Today market outlook

[Zerologic]

EUR/JPY is trading with low volume on Friday

The EURJPY pair drew a small bearish candle on Friday after Japan released inflation and employment data. Price formed a high of 164,819, a low of 164,017, and closed at 164,428 on FXOpen.

Japan released core CPI data on Friday which showed it was higher than the previous period but lower than expected. Core CPI came in at 2.4% from the expected 2.5% and previous data of 2.2%. Meanwhile, Japan's unemployment rate remained the same as the previous period at 2.5% as expected. Meanwhile, annual retail sales showed 2.8%, higher than the previous 1.3%, and exceeded expectations of 1.5%.

On the other hand, the BOJ highlighted the possibility of a gradual increase in interest rates if inflation has the potential to reach 1.0% in fiscal 2025. The BOJ also highlighted the focus on developing wages, service prices, and personal consumption as considerations for increasing interest rates. This is in line with BOJ Governor Kazuo Ueda's statement that the central bank will wait for further data on whether wage growth can maintain its upward momentum next year, to get better clarity on economic trends.

Apart from that, Japan will focus on US economic developments and the policies taken.

Meanwhile, the ECB has moved closer to its goal of sustainably reducing inflation to its medium-term target of 2%. However, Lagarde will continue to pay particular attention to inflation in the services sector. One of the ECB officials, Boris Vujcic, told Bloomberg that the ECB plans to continue lowering borrowing costs in 2025.

Today, looking at the economic calendar schedule, Japan will release the Final Manufacturing PMI which is expected to be the same as previously at 49.5. Meanwhile, Spain will release the annual Flash CPI which is expected to rise 2.6% from the previous 2.4%.

 

[Zerologic]

Approaching the new year the price of the Chinese Yuan weakens

USD/CNH prices in Monday's trading session showed USD strengthening against CNH and drawing a bullish long-body candle after the previous week moved in a narrow space during the Christmas holidays. USDCNH price formed a high of 7.3192, a low of 7.2935, closing at 7.3151.

The Chinese Yuan currency still faces significant challenges as a sluggish real estate market and weak consumer spending continue to weigh on the currency. On the other hand, talk about delaying US tariffs imposed on Chinese exports further complicates matters regarding China's future economic prospects.

The graph arranged in the monthly time frame shows that the Chinese Yuan's weakening started in October and continued until the end of the year when it experienced significant weakening. Renmimbi's weakening occurred more after Trump became the winner in the 2024 US election.

An anonymous source stated that the Chinese Politburo will take a fairly loose approach to its monetary policy in the future, which gives an indication of easing credit and interest rates. This announcement had an impact on global markets and encouraged appreciation of the US Dollar (USD) against the Chinese Renminbi Yuan (CNH).

Today some banks close early which may reduce trading volumes on the forex market such as Japanese and German bank holidays. Bank closures can reduce market liquidity.

Meanwhile, today China will release Manufacturing PMI data which is expected to experience an expansion of 50.3, the same as the previous data. And the Non-Manufacturing PMI which is predicted to be 50.2 is higher than the previous 50.0

 

[Zerologic]

What are the prospects for gold prices in 2025?

Gold price is now trading at around $2623 moving below the middle band line. At the end of 2024, the gold price drew a bullish candle with a body larger than the previous bearish candle. Price formed a high of $2627, a low of $2602, and closed at $2623 on FXOpen. Gold prices tend to move in a range during the Christmas and New Year holidays.

The price of gold fell to a low of $2536 in mid-November in the wake of the Fed's projections about future policy on slowing interest rate cuts due to the possibility of higher inflation as a result of President Trump's protectionist policies. Gold however again bounced back drawing a range top of $2725 and hit a low of $2584 in December.

What are the prospects for gold in 2025? According to Goldman Sachs, gold can reach $3000, this institution has entered gold as a top commodity for 2025 because President Trump's policies could risk launching a trade war against several countries and gold is one of the safe-haven assets that is an option amidst uncertainty.

In line with Goldman Sachs, Macquarie Group Ltd also estimates that gold can reach $3000 even though in the first quarter gold prices slackened due to the strengthening of the USD. Meanwhile, analysts from UBS Group AG project that gold can reach $2900 by the end of 2025.

Meanwhile, according to Mitsubishi UFJ Financial Group (MUFG) analysts, the outlook for gold in 2025 is a long gold spot with a prediction that gold can reach US$3000 in 2025, which is supported by risk factors. geopolitics and the US as a global asset that is under challenge. Meanwhile, demand for central bank gold from developing countries is expected to rise, triggered by concerns about sanctions.

