Currency Pairs Market Analysis

[Solid ECN]

2024 Starts with a Dip: U.S. Stock Futures Decline After Strong 2023

As 2024 begins, U.S. stock futures are experiencing a slight decline, marking a pause following a robust 2023 that witnessed substantial double-digit growth across the three main indices. Currently, investors are diligently evaluating the economic landscape and monetary policy expectations, especially in anticipation of the forthcoming FOMC minutes and the crucial jobs report due later this week.

The S&P 500 futures have dropped by 0.5%, while the Dow Jones is facing a reduction of approximately 110 points, and the Nasdaq 100 is also on a downward trajectory, decreasing by 0.7%. In the realm of corporate news, Tesla has seen its stock dip by about 1% in premarket trading. Market participants are keenly waiting for the company's announcement of its annual production and delivery figures, set to be released later today.​

 

[Solid ECN]

US Dollar, China Data Influence Copper Market

In January, copper futures dipped below $3.9 per pound, moving away from the five-month peak of $3.95 reached on December 27th. This decrease is a result of the US dollar's resurgence and some profit-taking activities by commodity trading companies.

The rebound of the US dollar, as traders evaluate the Federal Reserve's potential policy changes this year, has made copper, which is priced in this currency, more expensive for importers, leading to a drop in prices. Additionally, the demand from major Asian customers, particularly China, is under scrutiny.

The conflicting signals from China's official manufacturing PMI and the broader Caixin data have created uncertainty about the future copper demand in the country. Despite a modest rise in copper prices last year, market experts have been accumulating long positions in copper, anticipating that supply might not meet the strong future demand driven by the global push for electrification.​

 

[Solid ECN]

NZX 50 Dips Amid Global Market Jitters

Solid ECN – On Wednesday, the NZX 50 fell by 40.36 points, a 0.34% drop, ending at 11,730.14. This followed a slight downturn in US futures after a tough start to the year on Wall Street, especially in tech stocks. Ahead of key US job data and the nonfarm payrolls report, traders seemed less hopeful about interest rate cuts from the Federal Reserve.

Concerns grew as China's uncertain economic future cast a shadow, affecting its main trading partners like New Zealand. Recent data showed a decline in China's manufacturing for December, though some private surveys suggested a slight positive trend in the sector. The NZX 50 was impacted by sectors like manufacturing, transport, consumer services, and non-durables. Notably, Restaurant Brands NZ dropped 4.5%, Scales Corp. 2.9%, Auckland Intl. 2.7%, A2 Milk Co. 2.4%, and Meridian Energy Ltd. 1.8%.​

 

[Solid ECN]

Euro Slides Below $1.1 Amid Economic Data and Rate Cut Speculations

At the beginning of 2024, the euro fell below $1.1. This drop came after reaching a high of $1.1139 on December 28th. Investors are now focusing on upcoming European inflation data and the US jobs report due later this week. Additionally, recent PMI data showed that Eurozone factory activity shrank for the 18th month in a row in December.

As for monetary policy, there's an 80% chance the Fed will start reducing interest rates in March. Over the year, cuts could total more than 150 basis points. Meanwhile, the European Central Bank might also cut rates, but likely slower than the Fed, even as ECB policymakers aim for a tougher stance.​

 

[Solid ECN]

Kiwi Dollar Drops, RBNZ Rate Cuts Loom on Horizon

Recently, the New Zealand dollar has been struggling, staying below $0.628. This is the lowest it's been in about two weeks. The reason behind this is the US dollar's strong recovery, which has led investors to rethink their previous expectations of significant interest rate cuts by the Federal Reserve within the year.

Additionally, there's been a shift towards a more cautious approach in the market, resulting in a drop in both stocks and commodities. Contrarily, US Treasury yields have been on the rise. Within New Zealand, the market is anticipating four rate cuts from the Reserve Bank of New Zealand (RBNZ) this year, with the first one possibly happening as early as May. The RBNZ's head recently acknowledged the unexpected downturn in recent growth figures, increasing speculation about an earlier cash rate cut. Back in November, the RBNZ held the cash rate at 5.5%, narrowly avoiding a rate hike.​

 

[Solid ECN]

Yen Slides as Dollar Strengthens

Solid ECN – The Japanese yen has recently fallen to around 142 against the dollar, moving away from its five-month high. This change comes as the dollar gains strength and investors reduce their expectations for major interest rate cuts by the Federal Reserve this year. However, trading activity in Japan has been thin due to ongoing holiday celebrations.

