On Wednesday, the stock market exhibited a blend of movements as the S&P 500 set a new record high, driven by a technology stock rally led by Netflix. While the S&P 500 and Nasdaq Composite saw positive gains, the Dow Jones Industrial Average faced a slight decline due to notable drops in Verizon and 3M following earnings reports. Netflix’s remarkable 10% surge, supported by an all-time high subscriber count, contributed to the broader tech sector’s strength in 2024. Microsoft and Meta also made significant gains, pushing the S&P 500 to record levels and confirming a new bull market. However, not all companies shared in the positive momentum, with AT&T and DuPont De Nemours facing setbacks. In the currency market, the dollar index declined, influenced by China’s stimulus measures, impacting pairs like USD/JPY and EUR/USD. The article concludes with a look ahead at upcoming economic data releases, central bank meetings, and geopolitical factors influencing the dynamic currency market.

Stock Market Updates

The stock market experienced mixed movements on Wednesday, with the S&P 500 reaching a new record high, driven by a rally in technology stocks led by Netflix. The S&P 500 edged up 0.08% to close at 4,868.55, establishing a fresh all-time closing record, while the Nasdaq Composite gained 0.36%, marking the fifth consecutive day of positive performance for both indices. However, the Dow Jones Industrial Average slipped 0.26% to 37,806.39, impacted by notable declines in Verizon and 3M following their earnings reports. Netflix saw a significant surge of over 10% after announcing an all-time high subscriber count of 260.8 million and surpassing analysts’ revenue estimates, contributing to the broader tech sector’s strong performance in 2024.

In addition to Netflix’s positive impact, Microsoft’s shares rose nearly 1%, briefly pushing its market value above $3 trillion for the first time, while Meta advanced 1.4%, surpassing a $1 trillion market cap. These gains, along with the strong performance of communication services and information technology stocks, propelled the S&P 500 to record highs and confirmed a new bull market. However, not all companies shared in the positive momentum, with AT&T slipping about 3% due to lower-than-expected earnings, and DuPont De Nemours tumbling 14% after preannouncing weak fourth-quarter results and issuing disappointing first-quarter guidance. Traders continued to focus on earnings reports, with Tesla, Las Vegas Sands, and IBM scheduled to release results after the market close. As of the current earnings season, more than 71% of S&P 500 companies that have reported quarterly financials have exceeded Wall Street expectations, according to FactSet.

Data by Bloomberg

On Wednesday, the overall market saw a marginal increase of 0.08%. Notable positive performances were observed in the Energy sector, which gained 1.43%, followed by Communication Services at 1.17%, and Information Technology at 0.77%. Conversely, the

Consumer Staples, Real Estate, Utilities, and Materials sectors experienced declines of -1.23%, -1.36%, -1.38%, and -1.40%, respectively. The Consumer Discretionary sector also saw a modest decrease of -0.24%. Sectors such as Industrials and Health Care reported larger declines of -0.64% and -0.91%, respectively.

Currency Market Updates

In the currency market updates, the dollar index experienced a 0.45% decline, driven by risk-on sentiments influenced by China’s stimulus measures. The USD/JPY pair saw a significant drop due to rising Japanese Government Bond (JGB) yields in response to the Bank of Japan’s somewhat hawkish meeting earlier in the week. However, a rebound in U.S. flash Purchasing Managers’ Index (PMI) numbers contributed to lifting Treasury yields and helping the dollar recover from its lows. The EUR/USD pair rose by 0.38%, reaching a high of 1.0930 before the U.S. PMI release. The positive impact of the U.S. manufacturing and service sector readings beating forecasts was tempered by a cooling price received index.

Looking ahead, attention in the currency market is shifting to upcoming hard U.S. data ahead of the Federal Reserve meeting next week. Key events include Q4 GDP and jobless claims on Thursday, followed by core Personal Consumption Expenditures (PCE), income, and spending on Friday. Additionally, post-European Central Bank (ECB) meeting events on Thursday may provide hints regarding the timing of the first rate cut, which is currently favored for April. Tokyo CPI data on Friday will also be closely monitored amid speculation about a Bank of Japan rate hike, with April’s BoJ meeting seen as the earliest potential venue for such a move. The article also notes the market’s modest preference for a March Fed rate cut in futures. Overall, the currency market remains dynamic, responding to a combination of economic data releases, central bank meetings, and geopolitical developments.

