Weekly Analysis by zForex Research Team

[Z Forex]

Weekly Analysis by zForex Research Team - 4-8 November​

Election Concerns Weigh on Global Markets​

Gold gained early in the week before retreating with silver also losing as Fed rate cut expectations weakened.

The Dollar Index ended a four-week rise with mixed US data affecting rate cut hopes. In forex, strong growth data strengthened the euro, while UK tax hikes and expected BoE cuts weakened the pound. Japan held rates steady, the Australian dollar dipped amid mixed economic signals, and the yuan remained stable on solid PMI data. The Canadian dollar neared a two-year low as economic softness continued. Stocks declined due to election concerns and strong US data, though Google and Amazon gained on positive earnings, while Nvidia and Microsoft saw drops.

Gold and Silver​

Metals experienced a mixed outlook with gold starting the week with gains but losing some of its value toward the end. Silver finished the week with a loss. As expectations for interest rate cuts from the Fed diminished and the perception grew that the Fed is in no hurry to lower rates, non-yielding metals pulled back. However, factors such as the upcoming elections in the US, and last week's positive manufacturing PMI data from China could still provide support for precious metals.

The Dollar Index​

This week, US data presented a mixed picture. Weak growth figures and non-farm payroll data increased appetite for interest rate cuts while promising unemployment figures and a PCE Price Index that exceeded forecasts created the perception that the Fed may not need to rush into rate reductions. Additionally, the upcoming presidential elections are viewed as a source of uncertainty in the markets. Despite this, the four-week streak of gains ended with a modest pullback this week.

Forex Market​

In Europe, rate cut expectations eased as stronger-than-expected growth and inflation data from Germany and Eurozone inflation surpassing forecasts led money markets to adjust anticipated cuts from 42 basis points to 34. As a result, the euro gained against the dollar.

In the UK, the Autumn Forecast Statement included substantial tax hikes to address budget deficits, negatively impacting the market. Additionally, a 25 basis point rate cut expected from the Bank of England weakened the pound, which closed the week down against the dollar.

In Japan, the central bank held interest rates steady, as anticipated. However, Governor Ueda’s comments were seen as hawkish, hinting at diminished US economic risks and potential rate cuts. A 50 basis point hike is expected as early as January, contingent on currency fluctuations and the economic outlook. The yen strengthened this week but remains at a three-month low.

The Australian dollar ended the week lower against the US dollar, near August lows as the US dollar rose on signs of economic strength and election speculation. China’s unexpected manufacturing PMI growth offered some support, given the Australian dollar’s correlation with the yuan. Mixed economic signals in Australia complicated the RBA outlook, with producer prices rising in Q3 but retail sales slowing. While annual trimmed mean CPI decreased to 3.5%, still above the 2-3% target, markets expect the RBA to hold rates at 4.35%.

The Chinese yuan finished the week steady against the US dollar as October’s manufacturing PMI returned to expansion, slightly exceeding forecasts. Official figures showed manufacturing activity expanding for the first time since April. Yet, export orders and employment declined, with traders eyeing the November 4-8 National People's Congress for possible fiscal support.

The Canadian dollar closed near a two-year low against the US dollar as markets assessed recent economic data. Canada’s GDP grew by 0.3% in September, bringing Q3 growth to 0.2%, supported by finance, construction, and retail. Bank of Canada Governor Macklem noted signs of economic response to recent rate cuts, including a 50 basis point reduction last meeting. Since June, the BoC has enacted four rate cuts to support growth amid slowing inflation, which fell to 1.6% in September, and a softening labor market with 6.5% unemployment.

Stock Market​

Last week, indices faced heavy selling pressure due to political uncertainty ahead of elections, stronger-than-expected PCE data, and better-than-anticipated unemployment figures, which dampened hopes for imminent Fed rate cuts. The S&P 500 ended down about 1.5%, with similar losses in the Nasdaq and Dow Jones.

Despite these declines, some stocks performed well. Google rose roughly 5% after reporting earnings on Tuesday, and Amazon also closed the week positively following its Thursday earnings release.

Apple’s earnings met expectations, though not enough to keep the stock in positive territory. Tesla, which rallied strongly the previous week, could not sustain its momentum.

Among stocks that declined, Nvidia and Microsoft saw notable drops, with Microsoft down about 5% and Nvidia nearly 6%.

​

 

[Z Forex]

Dollar Strengthens on Election Hopes, Euro and Pound Weaken (11-15 November)​

The dollar index closed higher with expectations of inflationary policies under Trump’s presidency.

Access Expert Trading Analysis​

The euro weakened due to political uncertainty, below-target inflation, and Trump’s victory. The pound also declined following the rate cut but recovered slightly.

Non-yielding assets suffered losses as Trump’s election raised hopes for higher interest rates. Concerns about US-China tensions pressured silver prices, given China’s role as the largest importer.

US 10-year Treasury yields initially surged but retreated, while 2-year yields closed higher for the week.

RBA Interest Rate Decision (Nov)​

The Reserve Bank of Australia (RBA) kept its cash rate at 4.35% during its November meeting, maintaining borrowing costs for the eighth consecutive time, as expected. While headline inflation has dropped and is projected to stay low, core inflation remains high, prompting caution about inflationary pressures. The RBA noted monetary policy will remain restrictive until inflation is confidently on track toward the target. Signs of increased Q3 household spending were observed, but a slower rebound could lead to weak growth and labor market issues. The interest rate on Exchange Settlement balances stayed at 4.25%.

S&P Global Services PMI (Oct)​

US service providers saw solid business growth as Q4 began, with new orders maintaining September’s pace despite weaker international demand. Business activity expectations rose from a 23-month low, but companies reduced staffing slightly amid future demand uncertainty. The S&P Global US Services PMI Business Activity Index indicated strong growth in October, slightly down to 55.0 from 55.2 in September, marking 21 consecutive months of expansion. New orders increased for the sixth month, though export growth was slower due to subdued demand.

ISM Non-Manufacturing PMI (Oct)​

In October, the Services PMI reached 56%, up by 1.1% from September’s 54.9%. This marks the eighth occasion this year that the composite index has remained in expansion territory.

BoE Interest Rate Decision (Nov)​

The Bank of England cut its Bank Rate by 25bps to 4.75% in its November 2024 meeting, the second cut since August. Eight of nine MPC members supported the move, exceeding the expected seven votes, with Catherine Mann dissenting.

Initial Jobless Claims​

For the week ending November 2, seasonally adjusted initial unemployment claims rose to 221,000, up 3,000 from the prior week’s revised 218,000. The 4-week moving average fell by 9,750 to 227,250, compared to the revised 236,500 from the prior week, which was adjusted up by 500 to 237,000.

Fed Interest Rate Decision​

At its November 2024 meeting, the Federal Reserve cut the funds’ target range by 25bps to 4.5%-4.75%, following a 50bps cut in September, as expected. Policymakers reiterated their data-driven approach for future rate adjustments. Chair Jerome Powell stated that the Fed will decide on a meeting-by-meeting basis and may pause rate cuts in December, depending on incoming data. He noted that Trump’s election victory would not impact the Fed’s near-term policy and emphasized that the Fed does not speculate on future government actions.