At the same time, the country is dealing with the aftermath of a significant earthquake that hit its central region on New Year's Day. Adding to the economic landscape, recent statements from Bank of Japan Governor Kazuo Ueda have sparked discussions about a potential shift away from Japan's negative interest rates policy. Last month, Ueda noted an increasing likelihood of Japan's economy emerging from its prolonged low-inflation state and reaching its inflation target. He mentioned that if the positive cycle of wages and prices strengthens enough to sustainably achieve the 2% inflation target, the Bank of Japan might consider altering its monetary policy.​

 

[Solid ECN]

Swiss Franc's Shift: Balancing SNB and Fed Rate Outlooks

After reaching a 12-year peak of 0.841 on the last trading day of 2023, the Swiss franc has recently weakened to 0.85 against the USD. This shift occurred amid a recovery in the DXY index. Last year, the franc saw an 8.5% appreciation against the dollar, largely due to differing interest rate policies between the Swiss National Bank (SNB) and the Federal Reserve.

Recent dovish statements from Fed officials, coupled with new data indicating a slowdown in US inflation, have put pressure on the dollar. In Switzerland, despite a slowdown in inflation, the SNB has maintained a cautious stance, suggesting that higher interest rates are still necessary. Inflation in Switzerland was 1.4% in November. The central bank anticipates it will approach their 2% target by mid-2024. This forecast leads investors to believe that the SNB might delay rate cuts, especially compared to the Fed's timeline. The persistent high-interest rate expectations for the SNB also drove the franc to unprecedented levels against the Euro, the currency of its neighboring countries.​

 

[Solid ECN]

Canadian Dollar Weakens, Awaits Key Labor Market Data

The Canadian dollar recently fell beyond 1.33 against the USD, moving away from its five-month high of 1.32 achieved on December 26th. This decline is largely due to a resurgence of the US dollar, disappointing domestic economic indicators, and a decrease in foreign currency inflows.

Canada's manufacturing sector experienced its most significant contraction since the 2020 pandemic downturn, posing challenges for the central bank's efforts to control inflation through tighter monetary policy. Additionally, the easing concerns over global oil demand have impacted foreign exchange inflows, negatively affecting the Canadian dollar's strength. Investors are now looking forward to the upcoming labor market data, expected on Friday, to gain insights into potential future directions for monetary policy.​

 

[Solid ECN]

WTI Futures Drop Below $69.5, Market Weighs Supply and Risk

On Wednesday, WTI crude futures experienced a notable decline, dropping over 1.5% to reach a three-week low, falling below $69.5 per barrel. This downturn came on the heels of a 1.8% loss in the previous session, influenced by a broad selloff in risk assets. This selloff occurred despite rising tensions in the Middle East, which might typically bolster oil prices. As the new year began, the market's mood was cautious, with stocks and other risky assets facing downward pressure. This sentiment was further influenced by a rebound in the dollar and Treasury yields, as investors recalibrated their expectations for significant rate cuts from major central banks.

Contributing to the oil price drop is the increase in global supplies, especially from non-OPEC countries, combined with a shaky demand forecast. Additionally, traders are keeping a watchful eye on geopolitical events, particularly Iran's recent deployment of a warship in the Red Sea, seen as a challenge to US forces in this crucial trade corridor. Over the weekend, there was a confrontation when US Navy helicopters intercepted three Houthi boats that were attempting to hijack a container ship in the Red Sea, leading to casualties.​

 

[Solid ECN]

The Balance of Gold in a Shifting Economic Landscape

Solid ECN – On Wednesday, gold prices stabilized above $2,060 an ounce, recovering from the previous session's fluctuating trends. This stability comes as investors eagerly await insights from the upcoming Federal Reserve policy meeting minutes, which are expected to shed light on future monetary policies. Despite reaching intraday highs, gold experienced a slight decline of 0.2% on Tuesday. This was attributed to a resurgence in the dollar's value and an increase in Treasury yields, leading investors to reconsider their expectations for interest rate reductions by major central banks within the year.

Currently, market predictions indicate about a 70% likelihood of the US central bank implementing a quarter-point rate cut in March, a decrease from the almost 90% probability previously anticipated. In addition, gold's value has found some support due to a combination of factors, including the sell-off in riskier assets and escalating geopolitical tensions in the Middle East.​

 

[Solid ECN]

NZX 50's Comeback: A Detailed Analysis

Solid ECN – On Thursday, the NZX 50 index made a comeback. It rose by 28.98 points or 0.25%, ending at 11,759.11. This was after a slow start with minor losses. The turnaround happened when a private report showed that service activities in China, a major trade partner, reached a five-month high in December.