Picks of the Day Analysis

EUR/USD (4 Hours)

EUR/USD Surges as Intense Greenback Sell-Off and Positive Economic Indicators Overpower Rate Cut Speculations

In a surprising turn of events, the intense sell-off in the greenback allowed EUR/USD to overcome recent weaknesses, pushing past the 1.0900 hurdle and reaching new multi-day highs. The USD Index (DXY) faced headwinds in the risk-friendly environment, dropping below 103.00 despite an uptick in US yields. Speculation shifted away from a Fed rate cut in March, favoring a reduction in May. Contributing to the Euro’s strength were robust PMIs in Germany and the eurozone for January, suggesting a potential soft landing for the regional economy. As the ECB event approaches, market participants are weighing in on potential rate cuts, with debates arising on the timing of the central bank’s decision, further fueled by President Lagarde’s hints at a move during the summer.

Chart EUR/USD by TradingView

On Wednesday, the EUR/USD moved higher, able to reach the upper band of the Bollinger Bands. Currently, the price is moving back lower to reach below the middle band, suggesting a potential downward movement to reach the lower band. Notably, the Relative Strength Index (RSI) maintains its position at 47, signaling a neutral outlook for this currency pair.

Resistance: 1.0890, 1.0954

Support: 1.0814, 1.0745

XAU/USD (4 Hours)

US Dollar Strengthens as Upbeat Data Pushes Gold (XAU/USD) to Weekly Low

In the American session, the US Dollar gained momentum, driving Gold (XAU/USD) down to $2,011.72, marking a fresh weekly low. The surge was fueled by optimistic US economic data, particularly the January Producer Manager Indexes (PMIs) released by S&P Global. Manufacturing output improved to 50.3, surpassing the previous 47.9 and reaching the highest reading in over a year. The Services PMI also exceeded expectations at 52.9, indicating the sharpest business activity growth in seven months. While the Bank of Canada (BoC) left its key rate unchanged at 5%, the statement was slightly more hawkish, reducing the likelihood of an April rate cut. Despite this, stock markets maintained a positive tone, with Wall Street resuming its record rally on better-than-anticipated earnings reports, signaling overall economic health.

Chart XAU/USD by TradingView

On Wednesday, XAU/USD moved lower and was able to reach the lower band of the Bollinger Bands. Currently, the price moving around the lower band suggesting a potential upward movement to reach the middle band. The Relative Strength Index (RSI) stands at 43, signaling a neutral outlook for this pair.

Resistance: $2,035, $2,052

Support: $2,010, $1,993

Economic Data

Forex Daily Analysis: 25 Jan 2024

CURRENCIES:

Overview: Gold and Silver Struggle

• Heavyweight US data releases anticipated later this week.
• Latest Fed rate expectations indicate six quarter-point cuts this year.
• Gold and Silver prices experience challenges, but the sell-off is contained.

US Rate Expectations: A Shift in Outlook

• New assessment suggests six quarter-point cuts, with the first expected in May.
• Contrast to the previous week, where seven cuts were forecasted, starting in March.
• The UST 2-year daily yield rises from 4.14% to 4.40%, signaling a moderation in rate cut expectations.

Upcoming US Economic Data Releases

• Three key releases scheduled for the week: US Q4 GDP on Thursday, Durable Goods report, and Core PCE report on Friday.
• These releases closely monitored by the Fed in anticipation of next week’s FOMC meeting.

Gold Price Action and Trading Range

• Gold currently trades within a $2,000/oz. – $2,040/oz. range.
• Series of higher lows provide support, while price action around the 20- and 50-day moving averages remains uncertain.
• Potential break lower could target prior support at $1,987/oz.

Retail Trader Sentiment for Gold

• Retail trader data indicates 59.13% are net-long.
• Changes show a 7.39% decrease in net long positions compared to yesterday.
• Weekly changes indicate a 4% reduction in net long positions.

Silver’s Recovery and Chart Analysis

• Silver rebounds today after a multi-week sell-off from late December.
• Brief dip below $22/oz. on Monday, followed by a recovery, currently trading approximately 1.1% higher.
• The cluster of lows around $20.71 from early October may face renewed pressure.

