin wasn’t exactly conductive to inflows. I agree there was also plenty of talk about sell-the-fact so maybe the tide turns if/when bitcoin prices start to rise but at this point, but I’m going to need to see it to believe it.

So far, I wouldn’t classify this launch as anything less than disastrous.

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

• US December PPI 1.0% vs 1.3% expected
• ECB’s Lane: Interest rate cuts are not a near-term topic
• Baker Hughes oil rigs -2 in the current week to 499
• The state of the US consumer and the economic risks, according to JP Morgan
• US says it expects some sort of retaliation from the Houthis
• Canadian retail spending ticked lower in December – RBC
• Reminder: Monday is a holiday in the US

Markets:

• Gold up $19 to $2047
• US 10-yaer yields down 3.4 bps to 3.94%
• US 2-year yields down 11 bps to 4.15%
• WTI crude oil up 77-cents to $72.72
• S&P 500 up 4 points to 4783
• JPY leads, EUR lags

The big question everyone is asking for the second day is: Why such a strong bid in two-years? Yields are down 25 bps since the post-CPI peak on Thursday with a near-relentless bid. There was some ammunition with a softer PPI number today and others are pointing to Yemen and the upcoming PCE report factors but that’s a stretch.

Curiously, other markets didn’t really buy into what was happening in bonds, sparking talk (unfounded so far as I can tell) that some kind of fund blowup might be behind the moves. The US dollar initially fell with yields, boosting the euro to 1.0986 — a session high — but it slowly backed off to 1.0949 last.

Most dollar trades followed a similar path of strength early in the day with a reversal as Europe closed up shop. Importantly, the US is closed on Monday so that could have created some lumpy flows.

As for Yemen, oil rallied to $75.25 early only to slide all the way back to $72.79 on steady selling in New York. That’s typical of geopolitical events that don’t truly touch on oil supply (though I acknowledge the risks). The US continues to say that it doesn’t want a war.

Have a wonderful weekend.

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

The major US stock indices are ending the day with mixed results. The Dow was lower on the day and although both the S&P and Nasdaq closed higher, it was only by modest changes. Nevertheless, the Nasdaq is now up 6 consecutive days after starting the New Year on the back foot by moving sharply lower. The last two days, however, have only risen by about 0.02%

The final numbers are showing:

• Dow Industrial Average is down -118.06 points or -0.31% at 37592.99
• S&P is closing up 3.61 points or 0.08% at 4783.84
• Nasdaq is closing up 2.56 points or 0.02% at 14972.75.

For the trading week, the major indices are ending with gains after declines last week that snapped 9-week gains for the S&P and the Nasdaq indices:

• Dow Industrial Average rose 0.34%. Last week the index fell -0.59%.
• S&P index rose 1.84%. Last week the index fell -1.52%.
• NASDAQ index rose 3.09%. Last week the index tumbled -3.25%.

A negative – at least technically – is that the S&P index moved above is all-time high closing level both yesterday and today, only to close below that level on each of the days. The high closing level is at 4796.57. The high price today reads 4802.40.. The high price yesterday reached 4798.50.

The earning season got underway with JPMorgan, Citi, Wells Fargo announcing.

Next week, other financial institutions are scheduled to release including

• Tuesday: Morgan Stanley, PNC, Goldman Sachs
• Wednesday Citizens Financial Group, U.S. Bancorp, Discover
• Thursday: Key Bank, M&T Bank, Truist, Northern Trust
• Friday: State Street, Comerica, Ally

Thinking about other earnings releases going forward? Below is a summary of the earnings calendar for some of the major companies:

• January 23: Netflix, 3M, Intuitive Surgical, Verizon, Johnson & Johnson, P&G
• January 24: Tesla, IBM, servicenow
• January 25: Intel, Southwest Airlines, Northrop Grumman
• January 26, Caterpillar, American Express
• January 30: AMD, Pfizer, GM, UPS, Stryker
• January 31: Microsoft, MasterCard, Boeing, Phillips 66, Boston Scientific
• February 1: Apple, Meta, Alphabet, Merck, Honeywell, Amazon
• February 2: Chevron, Exxon
• February 5: McDonald’s
• February 6: Ford, Chipotle
• February 7: Walt Disney, PayPal, McKesson
• February 8: ConocoPhillips
• February 9 PepsiCo

Thank you for your support. Wishing all a happy and healthy weekend.

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

The AUDUSD technicals are closing what has been an up-and-down trading week with a bias to the downside. That is a result, of the price action that has taken the price back below the 200 and 100-hour MAs at 0.6711 and 0.6700. Staying below those MAs tilts the bias more to the downside.

Although the bias is more to the downside, this week’s trading had several different shifts in that bias including the price action today.

• The price highs today moved up to test the low of what is a topside swing level between 0.6727 to 0.6738.
• On the downside today, the low of the day, bottomed near the low of a swing area that formed a floor for the early part of the week at 0.6676.

The price did move below that level on Thursday after the stronger-than-expected CPI, but the momentum could not be sustained and the price rebounded back higher setting up the ups and downs today.

The video above outlines the levels in play as the trading comes to an end, and traders look to the new week.

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

Retail spending from Canadian consumers at the country’s largest bank suggests a slight decrease in spending, with hardly any improvement year-over-year.

„Purchases of physical merchandise (excluding motor vehicles) ticked lower in December,“ RBC said in its month spending tracker, which is based on its cardholder data.

Spending on gifts was up just over 4% this year in Nov/Dec in nominal terms, just ahead of the 3% y/y inflation rate. However for December alone, both discretionary goods and services spending ended on a softer note.

Canadians continue to feel the squeeze of higher interest rates, but softer broader economic growth data (per-person GDP is on track to decline for a 6th consecutive quarter in Q4 2023) is bringing the Bank of Canada closer to a potential pivot to interest rate cuts, likely in the middle of the year in our own forecast.

Read the full report

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