FX Daily Analysis: 8 January 2024
CURRENCIES:
- Market Q1 Outlook: Gold, Stocks, EUR/USD, GBP/USD & USD/JPY monitoring Fed and US Yields
- Gold and U.S. equities experienced moderate losses in the first trading week of 2024
- Pressured by a significant rally in Treasury yields and a rise in the U.S. dollar
- Strong December U.S. jobs report bolstered the U.S. dollar
- Traders in late 2023 priced in deep rate cuts for the coming year
- U.S. central bank signaled potential borrowing cost cuts, but economic resilience may delay the easing cycle
- This sets markers for a potential deeper reversal in the coming weeks
- If mean reversion of returns unfolds, gold and risk assets could face challenges
- Euro, British pound, and Japanese yen may weaken against the U.S. dollar
- Different and complex market dynamics expected in early 2024
- Attractive trade opportunities and setups anticipated for key assets
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STOCK MARKET:
- Corporate Earnings and Inflation Focus This Week
- Bank of America, Wells Fargo, JPMorgan, BlackRock, and Citi to Report Q4 Earnings
- Consumer Price Index (CPI) for December to be Released Thursday
- Producer Price Index (PPI) for December Out on Friday
- S&P 500 Enters Q4 Reporting Period After a Negative Start in 2024
- Tech-Heavy Nasdaq Down Nearly 4% Over the Last Five Trading Sessions
- December Jobs Report Shows Solid US Labor Market, Adding 216,000 Jobs
- Unemployment Rate Holds Steady at Historically Low Level of 3.7%
- Average Hourly Earnings Increase 0.4% Monthly and 4.1% Annually
- Market Debate on Federal Reserve Interest Rate Cuts Continues
- Goldman Sachs Expects First Cut in March, Markets Pricing in a 66% Chance
- December CPI Print Expected to Show Annual Inflation at 3.2%
- Core CPI Forecasted to Rise 3.8% YoY, Monthly Core Price Increase of 0.3%
- Corporate Earnings Season Kicks Off with Delta Air Lines, JPMorgan, Citi, Wells Fargo, Bank of America, and BlackRock Reporting
- Investors Anticipate Updates on Consumer Spending and Financials Amid Higher Rate Environment
- Market Pessimism on Q4 Earnings with S&P 500 Estimates Falling 6.8% Since September 30
- Deutsche Bank Chief US Equity Strategist Expects a Robust Quarter for Earnings but Notes Potential Market Temperance Due to Previous Rally.
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