Currencies​

The euro ended the week lower against the US dollar due to concerns over the Eurozone’s economic outlook following Trump’s election win and German political instability. The Japanese yen was flat against the dollar as BoJ minutes showed consensus for rate hikes, though strong wage data and global uncertainties cast doubt on this. The pound fell after the BoE’s expected 25bps rate cut, supported by 8 of 9 members, and expectations of a 0.5 percentage point inflation rise from the Labour Party’s budget. The Chinese yuan weakened amid concerns over Trump’s return, prompting a 10 trillion yuan stimulus package. The Australian dollar remained flat, with hawkish RBA signals and expected Chinese stimulus balancing the impact of Trump’s election.

Commodities​

Precious metals had a tough week, ending lower. Trump’s re-election drove expectations of inflationary policies, raising 10-year Treasury yields and the dollar index, which pressured non-yielding metals. Concerns over strained US-China relations and potential impacts on China’s economy, the largest importer of silver, also weighed on silver prices.

Equities​

The S&P 500 and Dow Jones rose nearly 5%, while the Nasdaq gained similarly, surpassing its July peak. The rally was fueled by the election conclusion easing political uncertainty and expectations of expansionary policies under a potential Trump administration, along with hopes for reduced geopolitical tensions. Nvidia led the rally with a 9% surge to a new high, followed by Google and Netflix, both up 5%. Apple, Microsoft, and Meta each rose about 3%.

 

[Z Forex]

Dollar Rises on Inflation Expectations, Euro Hits Yearly Low (18 - 22 November)​

Global financial markets last week saw a strong rally in the U.S. dollar, weak performance in metals, and gains in Treasury yields. The dollar's surge, driven by inflationary expectations and geopolitical developments, weighed heavily on other currencies and commodities.

Key Points​

Currencies:

• DXY gained nearly 2%, marking seven straight weeks of growth, approaching the 107 level.
• The Euro hit its lowest level against the dollar in a year amid U.S. inflationary policy expectations.
• The pound declined to a 13-week low, pressured by weak growth data and dollar strength.
• The Japanese yen fell to a four-month low, with GDP growth for two consecutive quarters having a minimal market impact.

Commodities:

• Gold and silver experienced notable pullbacks, with silver showing relative resilience.
• The gold-to-silver ratio reached 83.80.
• Crude oil prices dropped approximately $2 for the week.

Fixed Income:

• U.S. 10-year and 2-year Treasury yields rose by 3% and 2%, respectively, driven by the "Trump trade" effect.

Macro Analysis​

Global economic data for October highlights a mix of improving inflation metrics and slower economic growth across key regions, with energy costs playing a significant role in driving headline inflation trends.

German CPI​

Inflation rose to 2.0% in October from 1.6% in September, its highest in three months, driven by higher services inflation (4.0% vs. 3.8%) and food prices (2.3% vs. 1.6%). Core inflation increased to 2.9%. Energy costs fell 5.5%, slowing from a 7.6% drop in September. EU-harmonized CPI accelerated to 2.4% YoY and rose 0.4% MoM.

U.S. PPI​

Producer prices rose 0.2% MoM in October and 2.4% YoY. Core PPI (excluding food, energy, and trade) rose 0.3% in October, up from 0.1% in September, and 3.5% YoY.

U.S. CPI​

Inflation climbed to 2.6% in October from 2.4% in September, its first increase in seven months. Energy costs fell 4.9%, slowing from a 6.8% drop, while shelter inflation remained at 4.9%. Core inflation held steady at 3.3%. Monthly CPI rose 0.2%.

UK GDP​

The economy grew 0.1% QoQ in Q3, down from 0.5% in Q2. Yearly growth improved to 1% from 0.7%. Services rose 0.1%, construction grew 0.8%, but production contracted by 0.2%. Net trade contributed positively, with exports down 0.2% and imports falling 1.5%

Eurozone GDP:​

GDP grew 0.4% QoQ in Q3, its best in two years, with Germany’s 0.2% growth avoiding recession. Spain rose 0.8%, France 0.4%, and Ireland rebounded by 2%. Yearly growth reached 0.9%.

U.S. Retail Sales​

Retail sales rose 0.4% MoM in October, following a 0.8% increase in September. Gains were led by electronics (+2.3%), autos (+1.9%), and food services (+0.7%). Declines were noted in miscellaneous stores (-1.6%) and furniture (-1.3%).

Currencies​

• Dollar Index (DXY): Climbed nearly 2%, testing 107, its seventh consecutive weekly gain, supported by Trump-related inflation expectations.
• Euro: Fell to a one-year low against the dollar amid broad USD strength.
• Pound: Declined to a 13-week low on weak GDP data and USD gains.
• Japanese Yen: Dropped to a four-month low despite consecutive GDP growth quarters.
• Chinese Yuan: Hit a three-month low, despite improving retail sales and unemployment.
• Canadian Dollar: Reached its lowest since 2020, pressured by falling oil prices and trade concerns, though strong PMI data provided slight relief.
• Australian Dollar: Declined on lower commodity prices and Chinese demand concerns, with RBA's steady rate comments offering little support.

Commodities​

• Gold and Silver: Gold posted its worst week since 2021, pressured by a stronger dollar and Trump-driven rate concerns. Silver outperformed gold, narrowing the gold-to-silver ratio.
• Crude Oil: Fell to $68.50 as the IEA forecasted an oil surplus for 2024, citing weaker demand and higher production. U.S. crude inventories rose by 2.1 million barrels.

Equities:​

• U.S. Stocks: Dow fell 0.8%, S&P 500 and Nasdaq dropped 1.5%. Broadcom (-6%) and Amgen (-8%) led declines, while Netflix (+7%) and Tesla (+7%) posted gains.

 

[Z Forex]

Dollar Surges as Currencies, Commodities, and Equities Diverge (25-29 November, 2024)​

Global markets last week experienced a continued dollar rally, a rebound in gold and crude oil, and mixed performances in equities and currencies, as geopolitical tensions and shifting central bank policies shaped investor sentiment.

Key Points:​

Currencies:

• Dollar Index: Ended the week higher as safe-haven demand grew amid geopolitical risks and reduced Fed rate cut expectations. It tested two-year highs.
• EUR/USD: Closed at a 58-week low due to a strong dollar and ECB warnings on geopolitical risks in its Financial Stability Review.
• JPY: Dropped further against the USD, pressured by uncertainty over BOJ rate hikes despite verbal warnings from officials.
• GBP: Fell to a 26-week low as geopolitical tensions and rising UK inflation (2.3% YoY in October) weighed on the pound.
• Offshore Yuan: Declined after the PBoC held key lending rates steady, reflecting continued economic challenges.
• CAD: Recovered from a 3-year low, supported by strong inflation data (+2.6% trimmed-mean in October) and resilient economic indicators.
• AUD: Strengthened, driven by a hawkish RBA stance but limited by geopolitical tensions and USD strength.