On a quarterly basis, MUFG predicts the average gold price could reach US$2,750 per ounce in the first quarter, then US$2,850 in the second quarter, US$3,050 in the third quarter, and US$3,080 in the fourth quarter of 2025. On an annual basis, the average gold price in In 2025 it could reach US$2,939 per ounce, an increase compared to the average 2024 prediction of US$2,410. In 2026, the average gold price is predicted to reach US$3,280 per ounce.

 

[Zerologic]

The pound sterling is under pressure from the strengthening of the USD in early 2025

Yesterday, the GBP/USD currency pair drew a bearish candle with a long body crossing the lower band line indicating a strong downtrend. Price formed a high of 1.25406, a low of 1.23522, and closed at 1.23779.

On the monthly time frame, we can see that GBPUSD started its decline in October ahead of the US election, which was held on November 5, until it was still extending its decline at the beginning of January.

The strengthening of the USD seems to continue after the New Year holidays. The dollar index (DXY) which tracks the USD against six major currencies rose to a high of 109.533 from a low of 108.267.

In December, the UK Manufacturing Purchasing Managers' Index (PMI) showed actual data of 47.0 lower than the expected 47.3 and previous similar data. According to S&P Global, the manufacturing contraction is due to weak market confidence and operational restructuring in response to upcoming legislative changes impacting output and demand.

Risk aversion is also another reason investors choose safer assets due to concerns about central bank policy and geopolitical risk tensions.

Today investors will focus on some minor but possibly relevant UK economic data with GBP, M4 Money Supply, Mortgage Approvals, and Net Lending to Individuals. Meanwhile, the US will release ISM Manufacturing PMI data which is predicted to fall to 48.2 from the previous data of 48.4. Meanwhile, ISM Manufacturing Prices are predicted to rise to 51.5 from the previous 50.3.

 

[Zerologic]

EURUSD rebounds after meeting 1.0247 support, further decline is possible

On Friday's trading, the EURUSD pair rose drawing a bullish candle from the low of 1.02620 to the high of 1.03099 and closed at 1.03066. Even though it is rising, this increase still draws a lower high than the previous candle which drew a bearish candle with a low of 1.02247 which is the current support point. Breaking the support level allows the pair to fall deeper.

Market experts see the currency pair falling further to parity levels due to the divergence of views of the Federal Reserve and the European Central Bank on the monetary policy outlook. On the one side, the Fed is predicted to reduce interest rates more slowly in 2025. On the other hand, the ECB sees a continuation of the policy easing cycle at the current pace.

Looking at the latest dot plot in the Fed's Summary of Economic Projections, stakeholders see the Federal funds rate heading toward 3.9% by the end of the year. This has indicated policymakers will only cut interest rates twice in 2025. According to the CME group's Fedwatch tool, the Fed did not change interest rates at its January meeting with the probability of reaching 88.8% while the probability of interest rates falling is only 11.2%.

The Fed's dovish forecast is driven by Trump's inflation-boosting policies such as strict immigration, higher import tariffs, and lower taxes.

Meanwhile, the dollar index (DXY), which previously rose at 109,533, saw a slight decline to 108,922. The Dollar Index is a benchmark for tracking the value of the USD against six major currencies.

Today investors' focus is on the EURUSD pair regarding German Prelim CPI data which is predicted to rise 0.3% from the previous revision of -0.2%.

 

[Zerologic]

USD/CHF records two days of losses as Swiss Real Retail Sales increase

Yesterday the USDCHF currency pair drew a bearish candle extending the decline of the previous candle at the weekend. Price has formed a high of 0.91047 and a low of 0.90085 closing at 1.90447.

Swiss Retail Sales increased 0.8% YoY in November, compared to 1.2% expected and 1.5% last. Even though it was beyond expectations, data from the US was the reason for the weakening of the USD yesterday. The US Final Services PMI was only 56.8 lower than the expected 58.5 the same as the previous data revision.

The dollar index (DXY) recorded a decline yesterday from 109,069 to a low of 107,750. The dollar index value is used to track the USD currency with six other currencies.

Apart from the influence of the weakening US dollar, the strengthening of the Swiss Franc was also due to increasing geopolitical tensions in the Middle East and the ongoing Russia-Ukraine conflict. Considering the Swiss Franc is a safe-haven currency.

On Friday, the US manufacturing sector continued to contract in December, albeit at a slower pace, as the ISM Manufacturing PMI improved to 49.3 from 48.4 in November. This figure exceeded market expectations of 48.4.

