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Message: [QUOTE="katetrades, post: 240506, member: 21862"] [JUSTIFY][B]Forex Major Currencies Outlook (Jan 20 – Jan 24)[/B] BoJ meeting expected to deliver rate hike coupled with preliminary PMI data from Eurozone and the UK as well as inflation data from Canada and New Zealand will highlight the week ahead of us. [B]USD[/B] December CPI report saw headline number increase to 2.9% y/y, as expected, from 2.7% y/y in November with a 0.4% m/m increase compared to 0.3% m/m as expected. The main culprit for increase in headline number were energy prices as gasoline and fuel oil both rose by 4.4% m/m. Core CPI is where the report shone as it showed a tick down to 3.2% y/y from 3.3% y/y the previous month with a 0.2% m/m increase. Core CPI has increased by 0.3% m/m for the previous four months so the 0.2% m/m increase brought risk on to the markets. Shelter rose by 0.3% m/m, same as in November and 4.6% y/y. Services less energy services rose 4.4% y/y with transportation services increasing 0.5% m/m after being flat the previous month. Markets are now pricing more rate cuts for 2025. PPI came in at 0.2% m/m and 3.3% y/y vs 0.3% m/m and 3.4% y/y as expected. PPI rose from 3% y/y in November. Core PPI came in flat on the month. Retail sales for the month of December rose by 0.4% m/m vs 0.6% m/m as expected. Control group, it excludes volatile components and is a better predictor of consumption, rose by 0.7% m/m. Ex autos and ex autos and gas categories increased by 0.4% m/m and 0.3% m/m respectively. Miss on headline number raises small concern but strong control group reading and beats on ex autos categories indicates that consumer is still going strong. Incoming Treasury Secretary Scott Bessent spoke in front of the US Senate confirmation panel and stated that US Government has no issues with revenues, but that it has a spending problem. He pledged to revive economy with pro growth policies and tax reductions. Additionally, he warned that if tax cuts imposed by President Trump in 2017 are not renewed there will be economic calamity as there will be gigantic middle-class tax increases. He stated that President Trump will not make cuts to Medicare and Social Security and added that Fed should remain independent. He is certainly using similar expressions and tone of voice as his boss using expressions such as "gigantic" and "calamity". The yield on a 10y Treasury started the week at 4.75%, rose to 4.81% and finished the week at around 4.61%. The yield on 2y Treasury started the week at 4.39% and reached the high of 4.42%. Spread between 2y and 10y Treasuries started the week at 37bp and finished the week at 34bp as curve bull flattened. The 2y10y was inverted for over two years. FedWatchTool sees the probability of a 25bp rate cut at January meeting at around 3%, while probability of a no cut is around 97%. May is now the first meeting that sees above 50% probability of a rate cut. Important news for USD: [I]Monday[/I]:[/JUSTIFY] [LIST] [*][JUSTIFY]Trump inauguration[/JUSTIFY] [/LIST] [JUSTIFY][B]EUR[/B] Preliminary reading of German 2024 GDP saw economy shrink by 0.2%. In 2023 economy shrank by 0.3% thus making it first time since the early 2000s that Germany posted two consecutive years of negative growth. Be mindful that this GDP projection was made without any hard data for the month of December so negative revisions to the print are likely. Minutes from the December ECB meeting showed that members took easing bias. Members discussed whether to go for a 25 or a 50bp rate cut and agreed on the former. Members also expressed their doubts regarding growth projections, calling it “probably too optimistic” and increasing risks of overshooting inflation. This week we will have preliminary January PMI data expected to show some pullbacks. Important news for EUR: [I]Friday[/I]:[/JUSTIFY] [LIST] [*][JUSTIFY]Manufacturing PMI (EU, Germany, France)[/JUSTIFY] [*][JUSTIFY]Services PMI (EU, Germany, France)[/JUSTIFY] [*][JUSTIFY]Composite PMI (EU, Germany, France)[/JUSTIFY] [/LIST] [JUSTIFY][B]GBP[/B] December inflation report saw headline CPI tick down to 2.5% y/y from 2.6% y/y in November while markets were expecting no change. Core CPI declined to 3.2% y/y from 3.5% y/y the previous month while markets were expecting a smaller decline to 3.4% y/y. Services inflation dropped to 4.4% y/y from 5% y/y in November. BoE was looking for reasons to justify rate cuts and this will provide them with the perfect one for their February meeting. This week we will have employment and preliminary January PMI data. Important news for GBP: [I]Tuesday[/I]:[/JUSTIFY] [LIST] [*][JUSTIFY]Payrolls Change[/JUSTIFY] [*][JUSTIFY]Unemployment Rate[/JUSTIFY] [/LIST] [JUSTIFY][I]Friday[/I]:[/JUSTIFY] [LIST] [*][JUSTIFY]Manufacturing PMI[/JUSTIFY] [*][JUSTIFY]Services PMI[/JUSTIFY] [*][JUSTIFY]Composite PMI[/JUSTIFY] [/LIST] [JUSTIFY][B]AUD[/B] Employment report for the month of December saw 56.3k jobs added, almost doubling 28.2k jobs added in November and almost four times higher than 15k as expected. The unemployment rate ticked up to 4% due to increase in participation rate to 67.1% from 67% the previous month. Composition of jobs put a downer on the report as all of the jobs created were part-time (80k) while better-paying full-time jobs saw a drop of 23.7k. Markets are pricing in greater chances of a rate cut at the February meeting. China Q4 GDP showed growth of 1.6% q/q and 5.4% y/y thus helping GDP for 2024 reach targeted 5%. December Industrial production rose by 6.2% y/y, beating expectations, after a 5.4% y/y print in November. Semiconductors and hi-tech manufacturing showed biggest increases. Retail sales rose by 3.7% y/y, also beating expectations, after a 3% y/y increase the previous month. Catering, alcohol and recreation were the biggest contributing categories. December trade surplus surged to $104.84bn as exports jumped 10.7% y/y while imports increased by 1% y/y. Frontrunning potential tariffs is the main reason for big increase in exports and trade surplus. [B]NZD[/B] Kiwi had an up and down week as it started strong gaining almost 100 pips against USD, then returning almost all of it by the week end only to regain some of that strength as the week wound down. RBNZ is seen cutting by 50bp at their next meeting but Kiwi is influenced more by USD and overall risk appetite in the markets. This week we will get inflation data for the Q4. Important news for NZD: [I]Tuesday[/I]:CPI [B]CAD[/B] Manufacturing sales continued to grow and rose by 0.8% m/m in November after a 2.1% m/m increase in October while wholesale trade declined by 0.2% m/m after a 1% m/m increase the previous month. BoC member Gravelle stated that BoC is expected to announce end to their Quantitative Tightening program in the first half of 2025. This week we will have inflation data. Important news for CAD: [I]Tuesday[/I]:[/JUSTIFY] [LIST] [*][JUSTIFY]CPI[/JUSTIFY] [/LIST] [JUSTIFY][B]JPY[/B] The biggest benefit of a weak JPY has been seen in the tourist industry. New data showed that record number of foreigners visited Japan. The number of foreign visitors is little less than 40 million. This week we will have BoJ meeting. Governor Ueda’s recent hawkish comments caused markets to almost fully price in a rate hike at the January meeting. Important news for JPY: [I]Friday[/I]:[/JUSTIFY] [LIST] [*][JUSTIFY]BoJ Interest Rate Decision[/JUSTIFY] [/LIST] [JUSTIFY][B]CHF[/B] SNB total sight deposits for the week ending January 10 came in at CHF445.1bn vs CHF439.6bn the previous week. A small increase in deposits after declines seen in the couple previous weeks.[/JUSTIFY] [/QUOTE]

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