Commodities:

• Gold: Rebounded by $130/oz, supported by geopolitical risks and safe-haven demand. Fed rate cut speculation added support.
• Silver: Gained alongside gold but underperformed due to weak demand and reduced production in China, raising the gold-to-silver ratio by 2%.
• WTI Crude: Rose on Russia-Ukraine tensions but capped by rising U.S. inventories (+0.5M barrels vs. +0.4M expected).

Fixed Income:

• U.S. Treasury Yields: 10-year yields were flat, while 2-year yields rose, reflecting mixed sentiment on rate cuts.

Macro Analysis​

• Eurozone CPI (Oct): Inflation rose to 2.0% (from 1.7%), with services contributing the most (+1.77 pts), while energy dragged (-0.45 pts).
• UK CPI (Oct): Inflation increased to 2.3% YoY, up from 1.7% in September, driven by rising owner occupiers’ housing costs (+7.4%).
• U.S. Jobless Claims (Nov 16): Fell to 213K (-6K), marking a new low since April.
• Philadelphia Fed Index (Nov): Dropped to -5.5, indicating regional manufacturing slowdown.
• Existing Home Sales (Oct): Increased 3.5% MoM to 3.96M units, rebounding from a 14-year low.
• PBoC Loan Prime Rate: Left unchanged (1-year at 3.1%, 5-year at 3.6%).

Equities​

• U.S. Indices: S&P 500 (+1.3%), Dow (+1.3%), Nasdaq (+1.6%) rebounded after a selloff.
• Top Performers: Tesla (+14%), Netflix (+8%), Apple (+2%).
• Lagging Stocks: Microsoft (-3%), Google (-5%), Meta (-2.7%), Amazon (-5%).

 

[Z Forex]

Markets Shift as Dollar Rally Ends, Currencies Gain (2 – 6 December, 2024)​

This week, markets reacted to economic data and policy shifts, with the Dollar Index ending a nine-week rally. Major currencies gained against the dollar, driven by inflation dynamics and central bank signals. Commodities like gold and silver declined on easing geopolitical risks, while U.S. Treasury yields and equities saw mixed performances amid nuanced economic trends.

Key points​

• Currencies: The Dollar Index ended the week lower, marking its first negative close in nine weeks, driven by positive data flows and President-elect Trump’s appointment of Bessent, which sparked a pullback. The euro, despite weaker German inflation data and rising rate cut expectations, benefitted from Schnabel’s hawkish remarks and the weakening dollar, closing the week higher. Similarly, the British pound strengthened as market expectations for interest rate cuts were tempered by high inflation, leading the GBP/USD pair to close the week on a positive note. In Japan, the Tokyo inflation rate coming in above 2% fueled expectations for a rate hike, causing the yen to appreciate by nearly 3% against the US dollar by the end of the week.
• Commodities: Gold and silver showed similar performance, both finishing the week lower due to easing geopolitical risks and a weaker dollar. As a result, gold closed its first negative month since June.
• Fixed Income: U.S. two-year and ten-year Treasury yields closed the week lower. The ten-year yield fell to approximately 4.21%, while the two-year yield tested 4.20%.

Macro​

CB Consumer Confidence (Nov):​

The Conference Board Consumer Confidence Index rose to 111.7 in November, up 2.1 points from October. The Present Situation Index climbed to 140.9 (+4.8), while the Expectations Index edged up to 92.3 (+0.4), staying well above the 80 threshold that signals recession risk.

New Home Sales (Oct):​

Sales fell 17.3% MoM to 610,000, marking the steepest drop since 2013 due to hurricanes and affordability issues. The median home price rose to $437,300, while inventory increased to a 9.5-month supply.

RBNZ Rate Decision:​

The RBNZ cut rates by 50bps to 4.25%, its third consecutive cut, as inflation slowed to 2.2%. Weak economic activity and subdued employment growth prompted expectations for further easing.

Durable Goods Orders (Oct):​

New orders rose 0.2% MoM to $286.6 billion, driven by a 0.5% increase in transportation. Business investment fell 0.2%, following a 0.3% rise in September.

US GDP (Q3):​

The economy grew 2.8% annualized, unchanged from initial estimates. Personal spending rose 3.5%, and fixed investment increased 1.7%. Net trade negatively impacted growth by 0.57 percentage points.

Jobless Claims (Nov 23):​

Initial claims held steady at 213,000, with the 4-week moving average at 217,000. Continuing claims rose to 1.907 million, the highest since November 2021.

Chicago PMI (Nov):​

The index fell to 40.2, indicating contraction for the 12th straight month. Production and employment slowed, while new orders rose slightly above the year-to-date average.

Core PCE Price Index (Oct):​

Core PCE rose 2.8% YoY, the largest increase in six months, meeting market expectations.

German CPI (Nov):​

Annual inflation rose to 2.2%, the highest in four months, with core inflation reaching 3%.

Eurozone CPI (Nov):​

Inflation climbed to 2.3% as smaller energy price declines eased the annual comparison. Core inflation held steady at 2.7%.

Currencies​

• Dollar Index: Ended a nine-week rally, driven lower by Trump’s nomination of Scott Bessent as Treasury Secretary, signaling stability and easing drastic policy concerns. PCE data and Fed minutes supporting gradual rate cuts also pressured the index.
• EUR/USD: Gained 150 pips as hawkish remarks from Schnabel and a weaker Dollar Index outweighed weak German inflation data.
• GBP/USD: Strengthened due to tempered BoE rate cut expectations after UK inflation rose to 2.3% in October, coupled with a softer dollar.
• JPY: Tokyo inflation above 2% raised expectations for a BOJ rate hike in December, boosting the yen by 3% this week.
• NZD: Gained despite a 50bps RBNZ rate cut, supported by strong consumer confidence and USD weakness. Tariff threats from Trump added slight pressure.
• CAD: Fell to mid-2024 lows after Trump reaffirmed tariff hikes on Canadian exports, while resilient inflation data limited losses.
• AUD: Strengthened above $0.65, supported by the RBA's hawkish stance on inflation and a weaker US dollar.

Commodities​

• Gold and Silver: Both ended the week lower as easing geopolitical tensions and reduced safe-haven demand weighed on prices. Concerns over weak Chinese demand added pressure on silver.

Equities​

• Indices: The S&P 500 rose 0.7%, Dow Jones gained 1%, and Nasdaq edged up 0.2%.
• Decliners: Nvidia (-8%), Google (-4.5%), and Tesla (-3.5%) weighed on tech stocks.
• Top Performers: Microsoft (+1.4%), Meta (+1%), Apple (+3%), and Amazon (+1.3%) delivered gains.

 

[Z Forex]

Dollar Index Flat, Euro Volatile on France's Political Unrest (9-13 December)​

The U.S. Dollar Index ended flat this week as employment data met expectations, manufacturing PMI exceeded forecasts, and Powell’s cautious remarks on rate cuts raised the probability of a December 25bps cut to 72%.

The euro was highly volatile, impacted by France's government collapse and political uncertainties, though EUR/USD is set to close higher amid stronger PMI data and growing ECB rate cut expectations, with rumors of a potential 50bps cut.

