Macro-News round-up:

– US: Yesterday’s US PMIs were positive, showing that the US economy is still expanding, however, they came out weaker than expected. S&P Global Composite PMI in January was 52.0, compared with a 52.3 expected.

Fed Chair Powell reiterated during a TV interview in the US that a rate cut in March was highly improbable and that a first decrease around the middle of the year was more likely.

The market response was in line with the targets we have set over the last few weeks.  In the charts shared on social media, we showed a potentially bullish pattern that could take the dollar index above 104.50, a level that was reached a few hours ago.

The EURUSD has consequently fallen sharply, and as we discussed in Friday’s ATFX connect video report, the downside targets of 1.0750 have been touched and even surpassed.  In the longer term, the most likely projection for this pair is to reach the historical support zones of 1.05.

10Y yields increased by 13.8bp to 4.158%, while 2Y UST yields increased by 10.8bp to 4.47%. Ten-year rates were down at 3.88% just a few days ago.

– Europe: December 2023 saw a 1.10% decline in retail sales in the Euro Area compared to the same month the previous year.

Surprisingly, good news from the German economy, at last. The release of German factory orders came out much better than expected at 8.9% versus -0.1%.

Despite this, the German DAX40 does not show a bullish reaction and in fact is retreating in today’s session towards 16900 points, having temporarily surpassed the highs of 17000 points in the last few days.

– China: The fresh promises of help provided some relief for Chinese equities. The Hang Seng dropped again, but only by 0.15%, while the CSI 300 increased by 0.65%.

– Japan: The results of yesterday’s wage and spending data were a little contradictory. On the one hand, the Wage growth persisted, albeit most likely not at a rate that convinced the BoJ that immediate policy action was necessary, and on the other hand, household expenditure declined more than anticipated.

– Geopolitical: Controversial journalist Tucker Carlson is visiting Moscow. Rumour has it that he may conduct an interview with Putin. The outcome of this interview could shake global stability, as this journalist has made harsh statements about geopolitical events in recent years, including blaming the United States for the destruction of the Russian-German Nord Steam II gas pipeline. Let’s not forget that this is an election year in the United States, and political opinion is the main battlefront to determine the next leader of the world’s leading economy.