Learn More About Online Forex Trading here.

STOCK MARKET:

S&P 500 Soars to New Highs:

• The S&P 500 (^GSPC) continues its record-setting rally, surging nearly 0.3% to achieve a new closing high of 4,864.61.
• Nasdaq Composite (^IXIC) also gains momentum, rising 0.4%, while Dow Jones Industrial Average (^DJI) experiences a slight dip of about 0.2% following its breakthrough above 38,000 on Monday.

Sector Performances:

Winners:

• Consumer Staples (XLP) and Communications Services (XLC) lead gains in the S&P 500.
• Staples surge over 1%, with notable quarterly results from Procter & Gamble (PG) and Verizon (VZ).

Earnings Impact on Dow:

• Dow faces a setback as 3M (MMM) drops over 10% due to a 2024 profit outlook below Wall Street’s expectations.

Earnings-Driven Moves:

Positive Outlook Lifts Airlines:

• United Airlines (UAL) provides an optimistic 2024 profit forecast, boosting its shares by 5%.
• Positive momentum extends to other airlines, including Delta (DAL) and American Airlines (AAL).

Tech Focus – Netflix (NFLX):

• Netflix (NFLX) takes the spotlight with earnings reported after the bell.
• The company announces a deal with TKO Group’s WWE (TKO), impacting TKO shares positively.

Ongoing Developments:

3M (MMM) Earnings Disappointment:

• Dow affected by a more than 10% drop in 3M (MMM) shares due to a below-expectation 2024 profit outlook.

United Airlines (UAL) Resilience:

• Despite warnings about the Boeing 737 Max 9 planes’ grounding impact, United Airlines (UAL) shares rise with an upbeat 2024 profit forecast.

Netflix (NFLX) Partnership:

• Netflix (NFLX) strikes a deal with TKO Group’s WWE (TKO), leading to a nearly 15% rise in TKO shares.

Outlook and Market Dynamics:

• Earnings in various sectors contribute significantly to market movements.
• Ongoing focus on corporate America’s health and economic indicators.
• Continued attention to tech-driven rallies and sector-specific earnings for market insights.

Ready to trade in these dynamic markets? Join VT Markets today and start trading with our Copy Trading Tool – Vtrade.

Dear Client,

Please note that the dividends of the following products will be adjusted accordingly. Index dividends will be executed separately through a balance statement directly to your trading account, and the comment will be in the following format “Div & Product Name & Net Volume ”.

Please refer to the table below for more details:

The above data is for reference only, please refer to the MT4/MT5 software for specific data.

If you’d like more information, please don’t hesitate to contact [email protected].

After Netflix’s stellar fourth-quarter performance, Nasdaq 100 futures experienced a significant boost in Tuesday evening trading. Fueled by Netflix’s impressive subscriber growth of 13 million, reaching a record 260.8 million, tech-heavy Nasdaq 100 futures rose by 0.28%, contributing to the broader strength of mega-cap tech stocks and propelling the S&P 500 to record highs. While the Dow Jones Industrial Average futures showed a more restrained response, Netflix’s positive performance extended beyond subscriber gains, with an 8.6% surge in extended trading. The article delves into the factors driving Netflix’s success and the resilience of tech stocks amid mixed market performances, offering insights into currency market dynamics and the potential impact on various economies, particularly Japan, as they navigate higher rates and potential rate cuts. The narrative also previews upcoming economic data, emphasizing the market’s focus on the European Central Bank meeting, U.S. Q4 GDP, and core PCE readings for further guidance on Fed and dollar pricing.

Stock Market Updates

In the wake of Netflix’s strong fourth-quarter performance, futures linked to the Nasdaq 100 experienced a notable uptick during Tuesday evening trading. The tech-heavy Nasdaq 100 futures rose by 0.28%, driven by Netflix’s robust results, which revealed a record-breaking subscriber count of 260.8 million, an increase of over 13 million in the last quarter. The streaming giant’s impressive gains contributed to the broader strength of mega-cap tech stocks in 2024, propelling the S&P 500 to record highs and confirming the onset of a new bull market. However, the Dow Jones Industrial Average futures only edged up by 0.05%, with a marginal increase of 19 points, reflecting a more subdued response possibly influenced by disappointing earnings and guidance from certain blue-chip companies during the main trading session.