Gold traded sideways with limited geopolitical risks, while silver outperformed on potential Chinese stimulus, narrowing the gold-to-silver ratio to 84.40. U.S. Treasury yields fell, with the 10-year at 4.17% and the 2-year at 4.15%.

S&P Global US Manufacturing PMI (Nov)​

The PMI improved to 49.7 in November from 48.5 in October, signaling the slowest decline in five months. New orders showed slower contraction, boosting hiring, though output remained weak.

ISM Manufacturing PMI (Nov)​

The Manufacturing PMI rose to 48.4% in November from 46.5% in October, marking the 8th straight month of contraction. However, the broader economy expanded for the 55th consecutive month.

ISM Manufacturing Prices (Nov)​

The ISM Manufacturing Prices subindex dropped to 50.3 in November from 54.8 in October, below forecasts of 55.2. This remains well below the long-term average of 60.43.

JOLTS Job Openings (Oct)​

In October 2024, job openings rose by 372,000 to 7.744 million, surpassing expectations of 7.48 million. Gains were seen in professional and business services (+209,000), accommodation and food services (+162,000), and information (+87,000), while federal government openings fell by 26,000. Regionally, openings increased in the South (+486,000) and West (+133,000) but declined in the Northeast (-195,000) and Midwest (-52,000). Hires (5.3 million), quits (3.3 million), and layoffs (1.6 million) remained steady.

ADP Nonfarm Employment Change (Nov)​

The November ADP National Employment Report showed the private sector added 146,000 jobs, with annual wages rising 4.8%. The report, based on payroll data from over 25 million workers, offers near real-time employment insights. Chief Economist Nela Richardson noted positive job growth but highlighted weaknesses in manufacturing, financial services, and leisure and hospitality.

S&P Global Services PMI (Nov)​

The S&P Global US Services PMI for November was revised down to 56.1 from 57 but rose from 55 in October, signaling the strongest sector growth since March 2022. Business activity and new orders increased, driven by reduced uncertainty after the Presidential Election and lower interest rates. However, cautious hiring led to reduced employment and a buildup of outstanding work. Input costs rose sharply, but inflation slowed, with output prices increasing at their slowest in 4.5 years. Firms remained optimistic about future business activity.

ISM Non-Manufacturing PMI (Nov)​

The ISM Services PMI fell to 52.1 in November, down from 56 in October and below the expected 55.5, marking the slowest growth in three months. Declines were seen in business activity (53.7), new orders (53.7), employment (51.5), and supplier deliveries (49.5). Inventories (45.9) and backlogs (47.1) also decreased, while price pressures slightly rose to 58.2. Feedback from respondents was neutral to positive, with concerns about seasonality, election outcomes, and tariffs influencing cautious industry outlooks.

ISM Non-Manufacturing Prices (Nov)​

The ISM Services Prices PMI subindex in the United States rose slightly to 58.20 points in November 2024, up from 58.10 points in October. Since 1997, the average for ISM Non-Manufacturing Prices has been 59.85 points, with a peak of 84.50 points in December 2021 and a low of 36.10 points in December 2008.

Initial Jobless Claims​

For the week ending November 30, initial unemployment claims rose by 9,000 to 224,000, with the previous week revised up to 215,000. The 4-week moving average increased by 750 to 218,250. For the week ending November 23, the insured unemployment rate fell to 1.2%, with insured unemployed individuals decreasing by 25,000 to 1,871,000. The 4-week moving average dropped by 3,250 to 1,884,250.

Average Hourly Earnings (MoM) (Nov)​

In November 2024, average hourly earnings rose 0.4% to $35.61, exceeding expectations of 0.3%. For nonsupervisory employees, earnings increased 0.3% to $30.57. Annual wage growth stood at 4%, slightly above the forecasted 3.9%.

Nonfarm Payrolls (November 2024)​

The US added 227,000 jobs in November, exceeding expectations of 200,000. Gains were seen in healthcare, hospitality, government, and social assistance, with transportation equipment manufacturing rebounding as striking workers returned. October’s job gains were revised up to 36,000, reflecting recovery from Boeing strikes and hurricane disruptions.

Unemployment Rate (November 2024)​

The unemployment rate rose to 4.2%, with 7.145 million unemployed. The labor force participation rate dipped to 62.5%, and the employment-population ratio fell to 59.8%. Total employment declined by 355,000 to 161.141 million.

Currencies​

The U.S. Dollar Index ended flat, with Powell’s cautious remarks pushing the probability of a 25bps December Fed rate cut to 72%, up 6%.

The euro was volatile due to France's government collapse, while EUR/USD rose amid stronger PMI data and ECB rate cut speculation (25bps, possibly 50bps).

The British pound strengthened despite BoE hints at 2025 cuts, supported by reduced December cut expectations.

USD/JPY edged up as stable wages and hawkish BoJ comments raised the December hike probability to 50-60%, though doubts remain due to weak economic concerns.

The Canadian dollar fell to 1.4030/USD, weighed by GDP growth below the Bank of Canada's 1.5% forecast and renewed U.S. tariff threats.

The offshore yuan held at 7.26/USD on expected Chinese stimulus, while the Australian dollar weakened to 0.64/USD after weak GDP data raised February rate cut speculation.

Commodities​

Gold traded quietly, moving slightly down as the probability of a 25bps Fed rate cut rose by 5%. Limited geopolitical risks, including a de-escalation in South Korea, kept gold range-bound. Silver outperformed on potential Chinese stimulus, narrowing the gold-to-silver ratio to 84.40.

Brent crude closed at $72 per barrel as OPEC+ delayed production increases to April, phasing out cuts over 18 months. The UAE also postponed its 300,000 bpd production hike, reflecting efforts to balance weak demand with rising non-OPEC+ supply.

Equities​

Last week saw a positive performance across major indices, with new highs being reached. The Nasdaq rose nearly 3%, while the S&P 500 gained 1%. However, the Dow Jones underperformed, experiencing a roughly 1% decline due to profit-taking, which set it apart from the other indices.

Notable gainers for the week included Tesla, Nvidia, Amazon, and Meta, all of which saw increases of over 5%. Apple and Microsoft also saw gains in the range of 3-4%, delivering returns for investors.

On the downside, Intel stood out with a nearly 13% drop, and the broader electronics and technology sector generally underperformed.

 

[Z Forex]

Dollar Rises on Rate Cut Bets, Gold Gains Nearly 1% (16-20 December)​

The dollar index rose above 107, gaining 1% for the week, as markets priced in a 25-basis point Fed rate cut, with 2025 remaining uncertain.

The euro weakened after the ECB’s 25-basis point cut, while the pound hit a six-month low on weak growth data. Markets expect three Bank of England rate cuts in 2024.

Gold rose nearly 1% on mixed U.S. inflation data and jobless claims, with a 93% chance of a December Fed rate cut. Silver fell below $31 per ounce, pressured by weak Chinese demand. Treasury yields rose, with the ten-year at 4.38% and two-year at 4.22%.