However, the US dollar is still expected to strengthen. The Fed is expected not to reduce interest rates at its meeting at the end of January. In the latest dot plot in the Fed's Digest of Economic Projections, policymakers anticipate the Federal Funds Rate reaching 3.9% by the end of this year, indicating expectations of only two rate cuts in 2025.

According to data from the CME group's Fedwatch tool, the possibility of the Fed not changing interest rates in the January meeting is 93.1%, and only a 6.9% possibility of a rate cut.

Fed officials will be more cautious about their approach to rate cuts throughout 2025. Richmond Fed President Thomas Barkin highlighted that benchmark interest rates should remain tight until there is greater confidence that inflation will return to the 2% target

Today investors will focus on Swiss CPI data which is expected to fall -0.1%, the same as the previous revision. Meanwhile, data from the US focuses on ISM Services PMI and JOLTS Job Openings which may have a direct impact on currency performance.

 

[Zerologic]

AUD/USD is back under pressure after rising on Monday

Ahead of the release of Australian inflation data yesterday, the AUDUSD pair fell, drawing a bearish candle with a long shadow on the top candle, indicating buyer pressure was getting resistance. The AUDUSD currency pair formed a high of 0.62882, a low of 0.62279, and closed at 0.62291.

The Australian Dollar experienced an increase from its lowest level for three consecutive days as it received support from a moderate decline in the US Dollar even though Building Permit data for November was weaker than forecast.

The dollar index (DXY) has now returned to a rise at 108.683 from a low of 107.548. On the other hand, the prospect of a slower Fed rate cut and rising US bond yields supports USD buyers.

While US and China trade war concerns may lead the RBA to a dovish shift that could limit the Australian dollar's gains. The uncertainty of President Trump's tariff plans still worries investors to be more defensive.

On the other hand, the Fed indicated that it would slow down the pace of reducing interest rates in 2025. The US central bank is expected not to reduce interest rates at its January meeting.

Today investors will pay attention to Australian CPI data which is expected to be 2.2% from the previous revision of 2.1%. And US economic data ADP Non-Farm Employment Change is expected to fall 139k from the previous revision of 146k, and Unemployment Claims data is expected to rise 214k from the previous 211k.

 

[Zerologic]

Gold prices rise alert to FOMC minutes

Yesterday the gold price drew a bullish candle with a medium body and a small shadow on the top of the candle extending the previous rise. Gold price formed a high of $2669, a low of $2645, and a close of $2661. The raising in gold prices crossed the 50 MA from the downside.

One of the triggers for the raising of gold prices is thought to be related to tariff plans. President Trump is considering declaring a national economic emergency to provide legal justification for a large number of universal tariffs on allies and enemies. The International Economic Emergency Powers Act (IEEPA) would unilaterally authorize the president to manage imports during national emergencies.

The news increased demand for US dollars, and the dollar index (DXY) showed an increase from a low of 108.552 to a high of 109.376 due to the market response to demand for US dollars.

Meanwhile, US jobs data Job Openings and Labor Turnover Survey (JOLTS) showed that job vacancies unexpectedly increased to 8.098 million on the last day of November from the previous 7.839 million.

Other US data ADP Non-Farm Employment Change showed actual data of 122k lower than the expected 139k and much lower than a previous revision of 146k. Meanwhile, Unemployment Claims showed actual data of 201k lower than the expected 214k and the previous revision of 211k.

On the other hand, the rise in gold was triggered by demand from China's central bank, a commodity analyst stated that the PBoC held 73.29 million troy ounces in December, from 72.96 million in the previous month.

Gold gains stalled at a $2669 high as gold buyers seemed uncommitted ahead of the FOMC Meeting Minutes. This seems to show caution ahead of the FOMC meeting minutes could lead to a change in direction.

 

[Zerologic]

The weakening of the Japanese Yen slowed slightly as wage data spurred speculation of an interest rate hike in January

Yesterday the USDJPY pair drew a small bearish candle with a slight shadow at the bottom of the candle. Price formed a high of 158,399, a low of 157,574, and a close of 158,111 on FXOpen.

The position of the Japanese Yen strengthened slightly on Thursday after breaking through 158,550. The strengthening of the Japanese Yen is suspected because the Average cash earnings of Japanese wage data read stronger than expected for November. This gave rise to opinions that spurred speculation of an interest rate increase in January.

BOJ Governor Kazuo Ueda previously signaled that they would hold wage negotiations in March before deciding on an increase. But ING analysts said the case was growing for a hike in January, although it would still be a tough call.