Netflix’s positive performance extended beyond subscriber growth, as its shares surged by 8.6% in extended trading. The company not only exceeded revenue expectations but also provided optimistic earnings guidance for the current quarter, surpassing Wall Street forecasts. Analysts attribute Netflix’s success to the strength of its ad-tier business scaling, particularly in the latter part of the previous year, and its efforts to curb password sharing. As traders keep an eye on upcoming economic data, including U.S. manufacturing and services statistics for January and fourth-quarter gross domestic product figures, the broader market dynamics underscore the resilience of tech stocks amid mixed performances in other sectors, as exemplified by the Dow’s slight retreat during the main trading session.

Data by Bloomberg

On Tuesday, the overall market experienced a modest gain of 0.29%. Noteworthy performances were observed in the Consumer Staples (+1.08%), Communication Services (+1.00%), and Information Technology (+0.45%) sectors, contributing positively to the overall uptrend. However, the healthcare sector showed a slight decline with -0.05%, while Industrials (-0.06%), Consumer Discretionary (-0.14%), and Real Estate (-0.51%) sectors exhibited marginal losses, indicating a mixed day for different segments of the market. The Financials (+0.14%), Energy (+0.34%), and Materials (+0.32%) sectors also contributed to the overall positive sentiment with modest gains.

Currency Market Updates

In Tuesday’s currency market updates, the dollar index exhibited a 0.36% increase, recovering from earlier losses spurred by a brief yen rise following a somewhat more hawkish Bank of Japan (BoJ) meeting. The EUR/USD pair broke below key support from the previous week as Treasury yields outpaced bund yields. Despite the BoJ expressing confidence in ending its negative rates policy later in the year and the market leaning towards a 10-basis point June hike to zero, 2-year Japanese Government Bond (JGB) yields only rose to 0.06%. The article highlights how various economies, particularly Japan, can manage higher rates or a gradual retreat from previous rate hikes. The U.S. appears more resilient, having raised rates more than other major central banks, with futures markets not fully pricing in a Federal Reserve rate cut until May.

EUR/USD experienced a 0.45% decline, breaking key technical supports such as the daily cloud top and the 200-day moving average. USD/JPY initially dropped to 146.99 lows in response to the BoJ meeting but found support near the 10-day moving average and 147, leading to a 0.3% increase on the day. The article points out the potential challenge of testing the Ministry of Finance’s desire to prevent the yen from falling below 2022/23 lows at 151.94/92 if U.S. data continues to suggest fewer Fed rate cuts. Meanwhile, sterling fell 0.35%, despite rising Gilt-Treasury yield spreads, and is closely watched ahead of the Bank of England’s meeting on February 1. The focus for the rest of the week includes the European Central Bank meeting, U.S. Q4 GDP, and Friday’s core PCE for further Fed and dollar pricing guidance, with the flash January PMI readings as a key data feature on Wednesday.

Picks of the Day Analysis

EUR/USD (4 Hours)

EUR/USD Hits Multi-Week Lows as Greenback Gains Strength Amid ECB Caution

On Tuesday, the EUR/USD pair extended its decline, reaching fresh multi-week lows in the 1.0820 zone as the selling bias persisted in the risk complex. The USD Index (DXY) soared to a new yearly high of 103.80, driven by a robust buying bias in the greenback, higher US yields, and an overarching risk-off sentiment. The upcoming ECB event is marked by a growing debate between market participants and rate-setters regarding the timing of potential rate cuts, with President Lagarde hinting at a possible move in the summer. Despite inflation surpassing the ECB target, cautious policymaking in the face of weak economic fundamentals continues to limit the Euro’s potential for strengthening.

Chart EUR/USD by TradingView

On Tuesday, the EUR/USD moved lower, able to reach the lower band of the Bollinger Bands. Currently, the price is moving just above the lower band, suggesting a potential upward movement to reach the middle band. Notably, the Relative Strength Index (RSI) maintains its position at 41, signaling a neutral but bearish outlook for this currency pair.