Market players were optimistic. They hoped that Chinese authorities would shift from yuan stabilization to monetary easing. This came after the People's Bank of China (PBoC) significantly weakened the currency fixing, the most in over six months. US futures also saw a slight increase, boosting market sentiment. Investors were still processing the latest Federal Reserve minutes, which hinted at potential rate cuts in 2024.

In company news, PaySauce, a fintech firm, reported a 23% annual increase in its recurring revenue for the fiscal quarter ending on December 31st. The day's top performers included industrial services, consumer durables, and utilities sectors. In terms of individual stocks, Scales Corp. led the pack with a 3.0% jump. It was followed by Meridian Energy Ltd. (2.8%), Comvita NPV (2.6%), and Hallenstein Glassons Holdings (1.3%).​

 

[Solid ECN]

Canadian Dollar Dips Beyond 1.33 USD

The value of the Canadian dollar has recently decreased, now exceeding 1.33 against the US dollar. This decline follows a notable peak at 1.32 on December 26th, which was the highest in five months. Several factors contribute to this shift: a strengthening US dollar, underwhelming economic data within Canada, and a decrease in foreign currency coming into the country.

Particularly impactful was the manufacturing PMI in Canada, which saw its most significant reduction since the 2020 pandemic-induced downturn. This situation constrains the Central Bank of Canada's ability to implement strict policies to combat inflation. Additionally, a global reduction in oil demand is affecting the foreign exchange inflows, further weakening the Canadian dollar. Investors are now keenly anticipating the upcoming labor market data, set to be released on Friday, hoping it will shed light on the potential direction of future monetary policy.​

 

[Solid ECN]

NZX 50's Slight Dip Amid Global Uncertainty

Solid ECN – Heading into 2024, New Zealand's NZX 50 saw a slight decline, ending at 11,748.49 on the last day of the week. This minor fall of 0.1% encapsulated the market's tepid response to international economic signals. Notably, Wall Street's sluggish beginning to the new year played a role in this downturn.

Furthermore, speculation is rife regarding potential shifts in US Federal Reserve interest rates, adding to the air of uncertainty. This, coupled with the anticipation of December's job report, has prompted a cautious approach from investors.

In New Zealand, there's a mixed sentiment among economists about the Reserve Bank of New Zealand's (RBNZ) future moves. While some predict a possible change in the cash rate by August, confidence in this forecast remains moderate. Shifting focus to China, New Zealand's key trading ally, Goldman Sachs anticipates that the People's Bank of China might lower the reserve requirement ratio twice in 2024, aiming to bolster the nation's economic rebound.

Specific sectors like consumer durables, energy minerals, and technology services contributed to the NZX 50's decline. Leading the downward trend were companies such as Infratil Ltd., Gentrack Group Ltd., Briscoe Group, and Property for Industry, all experiencing notable drops in their stock values.​

 

[Solid ECN]

Crude Futures Steady Amidst Market Flux

On Friday, WTI crude futures maintained a steady position above $72 per barrel. This stability reflects a complex market situation where weakening demand in the United States contrasts with the impact of supply interruptions in Libya. Just the day before, oil prices experienced a notable drop of 2.3%, but later recovered slightly. This fluctuation was primarily influenced by recent US data revealing a surprising surge in gasoline reserves. Last week, gasoline stocks rose sharply by 10.9 million barrels, marking the most significant increase in over 30 years. Additionally, there was an unexpected rise in distillate inventories, which grew by 10.1 million barrels, far surpassing the anticipated increase of 400,000 barrels. Contrasting these increases, crude oil reserves saw a reduction of 5.5 million barrels.

At the same time, market attention remains focused on Libya, where ongoing protests have disrupted oil production at the Sharara and El-Feel fields. These fields are significant, contributing around 365,000 barrels of oil per day. In a separate development, Iran is grappling with a tragic event. Two explosions occurred during a ceremony honoring the late military leader Qassem Soleimani, resulting in almost 100 deaths and many injuries.​

 

[Solid ECN]

Canadian Dollar Falls Beyond 1.33 USD Mark

Solid ECN – The value of the Canadian dollar has recently dropped, surpassing 1.33 against the US dollar. This decline comes after it had reached a five-month peak at 1.32 on December 26th. Several factors contribute to this shift, including a strengthening US dollar, lackluster economic reports within Canada, and a decrease in foreign currency coming into the country. A notable point of concern is Canada's manufacturing sector, which has experienced its most significant downturn since the 2020 pandemic crash.

