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As the financial markets resumed action after the holiday season, the arrival of 2024 introduced intriguing movements, hinting at potential shifts in established trends. Join us for a comprehensive analysis in our weekly newsletter!
Noteworthy Market Trends:
US Dollar’s Vigorous Start:
- The US Dollar commenced the year on a robust note, exhibiting strength against most major currencies. Last week, the DXY index recorded a notable 1% rise, closing at 102.435 points, propelled by a robust NFP print. The impending US CPI release looms as a key determinant of the ongoing trend.
Euro’s Ongoing Challenges:
- The Euro sustained pressure as fresh German data reported weaker-than-expected figures. Eurozone inflation now hovers below 3%, gradually nearing the ECB’s 2% target.
Pound’s Mixed Performance:
- Despite a marginal loss against the USD, the Pound demonstrated a commendable start to the year, rallying against other majors. Notably, GBPJPY soared by 2.4%, closing at 183.711, while EURGBP declined by 0.8% to 0.86.
Commodity Currencies and Market Fluctuations:
- Commodity currencies experienced setbacks as yields and the Dollar surged simultaneously. The AUD, NZD, and NOK encountered declines ranging between 1% and 1.5%, while the CAD fell by 0.8% against the greenback. Other notable shifts include the CHF plummeting by 1%, the JPY dropping 2.6%, and the MXN showing a commendable 0.5% gain.
Asset Performance Snapshot:
- Oil sustained volatility within a broad range, witnessing a 3.6% rally in WTI, closing at $73.89.
- Precious metals commenced the year under pressure due to a strengthening Dollar. Gold marked a 0.9% decline to $2,045, and Silver experienced a 2.5% drop, closing at $23.19.
Weekly Forecast and Upcoming Events:
- Equities faced a challenging start, indicating a bearish trend but remaining bullish until key technical levels are breached. Last week, the S&P500 index fell by 1.7% to 4695 points, while the DAX lost 0.9%, closing at 16594 points.
- Bonds showcased a substantial dip at the year’s onset, potentially a brief correction before the upward trend resumes. The 10y UST yield surged by 17bps to 4.04%, while the 10y Bund declined by 1.2% to 135.466 points.
- Cryptocurrencies maintained their volatility in anticipation of a new ETF approval. At present, Bitcoin surged by 4.5% to $44,000, nearing crucial resistance, while Ethereum dipped 2.5% to $2,240.
Looking Ahead:
The forthcoming week promises to be eventful, especially with the latest US CPI release. While the Federal Reserve foresees a continuous decline in inflation and economic activity, the market anticipates multiple Fed rate cuts in 2024. Given these contrasting projections, monitoring inflation data from Japan, Switzerland, Mexico, and Norway will be crucial for informed trading decisions.
Wishing traders a successful and secure week ahead!
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