Resistance: 1.0890, 1.0954

Support: 1.0814, 1.0745

XAU/USD (4 Hours)

XAU/USD Holds Steady Above $2,020 Amidst Market Volatility and Economic Indicators

Gold (XAU/USD) maintained a tight trading range just above $2,020 per troy ounce on Tuesday, propelled initially by a weakening US Dollar in response to record highs in the S&P 500 and Dow Jones Industrial Average. The precious metal’s rally in the first half of the day was influenced by market optimism regarding a potential interest rate cut by the Federal Reserve. However, the USD regained strength later in the day as equities faced losses, driven by caution ahead of earnings reports and concerns about macroeconomic events in the coming days. Despite disappointing US data, gold remained resilient, with attention turning to the Bank of Canada’s upcoming monetary policy decision.

Chart XAU/USD by TradingView

On Tuesday, XAU/USD moved higher and was able to reach the upper band of the Bollinger Bands. Currently, the price is moving just above the middle band suggesting a potential upward movement to reach the upper band. The Relative Strength Index (RSI) stands at 50, signaling a neutral outlook for this pair.

Resistance: $2,035, $2,052

Support: $2,010, $1,993

Economic Data

Forex Markets Analysis: 23 Jan 2024

CURRENCIES:

• The NASDAQ, S&P 500, and Dow Jones have all achieved new record highs, signaling a complete reversal of the recent stock market dip from December to early January.
• In Japan, the Nikkei 225 has hit a fresh 34-year high, while China’s Hang Seng is experiencing ongoing weakness, attributed to a battle between the Federal Reserve (Fed) and the financial markets.
• The Fed is attempting to talk down interest rates, but market expectations for rate cuts persist, leading to a positive overall sentiment despite some success in lowering rate cut expectations.
• A “Fed blackout period” is currently in effect, with no speeches or comments from Fed members expected ahead of the FOMC meeting on January 31st, creating a quieter news period related to the Fed.
• Turning to the US dollar, it is trading around a 50% retracement level, with the 200-day and 50-day moving averages serving as significant support and resistance levels.
• The US Core PCE, the Fed’s preferred measure of inflation, is anticipated to be a major event for the dollar during the week, potentially influencing its performance.
• In the Eurodollar market, trading within small ranges is supported by the 200-day simple moving average, and upcoming factors such as the German and Eurozone PMIs, along with the ECB monetary policy meeting, could play a crucial role in shaping Eurodollar performance in the coming week.

STOCK MARKET:

• The ongoing equity rout in China has led to an unprecedented $38 trillion gap between the market capitalization of the US stock market and that of Hong Kong and China combined, setting a new record.
• Michael Liang, Chief Investment Officer at Foundation Asset Management HK Ltd., notes that while China presents value, the lack of catalysts is hindering its performance, while the US market benefits from momentum and a favorable economy.
• Global investor sentiment toward China is painted negatively as steep losses continue, contrasting with US stocks that have reached record highs, fueled by a technology rally and optimism about potential Federal Reserve interest rate cuts.
• Since February 2021, Chinese stocks have witnessed a loss of over $6.3 trillion in market value, while US equities have gained $5.3 trillion over the same period.
• Doubts over Beijing’s long-term economic agenda and strategic competition with the US are contributing to what started as a performance-driven exodus potentially becoming a structural shift.
• Bloomberg strategists, including Kumar Gautam, suggest that China’s correction might continue, estimating a 51% probability of the MSCI China Index trading below its peak for an average of 35 months.
• Despite the prolonged rout, some investors see potential for a technical rebound due to attractive valuations. The MSCI China Index is now 60% cheaper than the US equity benchmark based on earnings-based valuations.
• The MSCI Inc.’s key gauge for Chinese equities trades at about eight times 12-month forward estimated earnings, significantly lower than the S&P 500 Index’s 20 times.
• Currently, there is little indication of an end to the challenging start of 2024 for Chinese equities, with a gauge of Chinese stocks listed in Hong Kong already losing 13%, making it the worst-performing major global benchmark index in less than a month.
• Chinese stocks listed in Hong Kong already losing 13%, making it the worst-performing major global benchmark index in less than a month.

Ready to take your trading to the next level amidst these market dynamics? Explore the cutting-edge capabilities of VT Markets’ MetaTrader 5 platform – your gateway to informed and strategic trading in today’s volatile markets. Start now and experience the difference in your trading journey.

