<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.

<p style=““ class=“text-align-justify“>That comes after a choppy and mixed day yesterday but overall, we are still seeing some key levels in play. The dollar is mostly little changed at the moment with only the pound slightly softer and the yen higher on the day.</p><p style=““ class=“text-align-justify“>EUR/USD is flat at 1.0885 with buyers still hoping to keep the upside momentum in a push above 1.0900 towards 1.1000. But with the Fed fast approaching, we might just see some room for a pause in the move for now. Meanwhile, GBP/USD is keeping just below 1.2400 as buyers are consolidating after a failed push above the December highs of 1.2443-46 at the start of the week.</p><p style=““ class=“text-align-justify“>The commodity currencies are flattish today as well but AUD/USD is holding above 0.7100 as buyers knock on the door of the August highs at 0.7125-36 still. NZD/USD is keeping just below 0.6500 as the figure level continues to provide a key point of resistance for any upside move on the daily chart.</p><p style=““ class=“text-align-justify“>USD/JPY is the only decent mover today but even so, the pair is just down 0.3% to 129.80 with the downside trend still very much intact:</p><p style=““ class=“text-align-justify“>The risk mood is looking more cautious so far today, so let’s see how that progresses once Wall Street steps in and if US PCE data has the potential to provide traders with a trigger for more meaningful moves later in the day.</p>

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

<p>In terms of Russell 2000 technical analysis, the market is trading carefully
ahead of the FOMC meeting next week. The bulls had a good run recently ignoring
the deterioration in leading indicators like PMIs and focusing more on the
lagging ones like employment. </p><p>The labour market data keep on <a target=“_blank“ href=“https://www.forexlive.com/news/us-weekly-initial-jobless-claims-186k-vs-205k-expected-20230126/“ target=“_blank“ rel=“follow“>beating
expectations</a> with little sign of weakness. This, coupled
with <a target=“_blank“ href=“https://www.forexlive.com/news/us-december-cpi-65-yy-vs-65-expected-20230112/“ target=“_blank“ rel=“follow“>moderation
in inflation</a>, gave the market hopes for a “soft landing”
scenario where
inflation returns to its target without much damage in the economy and the Fed
can ease its monetary policy for a happily ever after ending. </p><p>That would be certainly an
unexpected and amazing outcome, but the signals from economic data are mixed
and the Fed is more likely to keep policy tight as long as the labour market
remains tight. Watch out for the next week events because not only we will
have the <a target=“_blank“ href=“https://www.forexlive.com/centralbank/wsj-fed-insider-says-its-open-market-committee-fomc-preparing-a-25bp-rate-hike-next-week-20230122/“ target=“_blank“ rel=“follow“>FOMC
Policy Decision</a>, but we will also get three major economic
reports: the two ISM PMIs and the NFP.</p><p>RUSSELL
2000 Technical Analysis</p><p>In the
daily chart above, we can see that the price is again at the <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-support-and-resistance-20220405/“ target=“_blank“ rel=“follow“>resistance</a> at 1910-1920 zone. The market
hasn’t broken that resistance since September 2022, and it will need a good
catalyst for the bulls to manage a breakout and a rally to the next
resistance at 2030. </p><p>If the
market fails again and the sentiment turns sour, we may see the bears taking
control and possibly targeting the lows at 1630. The next week should be
decisive for the next move. </p><p>In the 1-hour chart above, we can
see how the <a target=“_blank“ href=“https://www.forexlive.com/news/us-december-retail-sales-11-vs-08-expected-20230118/“ target=“_blank“ rel=“follow“>big
miss in Retail Sales</a> data sent the market lower right from the
resistance before picking up again with a <a target=“_blank“ href=“https://www.forexlive.com/news/initial-us-jobless-claims-190k-versus-214k-estimate-20230119/“ target=“_blank“ rel=“follow“>beat
in Jobless Claims</a> data still showing a resilient labour market. </p><p>Russell 2000 Eyes Key US Data</p><p>Yesterday, although we got
another beat in economic data like <a target=“_blank“ href=“https://www.forexlive.com/news/us-q4-advance-gdp-29-vs-26-expected-20230126/“ target=“_blank“ rel=“follow“>Q4
GDP</a> and Jobless Claims, the market couldn’t break the
resistance. This may be a sign of cautiousness as the next week there are many
risk events like FOMC, ISM PMIs and NFP. It’s probably going to be choppy
heading into those events.</p><p>Zooming in to the 15 minutes
chart, we can see the near term price action with the market selling off right
at the stock market open and then recovering soon after. The 1903 level should
provide some support for the bulls, but the resistance zone at 1910-1920 has
been a tough one to crack. </p><p>If the 1903 <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-support-and-resistance-20220405/“ target=“_blank“ rel=“follow“>support</a> gets breached, the bears should
target the next support level at 1886 with a possible continuation to
1862 if the market turns fearful. </p>

This article was written by ForexLive at www.forexlive.com.

<p style=““ class=“text-align-justify“>Here’s a snapshot of the major currencies space (which is not much different to what it was roughly three hours ago <a target=“_blank“ href=“https://www.forexlive.com/news/light-changes-among-major-currencies-to-start-the-session-20230126/“ target=“_blank“ rel=“follow“>here</a>):</p><p style=““ class=“text-align-justify“>There’s just a general lack of interest in markets for the time being, even with equities holding slightly firmer on the day. European indices are still maintaining slight gains while US futures are also a little higher currently. S&P 500 futures are up 0.2% while Nasdaq futures are up 0.6%, buoyed by Tesla’s record revenue and earnings beat.</p><p style=““ class=“text-align-justify“>But perhaps market players are waiting on key US data later, with other factors also in consideration:</p><ul><li><a target=“_blank“ href=“https://www.forexlive.com/news/heads-up-watch-out-for-the-us-pce-data-tomorrow-20230126/“ target=“_blank“ rel=“follow“>Heads up: Watch out for the US PCE data tomorrow</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/month-end-rebalancing-should-see-the-us-dollar-underperform-morgan-stanley-20230126/“ target=“_blank“ rel=“follow“>Month-end rebalancing should see the US dollar underperform – Morgan Stanley</a></li></ul>

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

<ul><li>Prior 11</li></ul><p style=““ class=“text-align-justify“>UK retail sales volumes fall at its fastest pace since April with expected retail sales for February seen at -15 (vs -17 in January). That continues to underscore a weaker trend in consumption activity as the cost-of-living crisis intensifies across the country.</p>

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

<p style=““ class=“text-align-justify“>Morgan Stanley notes that their month-end rebalancing model expects the dollar to underperform this month, with their signal suggesting weakness in the greenback against all G10 currencies except the Norwegian Krone. That will add some weight to an already struggling dollar since the turn of the year.</p><p style=““ class=“text-align-justify“>Just something to take note of we approach the final few trading days of January.</p>

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