Commentary

U.S. stocks are heading for a mixed start after weaker-than-expected data keeps rate cut hopes alive and as banks’ quarterly results continue to roll in. Retail sales rose 0.4% MoM and jobless claims rose 217k. However, this is a fine balance, the market won't want to see data weaken too much. Elsewhere Morgan Stanley and Bank of America continued the strong start to earnings season.

USD/JPY turned from trend resistance after a five-week hold. Support now in view heading into Trump’s inauguration. Battle lines drawn on the weekly technical chart.

Investors are closely monitoring key macroeconomic indicators, including jobless claims and retail sales data today, for clues about the health of the US economy and the Fed’s policy trajectory. For as long as we don’t see big surprises, mildly positive surprises in these areas could reinforce the market’s optimism and provide further fuel for the S&P 500.

Gold, Silver Forecast: Following the triangle formation in gold prices between December 2024 and January 2025, gold has taken a bullish turn, breaking above the $2,700 mark and eyeing its all-time high once again.

Crude Oil Forecast: Improving Chinese economic metrics, geopolitical developments, and declining inventories have pushed crude oil prices back toward the $80 mark. However, oversupply risks remain a key concern for 2025, raising questions about the sustainability of the current uptrend.

FTSE rises as the pound sinks and growth stalls. EUR/USD holds below 1.03 ahead of ECB minutes, US retail sales & jobless claims.

Concerns over rising inflationary pressures were building as we headed towards the end of 2024. And the rapid acceleration of crude oil prices this year is doing nothing to alleviate those concerns.

Democratic presidential election wins have led to an average gold price increase of +1.5%, while Republican wins brought a -5.5% decrease on average between election day and inauguration day

USD/CAD may threaten the positive slope in the 50-Day SMA (1.4175) if it fails to defend the monthly low (1.4280).

Stocks are putting in a big move and 10-year Treasury Notes are showing the largest decline in yields since last August, just before stocks bottomed.

Japan’s yields, which hit fresh multi-year high overnight, remained in the positive despite other global yields falling in reaction to US CPI. That made the Japanese yen the strongest currency. With the gap between yields in Japan and the rest of the world narrowing, all major JPY pairs fell, including the EUR/JPY as the yen rallied. The EUR/JPY forecast remains bearish.

U.S. stocks are surging higher following cooling US inflation data and after banks kick off earnings season on the front foot. US CPI rose 2.9% YoY up from 2.7% in November. Core CPI eased to 3.2% easing some inflationary worries. pulling treasury yields and the USD lower while lifting stocks. US banks kicked off earnings on a positive note with JP Morgan, Goldman Sachs and Wells Fargo posting solid profits.

British Pound plunged more than 5.2% off the December highs with GBP/USD now responding to pivotal support. Battle lines drawn on the weekly technical chart.

Bond yields are unlikely to fall back significantly in the near-term, even if we see a small miss in US inflation data today. This should keep the upside limited for gold. Therefore, we are still quite cautious when it comes to near-term gold outlook, even if we ultimately expect to see gold rising to $3,000 later this year.

GBP/USD rises after UK inflation cools. USD/JPY falls ahead of US CPI.

Last week I warned that gold’s gains appeared dubious, and that they could sucker-punch bulls. And it seems they did. And while I suspect another leg or two lower, we could find its downside limited when we weigh up the supporting factors for gold.