Dear Client,

Please note that the dividends of the following products will be adjusted accordingly. Index dividends will be executed separately through a balance statement directly to your trading account, and the comment will be in the following format “Div & Product Name & Net Volume ”.

Please refer to the table below for more details:

The above data is for reference only, please refer to the MT4/MT5 software for specific data.

If you’d like more information, please don’t hesitate to contact [email protected].

On Monday, the Dow Jones Industrial Average achieved a historic high above 38,000, accompanied by a surge in United Airlines’ stock following strong fourth-quarter results. However, concerns about the grounding of Boeing 737 Max 9 planes led to an anticipated first-quarter loss for the airline. The broader market witnessed milestones, with the S&P 500 and Nasdaq Composite reaching all-time highs. Despite the bullish trend, investors remain cautious, especially amid a tech-focused rally. Currency markets showed calm consolidation, and Treasury yields led to a bull yield curve steepening. Market attention turned to the BoJ’s policy meeting, upcoming economic events, and central bank decisions impacting major currencies. The week’s developments include expectations for the Fed’s role in USD/JPY dynamics and varying rate cut predictions for the BoE and ECB, influencing currency performance.

Stock Market Updates

U.S. stock futures showed minimal movement on Monday night, with the Dow Jones Industrial Average reaching a historic high above 38,000. Notably, United Airlines experienced a more than 6% surge in extended trading following robust fourth-quarter results but anticipated a first-quarter loss due to the grounding of Boeing 737 Max 9 airplanes involved in a recent emergency. Other airline stocks, including American Airlines and Southwest Airlines, rose around 3%, while Alaska Air Group and Delta Air Lines climbed approximately 2%.

Monday’s trading session marked significant milestones as the Dow advanced over 100 points, closing above 38,000 for the first time, and both the S&P 500 and Nasdaq Composite reached new all-time highs. Despite the bullish trend, investors are cautious about the sustainability of gains, particularly as the tech-focused rally contrasts with lackluster broader market participation. The ongoing corporate earnings season adds to market scrutiny, with notable reports expected from Johnson & Johnson, Procter & Gamble, Lockheed Martin before the open, and Netflix after the close on Tuesday.

Data by Bloomberg

On Monday, the overall market saw a modest gain of 0.22%. Several sectors contributed positively, with Industrials leading the way with a notable increase of 0.74%, followed by Real Estate (+0.44%), Financials (+0.43%), Information Technology (+0.39%), and Health Care (+0.38%). Materials and Energy also experienced slight upticks of 0.30% and 0.29%, respectively. However, not all sectors fared well, as Consumer Staples (-0.47%), Utilities (-0.52%), and Consumer Discretionary (-0.52%) witnessed declines, dragging down the overall market performance. Communication Services showed a marginal decrease of 0.04%.

Currency Market Updates

In the currency markets, the dollar, euro, and sterling showed a calm consolidation at the beginning of the week, with profit-taking observed on stretched short yen trades ahead of the BoJ meeting on Tuesday. The dollar index remained flat, EUR/USD held steady, USD/JPY experienced a slight dip of 0.1%, and sterling saw a 0.14% increase. Treasury yields led a broader bull yield curve steepening and a risk-on trend in major government bond and equity markets, except for China. The market’s expectations for a March Fed cut decreased to a 42% probability, down from being fully discounted at the turn of the year, and the expected 150bp of Fed cuts in 2024 was adjusted to 135bp.

The focus turned to the BoJ’s two-day policy meeting concluding on Tuesday, where no significant rate hike expectations were priced in. Modest policy normalization expectations for the yen may be revised lower, leaving Fed policy as the primary driver for USD/JPY. Additionally, upcoming events such as U.S. Q4 GDP, jobless claims, and the Fed’s favored PCE on Friday, as well as the ECB meeting on Thursday, added to the week’s potential market impact. EUR/USD continued to consolidate below key levels, while USD/JPY followed Treasury yields lower but held above crucial support. Sterling outperformed the euro, influenced by the expectation that the BoE would cut rates less than the ECB in the coming year. The yuan remained supported amid a 2.7% dive in the Shanghai Composite, affecting AUD/USD negatively.