Japan GDP (QoQ) (Q3)​

Japan's GDP grew 0.3% in Q3 2024, beating the 0.2% forecast, after a revised 0.5% rise in Q2. Business investment fell 0.1%, less than expected, and net trade dragged GDP by 0.2 points, better than the 0.4-point forecast. Exports grew 1.1% and imports 1.8%, both slower than in Q2. Private consumption rose 0.7%, supported by wages, while government spending increased just 0.1%.

RBA Interest Rate Decision (Dec)​

The RBA kept its cash rate at 4.35% for the ninth consecutive meeting, as expected. While headline inflation has eased, underlying inflation remains elevated and is not projected to hit the 2-3% target until 2026. Economic data aligns with forecasts, though household consumption recovery may be slow, impacting growth and the labor market. The rate on Exchange Settlement balances remains at 4.25%.

German CPI (MoM) (Nov)​

Germany's inflation rose to 2.2% in November from 2.0% in October, driven by higher service costs. Energy prices continued to ease inflation but less than before. Month-on-month, consumer prices fell 0.2%.

U.S. CPI​

In November, the CPI-U rose 0.3%, following four months of 0.2% increases, with an annual rise of 2.7%. Shelter rose 0.3%, contributing 40% of the monthly increase. Food prices rose 0.4%, with food at home up 0.5% and food away from home up 0.3%. The energy index rose 0.2% after no change in October. The core index, excluding food and energy, increased 0.3% for the month and 3.3% year-over-year. Energy fell 3.2%, and food rose 2.4% over the past year.

BoC Interest Rate Decision​

The Bank of Canada cut its key rate by 50 basis points in December, totaling a 175-point reduction from a 5% peak. Policymakers signaled no further aggressive cuts, citing 1% Q3 GDP growth below expectations and risks to Q4 growth. Consumer spending exceeded forecasts, and inflation is projected to stay near 2%, though potential US tariffs add uncertainty.

SNB Interest Rate Decision (Q4)​

The SNB cut its key rate by 50 basis points to 0.5%, exceeding expectations of 25 points. This fourth consecutive cut, the largest since 2015, brings rates to their lowest since November 2022. Inflation fell from 1.1% in August to 0.7% in November and is projected to average 1.1% in 2024, 0.3% in 2025, and 0.8% in 2026. GDP growth is forecast at 1% in 2024, rising to 1-1.5% in 2025, but risks include rising unemployment, slower production, and geopolitical uncertainties.

ECB Interest Rate Decision (Dec)​

The ECB cut key interest rates by 25 basis points, citing progress in disinflation and improved policy transmission. Inflation is forecast to average 2.4% in 2024, 2.1% in 2025, and stabilize near 2% by 2026-2027. Core inflation, excluding energy and food, is projected at 2.9% in 2024 and 1.9% by 2026-2027.

Economic growth is expected at 0.7% in 2024, rising to 1.4% in 2026, driven by higher incomes and investment. Tight financing conditions persist but are easing with recent rate cuts. The ECB remains committed to a data-driven approach to maintain its 2% inflation target.

Initial Jobless Claims​

For the week ending December 7, initial jobless claims rose by 17,000 to 242,000, with the prior week revised up to 225,000. The 4-week average increased by 5,750 to 224,250.

For the week ending November 30, the insured unemployment rate held at 1.2%, with insured unemployment rising by 15,000 to 1,886,000. The 4-week average increased by 3,500 to 1,888,000, the highest since November 2021.

PPI (MoM) (Nov)​

The Producer Price Index (PPI) rose 0.4% in November, following increases of 0.3% in October and 0.2% in September. Annually, the unadjusted PPI increased 3.0%, the largest since February 2023's 4.7%.

Nearly 60% of November's increase came from a 0.7% rise in goods, while services rose 0.2%. Excluding food, energy, and trade services, the index edged up 0.1% in November and 3.5% over the year.

UK GDP (MoM) (Oct)​

The UK economy grew 0.1% quarter-on-quarter in Q3 2024, down from 0.5% in Q2 and below the 0.2% forecast. Services rose 0.1%, driven by 0.7% growth in professional activities and 0.6% in trade. Construction grew 0.8%, while production fell 0.2% due to a 2.7% drop in energy supply.

Net trade contributed positively as exports fell 0.2% and imports dropped 1.5%. Household spending rose 0.5%, business investment increased 1.2%, and government consumption grew 0.6%. Year-on-year, the economy grew 1%, up from 0.7% in Q2.

Currencies​

The dollar index rose above 107, gaining 1% for the week, driven by expectations of a 25-basis point Fed rate cut and strong November PPI data. The euro weakened after the ECB opted for a 25-basis point cut, while the pound hit a six-month low on weak growth data. Markets expect three Bank of England rate cuts in 2024.

The yuan ended flat after China’s Central Economic Work Conference signaled expansive fiscal and monetary policies but left investors uncertain. The Australian dollar fell as unemployment dropped to 3.9%, and employment rose by 35,600, reducing the likelihood of a February RBA rate cut to 50%. The RBA held rates at 4.35% but leaned dovish.

The Swiss Franc dropped to 0.89 per USD after a surprise 50-basis point SNB rate cut, the largest in a decade, as inflation fell to 0.7% in November. Swiss GDP growth remained weak in Q3.

Commodities​

Gold rose nearly 1% this week as mixed U.S. inflation data and jobless claims boosted expectations of a December Fed rate cut, with a 93% chance of a 25-basis point cut, per CBOT. Investors await the Fed's December 17-18 meeting and Chair Powell’s insights on 2025 policy. U.S. Import Prices rose slightly, while Export Prices fell in November.

Silver dropped below $31, down from last week's $32 high, pressured by weak Chinese demand despite dovish central bank actions. Concerns include China's yuan devaluation, loosening monetary policy, and solar panel overcapacity, which may limit silver demand.

Equities​

Last week, stock indices showed mixed results. The Nasdaq closed slightly higher, while the S&P fell nearly 1%, and the Dow dropped 1.7%. Nvidia led declines with an 8% drop, followed by Intel (-3%) and Cisco (-2.5%). Google and Tesla gained 10%, while Amazon rose 3%.

 

[Z Forex]

Weekly Analysis By zForex Research Team (23-27 December 2024)​

Fed Signals, Inflation Data, and Global Trends Reshape Market Dynamics
The dollar index hit a two-year high of 108.5 on hawkish Fed signals but eased after core PCE prices rose just 0.1% in November, sparking hopes for disinflation.

The euro dropped to $1.0340 on weak Eurozone data, and the pound fell below $1.25 amid rising UK inflation. The yen rebounded slightly after Japan's inflation data fueled hawkish BOJ expectations but stayed pressured by a strong dollar.

Gold fell to around $2,600, weighed down by the Fed's hawkish stance and limited 2025 rate cuts, while silver dropped to $29 on weak industrial demand from China. Both metals remain up for the year on safe-haven demand and central bank purchases.

U.S. Treasury yields rose, with the 10-year yield hitting 4.50%, while the 2-year yield ended at 4.27% after an early-week surge.