This downturn poses challenges for the central bank's efforts to control inflation through tighter policies. Additionally, the Canadian dollar's strength is further weakened by a global reduction in oil demand, which traditionally supports the currency through foreign exchange. Investors are now focusing on the upcoming labor market report, set to be released on Friday, to gain insights into the potential directions of future monetary policy.

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[Solid ECN]

Swiss Franc Falls from 12-Year High

Solid ECN – The Swiss franc dropped to 0.85 against the US dollar, down from a 12-year peak of 0.841. The DXY's recovery influenced this change. Last year, the franc gained 8.5% versus the dollar, reflecting differing interest rate policies of the Swiss National Bank and the Federal Reserve. The Fed's latest meeting hinted at a cautious approach, further affected by US inflation slowing down.

Despite this, the Swiss National Bank sees reasons for higher rates due to potential inflation increases. Currently, inflation in Switzerland is at 1.4%, but predictions show it might reach the 2% goal in mid-2024. This has led investors to believe that the Swiss National Bank will cut rates later than the Fed. Additionally, the franc reached a new high against the Euro, reflecting ongoing high rate expectations from the Swiss National Bank.

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[Solid ECN]

USDCHF Navigates Between Bullish Channel

Solid ECN – The bull's effort to flip the price above the Ichimoku cloud continues. However, the ADX indicator hovers below the 20 level, which can be interpreted as a weak market trend. The USDCHF price should stabilize itself above the %38.2 Fibonacci level for the uptick bias to continue. If this happens, the price would rise to test the %50 level of the Fibonacci resistance as its initial target.

Conversely, the bullish scenario should be invalid if the USDCHF price exceeds the bullish channel. In this case, the downfall would extend to December 2023's low.​

 

[Solid ECN]

Euro Stabilizes Amid Eurozone Inflation and Strong US Job Market

Solid ECN - The euro maintained a steady value near $1.09. This happened as market players absorbed new information. The Eurozone showed an increase in its inflation rate. At the same time, the US job market was doing well. These developments reduced the need for the European Central Bank and the US Federal Reserve to lower interest rates.

In December, the Euro Area saw its inflation rate go up to 2.9%. This was just below the expected 3%. The main reason for this increase was the cost of energy. The core inflation rate, which excludes energy, also slowed down. It reached 3.4%, the lowest since March 2022.

In the US, the job scene was positive. There were 216,000 new jobs added last month. This was more than the expected 170,000. The unemployment rate stayed the same at 3.7%. However, there was a slight dip in the activity rate. It fell to 62.5%, the lowest since February.​

 

[Solid ECN]

Pound Steadiness, Consumer Borrowing Spike, and House Price Rise

Solid ECN - The UK's pound currency remained stable at $1.27. This stability came as market players analyzed new economic figures and their effect on global financial policies. A recent report from the US showed an unexpected jump in job creation, suggesting the Federal Reserve might not lower interest rates soon, possibly not even in March. Meanwhile, UK consumer borrowing saw a significant boost, with an increase of £2.0 billion - the most since March 2017 and higher than the £1.4 billion predicted.

Additionally, the number of loans for buying homes in the UK was higher than expected, reaching 50.1K. In other news, Britain's service sector grew stronger in December than initially thought, and the mood among businesses was the most optimistic in seven months. Finally, UK house prices increased by 1.7% compared to last year, the first rise in nine months.​

 

[Solid ECN]

Libya's Oil Halt Boosts WTI Above $72

Solid ECN – WTI crude futures rose above $72.5 per barrel on Wednesday, extending gains from the previous session as escalating geopolitical tensions in the Middle East and halted oil production in Libya continued to support oil prices. Libya's Sharara oilfield has stopped oil production since last week due to political protests, removing approximately 300,000 barrels per day from the market.

A prolonged war in Gaza and Houthi attacks on ships in the Red Sea also stoked fears of a broader conflict in the region that could disrupt supply further. Moreover, industry data showed that US crude inventories declined by 5.215 million barrels last week, way above market expectations for a 1.2 million barrel drop. Meanwhile, US gasoline stockpiles rose by 4.9 million barrels, while distillate inventories gained 6.9 million. Investors now look ahead to US EIA data later on Wednesday and the International Energy Agency's monthly market report next week.

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