Picks of the Day Analysis

EUR/USD (4 Hours)

EUR/USD Navigates Indecision Amidst Diverging Central Bank Sentiments

The new trading week for EUR/USD opened with uncertainty and fluctuating price action tied to the U.S. dollar, accompanied by low volatility on Monday. As market participants anticipate around 120 basis points in rate cuts for the year, a debate ensues between them and the ECB’s rate-setters regarding the timing of the central bank’s decision to reduce the region’s policy rate. Despite inflation surpassing the bank’s target, European policymakers appear inclined to maintain a restrictive stance, hindered by weak fundamentals in the bloc, limiting the upside potential for the European currency. Meanwhile, across the Atlantic, investors are assigning just over a 40% probability to a Federal Reserve rate cut at the March 20 meeting, according to the FedWatch Tool tracked by CME Group.

Chart EUR/USD by TradingView

On Monday, the EUR/USD moved in consolidation, able to reach the middle band of the Bollinger Bands. Currently, the price moving just above the middle band, suggesting a potential upward movement to reach the upper band. Notably, the Relative Strength Index (RSI) maintains its position at 48, signaling a neutral outlook for this currency pair.

Resistance: 1.0954, 1.1000

Support: 1.0863, 1.0814

XAU/USD (4 Hours)

XAU/USD Retreats Amidst Dollar Weakness and Cautious Market Sentiment

Spot Gold experienced a shift in trajectory, rebounding from an early dip to $2,016.42 to trade around $2,024 during the American session, showcasing modest intraday losses. The weakened demand for the US Dollar, influenced by the strength in global indexes and Wall Street’s positive momentum fueled by robust earnings reports, played a pivotal role. However, market participants remain cautious as the upcoming week brings critical economic data releases, including the preliminary estimate of the Q4 Gross Domestic Product (GDP) in the United States. With various central banks revealing their monetary policy decisions, Gold faces a dynamic landscape, navigating uncertainties surrounding economic indicators and inflationary pressures.

Chart XAU/USD by TradingView

On Monday, XAU/USD moved lower and was able to reach the middle band of the Bollinger Bands. Currently, the price moving just above the middle band suggesting a potential upward movement to reach the upper band. The Relative Strength Index (RSI) stands at 46, signaling a neutral outlook for this pair.

Resistance: $2,035, $2,052

Support: $2,010, $1,993

Economic Data

Forex Markets Update: 22 Jan 2024

CURRENCIES:

Equities Forecast:

• US equities, including the S&P 500 and Dow Jones, reach fresh all-time highs, propelled by a robust performance in big tech stocks.
• The ongoing Q4 earnings season, especially results from the ‘Magnificent Seven’ companies, is anticipated to further boost US indices.
• Notably, Microsoft alone holds a significant 7.29% weighting in the S&P 500 index.

US Dollar Performance:

• The US dollar initiates the year with strength, attributed to Federal Reserve Members countering overly optimistic interest rate cut expectations.
• US Treasury yields support the USD against various currencies.
• Precious metals, particularly gold, face pressure as they test the $2,000/oz. level.

Upcoming Events and Releases:

• A multitude of Q4 US earnings releases is scheduled for the upcoming week.
• Key economic events include the closely monitored Bank of Japan Quarterly Outlook Report, significant given elevated USD/JPY levels.
• Thursday brings the European Central Bank (ECB) policy decision, while Friday features the US core PCE release, positioning them as the week’s main attractions.

Monday

• Economic data: Leading Index, December (-0.3%, expected, -0.5% prior)
• Earnings: United Airlines, Logitech, Zions Bancorporation Top of Form

STOCK MARKET:

Market Highlights:

• US equities achieve new record highs with S&P 500, Dow Jones, and Nasdaq Composite in positive territory for January.
• Consumer sentiment data from the University of Michigan boosts positive vibes as consumers express confidence in the economy.

Corporate Earnings:

• Tech results take center stage with Netflix (NFLX) earnings on Tuesday and Tesla (TSLA) on Wednesday.
• Other notable reports include Johnson and Johnson (JNJ), United Airlines (UAL), Verizon (VZ), and AT&T (ATT).
• Overall, one of the busiest weeks for quarterly reports on Wall Street.

Economic Data:

• First reading of Q4 economic growth expected on Thursday.
• Release of the Personal Consumer Expenditures (PCE) Index, the Fed’s preferred inflation gauge, scheduled for Friday.