S&P Global US Manufacturing PMI
The US Manufacturing PMI fell to 48.3 in December, marking the sixth consecutive contraction. Output dropped to its lowest since August 2009, excluding the pandemic slump, as new orders continued to decline. Inflationary pressures persisted due to rising raw material costs, while tariff concerns under the Trump administration added to uncertainty.

S&P Global US Services PMI
The Services PMI climbed to 58.5 in December, the strongest growth since October 2021. New orders rose at their fastest pace since March 2022, and employment grew for the first time since July. Cost growth slowed to its lowest in four and a half years, supported by weaker wage growth. Optimism surged on expectations of a business-friendly environment under the Trump administration.

U.S. Retail Sales (Nov)
Retail sales grew 0.7% in November, surpassing expectations of 0.5%. Gains were led by motor vehicles (+2.6%) and nonstore retailers (+1.8%), while declines were seen in miscellaneous retail (-3.5%) and food services (-0.4%). Excluding autos, food services, building materials, and gas, sales rose 0.4%, reflecting strong consumer spending during the holiday season.

UK CPI
UK inflation climbed to 2.6% in November, its highest in eight months, driven by higher recreation and housing costs. Services inflation held steady at 5%, and core CPI rose by 3.5% YoY. Monthly CPI growth slowed to 0.1%, matching forecasts, while core prices were flat.

EU CPI
Eurozone inflation edged up to 2.2% in November, below preliminary estimates of 2.3%. Energy prices declined at a slower pace (-2%), while service inflation eased to 3.9%. Core inflation remained stable at 2.7%, with the monthly CPI falling by 0.3%.

FED Interest Rate Decision
The Fed cut rates by 25bps to 4.25%-4.5%, its third cut this year. Projections for 2025 were revised to just 50bps in cuts, down from 100bps. GDP forecasts for 2024 and 2025 were raised, while inflation expectations for core PCE were increased to 2.8% in 2024.

BOJ Interest Rate Decision
The BoJ kept rates at 0.25%, citing uncertainties over wage growth and global policies. Inflation ranged between 2%-2.5%, with core CPI expected to rise gradually. Despite weak exports, private consumption and business spending supported economic recovery.

BOE Interest Rate Decision
The BoE maintained its benchmark rate at 4.75%, as inflation and wage growth increased risks of persistent inflation. Three MPC members supported a 25bps rate cut, citing weak demand. The Bank emphasized the need for a gradual approach to easing.

U.S. GDP Growth Rate
The US economy expanded by 3.1% in Q3, exceeding estimates. Consumer spending rose 3.7%, driven by goods consumption and services. Fixed investment grew by 2.1%, while government spending was revised up to 5.1%.

Initial Jobless Claims
Jobless claims fell to 220,000 in the first week of December, beating expectations of 230,000. Ongoing claims also declined to 1.874 million. The data alleviated concerns of labor market weakness, aligning with the Fed’s projections.

Core PCE Price Index
Core PCE prices rose 0.1% in November, marking the smallest increase since May. Year-over-year, core PCE grew 2.8%, while overall PCE inflation stood at 2.4%. Disposable personal income and consumption rose 0.2% and 0.3%, respectively.

Currencies
The dollar index reached a two-year high of 108.5 but eased slightly on disinflation hopes. Core PCE prices increased by 0.1%, raising expectations for more rate cuts in 2025. The euro fell to $1.0340, pressured by weak Eurozone data and political instability. The pound dipped below $1.25 as UK inflation rose to 2.6%, while the yen dropped to a five-month low after the BoJ left rates unchanged. The Australian dollar hit its lowest since October 2022 amid expectations of RBA rate cuts.

Commodities
Gold fell to $2,600 per ounce this week, weighed down by the Fed’s hawkish stance and weaker physical demand in India. Silver dropped to $29 per ounce, pressured by weak industrial demand and concerns over China’s looser monetary policy.

Equities
U.S. indices mostly closed the week lower. The S&P 500 finished the week down by approximately 1.5%, while the Dow Jones also dropped by 1.5%, marking its third consecutive week of losses. The Nasdaq ended the week with a modest gain.

 

[Z Forex]

Weekly Analysis By zForex Research Team (30 Dec 2024 - 03 Jan 2025)​

Dollar Index Rises as Rate Cut Expectations Drop​

The Dollar Index rose slightly as 2025 rate cut expectations dropped to 35 basis points. EUR/USD fell on Lagarde's dovish remarks, while GBP/USD declined due to BoE rate cut votes and weak Q3 GDP. The yen weakened as mixed data and BoJ caution on rate hikes outweighed higher Tokyo inflation.

Gold traded steadily amid light data and geopolitical calm, pressured by the Fed's hawkish stance and limited 2025 rate cut outlook. Silver struggled due to China's economic slowdown, solar sector overcapacity, and yuan devaluation risks.

Fixed Income: Last week, 2-year U.S. Treasury yields remained steady at 4.32%, while 10-year yields increased slightly to 4.58%.

Initial Jobless Claims​

US initial jobless claims fell by 1,000 to 219,000 in mid-December, below expectations of 224,000, signaling a tight labor market. However, outstanding unemployment claims rose to 1.91 million, the highest in three years, indicating longer job search periods. The four-week moving average increased slightly to 226,000, with notable state-level increases in New Jersey and Tennessee.

U.K. GDP​

The British economy stagnated in Q3 2024, with GDP growth revised to 0% from an initial 0.1%. Services showed no growth, while production fell 0.4%, driven by declines in energy supply. Construction grew by 0.7%, and business investment rose by 1.9%, but lower government spending and trade revisions contributed to overall weakness.

Durable Goods Orders (Nov)​

US durable goods orders fell 1.1% in November to $285.1 billion, worse than the expected 0.4% drop. Transportation equipment led the decline, down 2.9%, while non-defense capital goods excluding aircraft, a business investment measure, rose 0.7%, the largest gain since August 2023.

New Home Sales (Nov)​

US new home sales rose 5.9% in November to an annual rate of 664,000, beating expectations. Gains were led by the South and Midwest, while sales fell in the West and Northeast. The median home price stood at $402,600, with an inventory equivalent to 8.9 months of supply.

Currencies​

The Dollar Index edged higher, supported by lowered expectations for 2025 rate cuts and US policy shifts under Trump. EUR/USD weakened after Lagarde’s dovish comments on service inflation. GBP/USD declined due to BoE rate cut votes and weak Q3 GDP. The yen fell on mixed BoJ signals, despite higher Tokyo inflation. USD/CAD rose as Canada’s GDP revision fueled speculation of further rate cuts. The yuan weakened following a large liquidity withdrawal by the People's Bank of China amid a shift to a “moderately loose” monetary policy.

Commodities​

Gold traded steadily, pressured by the Fed's hawkish stance and limited 2025 rate cut expectations. Silver struggled due to China’s economic slowdown, solar sector issues, and yuan devaluation risks.

Equities​

US stocks rebounded this week, with the Nasdaq up 2%, the S&P 500 gaining 1.5%, and the Dow Jones rising 1.1%. Apple and Nvidia led the rally, while Meta and Microsoft lagged with a 1% decline.