Meanwhile, yesterday's FOMC minutes showed that policymakers were increasingly aiming for a slower pace of interest rate cuts in 2025. This was due to concerns that President Donald Trump's expansionary policies could potentially support inflation. According to the CME Group's Fedwatch tool, the Fed's probability of leaving interest rates unchanged is 93.1% at its January 29, 2025 meeting.

In the other hand, the dollar index (DXY) which tracks the USD currency against six major currencies rose slightly from a low of 106,940 to a high of 109,375.

Today investors will pay attention to US news data on Average Hourly Earnings, Non-Farm Employment Change, and Unemployment Rate.

 

[Zerologic]

CHF/JPY plunged on Friday amid BOJ officials cautious about raising interest rates

The CHFJPY cross pair at the weekend trade plummeted drawing a bearish long-body candle crossing the MA 200 from the upside. Price formed a high of 173,667, a low of 171,694, and a closing of 171,694. The price at market opening rose slightly to around 171,997.

The Bank of Japan (BoJ) seems to still be considering the interest rate decision in January's monetary policy. Bloomberg reports, that BoJ officials are still carefully assessing data ahead of the January meeting, considering raising their core-core inflation outlook for Fiscal 2024 and Fiscal 2025 and considering raising inflation forecasts due to the weakening Yen.

On the other hand, the Federal Reserve's (The Fed) hawkish shift led to a widening of the US-Japan yield gap, which turned out to be another factor that weakened the JPY lower. The Fed is not expected to change interest rates at its meeting in late January.

Apart from that, investors will also be careful amid concerns about the risk of a trade war and continued geopolitical risks and speculation that the Japanese authorities may carry out currency intervention to support the domestic currency which might restrain the JPY's decline.

Real wages fell for the fourth month in a row in November and suggest widespread inflationary pressures, opening the door for further interest rate hikes by the Bank of Japan in January or March.

On the other hand, the Swiss Unemployment Rate rose 2.8% from the previous revision of 2.6%, then investors are waiting for the release of consumer confidence which is predicted to be -35 from the previous -37. Today the Japanese Bank Holiday is closed in observance of Coming-of-Age Day which may reduce the volume of Japanese Yen transactions.

 

[Zerologic]

The price of gold drops and bounces after reaching the upper band line

In yesterday's trading session, the gold price drew a bearish candle with a long body indicating a strong decline. Price formed a high of $2692 a low of $2656 a close of $2662.

On Friday Gold prices briefly rose at $2,697.88, as a solid United States (US) monthly employment report encouraged risk aversion.

NFP data showed America added 256k new jobs in December, while the Unemployment Rate fell slightly to 4.1%. Meanwhile, Average Hourly Earnings rose by 3.9%, down from 4% previously.

The US economic data suggests the Fed will keep interest rates on hold for longer. High interest rates are usually a negative for non-yielding precious metals, but investors are bracing for more volatility ahead of President Trump's return to the White House on January 20.

In terms of geopolitical risk factors, the latest issue is that ceasefire negotiations are progressing positively, with Israel reportedly agreeing to withdraw troops from the Gaza Strip. Quoting the Haaretz newspaper on Monday, January 13, 2025, the Israeli military (IDF) has endorsed several plans for the rapid withdrawal of their troops from Gaza in response to progress in negotiations.

Today investors will also pay attention to US PPI news which is predicted to be the same as the previous revision.

 

[Zerologic]

GBP/USD appears a reversal pattern near the lower band

The GBPUSD pair fell to a low of 1.20998 on Monday, but there was buying pressure which then brought the price to a close at 1.22014 and drew a long wick at the bottom of the candle like a Pinbar. Yesterday the price was still drawing an indecision candle with a high of 1.22501, a low of 1.21376, close at 1.22124 near the lower band. The RSI level showing a value of 30 is considered the oversold zone level.

Yesterday's release of US PPI data showed producer inflation grew slower than expected in December, weighing on the USD and bringing the dollar index (DXY) to depreciate from 109.570 to 109.178. Economists expect the core PPI to rise to 3.8%. Month-on-month headline PPI rose modestly by 0.2%, while core PPI remained flat.

On the other hand, the Fed's expectation that it will reduce interest rate cuts this year is still driving the strengthening of the USD. According to the CME group's Fedwatch tool, the probability of the Fed not reducing interest rates at its January 29 meeting is 97.3% and the probability of a decrease is only 2.7%.

Today investors will focus on UK and US inflation data, the UK annual CPI is estimated at 2.6%, the same as the previous period. Meanwhile, the US CPI is expected to rise 2.9% from the previous 2.7%.