Economic Growth Outlook:

• Resilient data indicates a potential 2% annualized growth in the US economy for Q4.
• Oxford Economics expresses confidence in the ongoing economic expansion, citing a strong labor market, deceleration in inflation, and looser financial conditions.

Inflation and Rate Cut Speculations:

• Key debate centers on when the Federal Reserve will cut interest rates.
• Investors shift from an 81% chance of a March rate cut to 49%.
• Goldman Sachs chief economist anticipates a March rate cut, driven by a decline in inflation to the target of 2%.

Upcoming Events:

• Federal Reserve in blackout period, focusing attention on earnings as a key driver of stock market sentiment.
• Technology earnings, particularly from large-cap companies, may influence short-term market direction.
• Focus on Netflix demand for new advertising tier and Tesla’s margins, with CEO Elon Musk’s comments under scrutiny.
• Fourth quarter earnings show a weak start, but the narrative is expected to shift to Technology and Communication Services, where growth is anticipated.

Start Your Forex Journey with VT Markets, visit here for more information.

Dear Client,

Please note that the dividends of the following products will be adjusted accordingly. Index dividends will be executed separately through a balance statement directly to your trading account, and the comment will be in the following format “Div & Product Name & Net Volume ”.

Please refer to the table below for more details:

The above data is for reference only, please refer to the MT4/MT5 software for specific data.

If you’d like more information, please don’t hesitate to contact [email protected].

Recent decisions by central banks have significantly influenced global markets. In December 2023, the Bank of Japan (BoJ) and the Bank of Canada maintained key interest rates, while the European Central Bank (ECB) sustained multi-year high rates to combat inflation. Analysts expect these measures to continue. Key economic indicators, including manufacturing and services sector data, GDP, and inflation figures, will provide insights into the near-term market outlook.

Bank of Japan Rate Statement (23 January 2024)

In the final meeting of the year, the Bank of Japan (BoJ) unanimously decided to maintain its key short-term interest rate at -0.1% and 10-year bond yields at around 0%. Analysts are anticipating that the central bank will continue with the current interest rate levels in its upcoming meeting on January 23, 2024.

Bank of Canada Rate Statement (24 January 2024)

In December 2023, the Bank of Canada kept the overnight rate at 5%, marking the third consecutive meeting with unchanged rates. Analysts project a continuation of the current levels.

European Central Bank Rate Statement (25 January 2024)

In the European Union, the European Central Bank (ECB) sustained interest rates at multi-year highs for the second consecutive meeting in December 2023. This included signaling an early conclusion to its remaining bond purchase scheme as part of efforts to combat high inflation. Analysts are expecting a continuation of these interest rate levels at the ECB’s upcoming meeting on January 25, 2024.

Flash Manufacturing PMI (24 January 2024)

Turning to economic indicators, Germany’s manufacturing Purchasing Managers’ Index (PMI) increased from 42.6 to 43.3 between November and December 2023. In contrast, the UK and the US saw decreases in manufacturing PMIs, from 47.2 to 46.2 and 49.40 to 47.90, respectively. Forecasts for January 24, 2024, indicate anticipated manufacturing PMIs of 43.7 for Germany, 46.7 for the UK, and 47.6 for the US.

Flash Services PMI (24 January 2024)

Shifting to the services sector, Germany experienced a decline in its PMI from 49.6 to 49.3 between November and December 2023. In the same period, the UK’s services PMI increased from 50.9 to 53.4, and the US witnessed a rise in its services PMI from 50.8 to 51.4. Forecasts for January 24, 2024, suggest expected services PMIs of 49.1 for Germany, 53.0 for the UK, and 51.0 for the US.

US Advance GDP (25 January 2024)

In the United States, the American economy expanded at an annualised rate of 4.9% in the third quarter of 2023, slightly below the 5.2% second estimate but matching the initially reported 4.9% in the advance estimate. Looking ahead to the advance GDP release for the fourth quarter on January 25, 2024, analysts expect a slower growth rate of 2%.

US Core PCE Price Index (26 January 2024)

Finally, in the realm of inflation, Core PCE prices in the U.S., excluding food and energy, recorded a 0.1% increase from the previous month in November 2023. With data for December 2023 set to be released on January 26, 2024, analysts are forecasting a growth of 0.2%.