 

[Z Forex]

Weekly Analysis By zForex Research Team (06 - 10 Jan)​

Dollar Hits 2022 Highs as Growth Outlook Lifts Markets​

The dollar index rose to 109.4, its highest since October 2022, driven by strong U.S. growth expectations, elevated rates, and Trump’s pro-growth policies. The euro fell to $1.0220, weakened by Europe’s weak outlook and a dovish ECB, while the pound dropped on UK economic stagnation and BoE rate cut signals.

Gold ended the week positively, supported by strong Chinese manufacturing PMI data and weaker U.S. PMI figures, which increased demand for safe-haven assets. Silver also gained, following gold’s trend, as signs of growth in the Chinese economy offset weaker PMI data.

U.S. Treasury yields declined last week, with 10-year and 2-year yields pulling back. China’s 10-year bond yields also fell by approximately 7%, reflecting easing in global bond markets.

Initial Jobless Claims​

For the week ending December 28, initial jobless claims fell by 9,000 to 211,000, the lowest since a seven-month low of 213,000. The four-week moving average dropped by 3,500 to 223,250.

Chicago PMI​

The Chicago Business Barometer fell 3.3 points to 36.9 in December, marking its lowest since May 2024. Declines in New Orders and Production offset gains in Employment, Supplier Deliveries, and Order Backlogs. Prices Paid fell to the lowest since July 2024, while Inventories hit the lowest since October 2009.

SP Global Manufacturing PMI​

The S&P Global U.S. Manufacturing PMI declined to 49.4 in December, marking the sixth consecutive contraction in factory activity. Output fell fastest in 18 months due to reduced demand and weaker export orders. Firms cut purchasing but increased hiring, while input cost pressures surged, leading to higher output prices.

China Manufacturing PMI​

China's Caixin Manufacturing PMI dropped to 50.5 in December from 51.5, reflecting slower growth in output and new orders. Foreign orders declined, employment fell, and business confidence reached a three-month low. Selling prices dipped while input costs rose modestly.

ISM Manufacturing PMI​

The ISM Manufacturing PMI rose to 49.3 in December, indicating the slowest contraction since March. New Orders reached an 11-month high, while Production expanded for the first time in six months. Prices rose, reflecting persistent inflation concerns amid improved supplier deliveries.

Currencies​

The dollar index hit 109.4, its highest since October 2022, driven by robust U.S. economic growth and expectations for elevated rates under Trump’s policies. The euro fell to $1.0220 amid weak European growth and a dovish ECB, while the pound dropped to $1.239 due to the BoE’s dovish stance and stagnant UK growth. The yen gained slightly, with BoJ minutes hinting at possible rate hikes, though concerns over yen weakness persist. The offshore yuan weakened despite PBoC support, pressured by abundant liquidity and a strong dollar.

Commodities​

Gold rose 1.3% to $2,654 per ounce, driven by monetary easing, geopolitical tensions, and record central bank purchases. The outlook remains mixed as Fed caution on rate cuts weighs on demand, though central bank buying may sustain prices. Silver followed gold's trend, supported by signs of economic growth despite weaker Chinese PMI data.

Equities​

U.S. indices posted losses this week. The S&P 500 and Dow Jones fell 1.5%, while the Nasdaq dropped 2.5%, driven by a strong dollar and low trading volumes. Tech giants like Microsoft, Netflix, and Apple declined by 5%, while Starbucks and Uber gained 3% and 2%, respectively.

 

[Z Forex]

Weekly Analysis By zForex Research Team (13 - 17 Jan 2025)​

Gold’s Best Week Since November as Dollar Gains Amid Fed and Trump Policy​

The US Dollar Index ended the week higher, bolstered by hawkish FOMC minutes and inflation data. Despite positive PMI data and inflation figures supporting a less aggressive ECB stance, the euro weakened against the stronger dollar. The pound also fell, pressured by rising yields and capital outflows linked to inflation and fiscal instability.

Gold had its best week since mid-November, despite hawkish Fed comments. Silver posted its second consecutive weekly gain, supported by positive developments in China.

U.S. 10-year yields hit a 9-month high of 4.72%, driven by inflation concerns, while 2-year yields remained steady. Chinese 10-year yields recovered slightly to 1.67% after the PBOC paused bond purchases.

German CPI​

Germany's inflation rose for the third month to 2.6% in December, up from 2.2% in November, exceeding forecasts of 2.4%. This marks an 11-month high, driven by faster price increases in services (4.1%) and food (2%), while energy prices declined at a slower pace (-1.7%). Monthly CPI rose 0.4%, beating expectations of 0.3%. EU-harmonized CPI increased by 2.8% annually and 0.7% monthly, both above forecasts.

U.S. Service PMI​

The S&P Global US Services PMI for December was revised to 56.8 from 58.5, still above November’s 56.1, showing the fastest sector growth since March 2022. Improved client demand and accelerating new business drove growth, while inflation eased for the third month. Business confidence surged to an 18-month high, with optimism about the incoming administration.

Eurozone CPI​

Euro Area inflation rose to 2.4% in December, the highest since July, driven by energy price increases (0.1%) and rising service inflation (4%). Germany and Spain saw inflation rise to 2.8%, while Italy's slowed to 1.4%. Core inflation held steady at 2.7%, with the ECB expecting inflation to reach its 2% target by year-end.

U.S. Services PMI​

ISM Services PMI rose to 54.1 in December, up from 52.1, exceeding expectations of 53.3, marking consistent sector expansion.

U.S. Services Prices​

The ISM Services PMI Prices Index climbed to 64.4% in December, the highest since January 2024, signaling persistent inflation as prices rose for the 91st consecutive month.

U.S. JOLTS Job Openings​

Job openings increased by 259,000 to 8.1 million in November, surpassing forecasts. Gains were seen in professional services, finance, and education, while information jobs declined. Quits fell by 218,000 to 3.1 million, with layoffs steady at 1.8 million.

U.S. ADP Employment Change​

Private businesses added 122,000 jobs in December, the smallest increase in four months. The service sector led gains, particularly in healthcare, while manufacturing lost 11,000 jobs. Wage growth for job-stayers slowed to 4.6%, the lowest since July 2021.

Initial Jobless Claims​

Initial claims fell by 10,000 to 201,000 for the week ending January 4, the lowest in 11 months. The 4-week moving average decreased to 213,000 while continuing claims rose slightly to 1.867 million.

U.S. Nonfarm Payroll​

The US added 256,000 jobs in December, beating forecasts of 160,000. Gains were led by healthcare, government, and social assistance. Annual payroll growth slowed to 2.2 million jobs, below the 3 million increase in 2023.

U.S. Average Hourly Earnings​

Average hourly earnings rose 0.3% to $35.69 in December, with annual growth at 3.9%, slightly below forecasts. Non-supervisory worker earnings remained flat at $30.62.

U.S. Unemployment Rate: The unemployment rate dropped to 4.1% in December from 4.2%, with 235,000 fewer unemployed individuals and 478,000 more employed.

Currencies​

The Dollar Index rose after Fed minutes hinted at slower policy easing amid inflation concerns and Trump administration uncertainties. The euro weakened despite strong PMI data, while the pound fell due to UK inflation and fiscal instability. The yuan was stable after the PBOC paused bond purchases, citing market conditions. The Canadian dollar strengthened slightly but remains near 2016 lows amid trade concerns tied to Trump’s tariff plans and Trudeau’s resignation.

Commodities​

Gold had its best week since mid-November, despite hawkish comments from Fed members and the FOMC meeting minutes. Meanwhile, silver closed the second consecutive week in the green, driven by positive news from China.

Equities​

On the indices front, US indices ended the week lower. The S&P 500 declined by about 0.50%, while the Dow Jones lost around 0.2%. The worst performer, the Nasdaq, ended the week down by approximately 0.8%.

On the stocks front, Apple led the declines with a weekly drop of nearly 3.8%, while Tesla followed closely with a decrease of around 7%.

The most notable stocks that gained value last week were Meta, Nvidia, and Google. Meta rose by around 3%, while both Nvidia and Google increased by approximately 1.5%.

 

[Z Forex]

Weekly Analysis By zForex Research Team (20 - 24 Jan 2025)​

Dollar Drops on Rate-Cut Hopes; Euro and Metals Rally​

The dollar index dropped 0.8% last week, breaking a six-week winning streak. Despite strong US data, hopes for Fed rate cuts rose due to weaker inflation, PPI, and retail sales. The euro gained as European inflation aligned with forecasts, Germany’s data exceeded expectations, and ECB hawkishness supported the currency.

Gold ended the week near a one-month high, gaining 1%, driven by soft US data and expectations for Fed rate cuts. Inflation concerns tied to Trump’s policies also boosted gold. Silver rose for the third week, with its outlook influenced by Chinese developments.

U.S. 10-year yields eased to 4.60% after recent highs, while Japanese yields hit a 14-year peak of 1.26%. Chinese 10-year yields attempted a recovery from historic lows of 1.65%.

U.S. PPI (MoM) (Dec)​

In December, US factory gate prices rose 0.2% MoM, slowing from November’s 0.4% increase and below the forecast of 0.3%. Goods prices surged 0.6%, driven by a 9.7% gasoline price jump, while services remained flat. Annual PPI rose to 3.3%, the highest since February 2023 but below expectations of 3.4%. Core PPI held steady at 0.2%, with the annual core rate at 3.5%, under the forecasted 3.8%.

U.S. CPI (YoY) (Dec)​

US annual inflation rose to 2.9% in December from 2.7%, matching forecasts. Energy costs fell less sharply (-0.5%), while food and transportation inflation accelerated. Monthly CPI rose 0.4%, the highest since March, led by a 2.6% energy index rise.

U.K. CPI (YoY) (Dec)​

UK annual inflation fell to 2.5% in December, below market expectations but matching the BoE's forecast. Core inflation dropped to 3.2%, with prices easing in restaurants, hotels, and services, while food costs remained steady.

GDP (MoM) (Nov)​

UK GDP stagnated in Q3 2024, with growth revised to 0%. Services showed no growth, while production fell 0.4%. Business investment rose 1.9%, but weaker government consumption and exports offset gains.

German CPI (MoM) (Dec)​

Germany’s inflation rate rose to 2.6% in December, driven by higher service and food prices. Monthly CPI increased by 0.5%, recovering from November’s decline.

Retail Sales (MoM) (Dec)​

US retail sales grew 0.4% MoM in December, the smallest rise in four months, as gains in miscellaneous and furniture stores offset declines in building materials and food services.

Initial Jobless Claims:​

US jobless claims rose by 14,000 to 217,000, surpassing forecasts of 210,000. Continuing claims dropped to 1.86 million, reflecting a relatively strong labor market.

China GDP (YoY) (Q4)​

China’s economy grew 5.4% YoY in Q4, exceeding forecasts of 5.0%. December saw strong industrial output and exports, though unemployment rose to a three-month high.

Eurozone CPI (YoY) (Dec)​

Eurozone inflation rose to 2.4% in December, with energy prices turning positive for the first time since July. Core inflation remained stable at 2.7%.

Currencies​

The dollar index fell 0.8% this week, breaking a six-week winning streak, as weaker US PPI and retail sales data increased expectations for rate cuts. The euro gained support from ECB hawkishness, while the pound weakened on disappointing UK data. The yen saw its strongest week since November on speculation of a BOJ rate hike. The loonie fell due to weak domestic data and diverging monetary policies.

Commodities​

Gold hit a one-month high, supported by weak US inflation data and Fed rate cut expectations. Silver also gained for the third week, driven by similar factors, though China’s solar sector challenges may limit demand.

Equities​

US indices posted strong weekly gains, with the Dow leading at 3.84%. Tesla surged nearly 9%, while Apple dropped 4%, continuing its downward trend.

 

[Z Forex]

Weekly Analysis By zForex Research Team (27-31 Jan 2025)​

Markets Shift as Eased Inflation Fears Weigh on Dollar​

The dollar index fell as Trump’s policies eased inflation concerns, with no mention of China tariffs at the World Economic Forum. The euro rose to $1.05, supported by a weaker dollar, improving Eurozone PMIs, and expected ECB rate cuts. The yen strengthened as the BoJ raised rates to 0.5%, its highest in 16 years, with core inflation hitting 3% and potential further hikes ahead.

Gold climbed above $2,770, nearing its $2,790 record, driven by Trump’s rate cut calls, a weaker dollar, and tariff uncertainty. Silver rose above $30.70, supported by strong industrial demand, supply concerns, and optimism from China’s role as a key consumer.

Japan’s 10-year bond yields reached 1.22% after the BoJ’s hike, while China’s 10-year yields declined after a strong start. U.S. 10-year yields stayed flat.

Initial Jobless Claims​

Jobless claims rose by 6,000 to 223,000 for the week ending January 18, with the 4-week average increasing to 213,500. Insured unemployment hit 1,899,000, its highest since November 2021, while the insured unemployment rate stayed at 1.2%.

BoJ Interest Rate Decision​

The Bank of Japan raised its key rate by 25bps to 0.5%, the highest in 17 years, citing wage growth and inflation progress. The BoJ upgraded its inflation forecast to 2.7% for FY 2024 and signaled possible further hikes.

S&P Global Manufacturing PMI​

The U.S. Manufacturing PMI improved to 50.1 in January, ending six months of contraction. Factory output and new orders returned to modest growth, while inventories dropped at their fastest pace in 17 months.

S&P Global Services PMI​

The Services PMI fell to 52.8 in January, marking the slowest expansion since April. Output growth weakened, but hiring hit a 30-month high, while input costs rose, reversing a 10-month decline.

Currencies​

The dollar index dropped 0.8% last week, breaking a six-week winning streak, as weaker inflation and retail sales raised expectations for Fed rate cuts. Trump softened his stance on tariffs, reducing inflation fears.

The euro rose near $1.05, supported by a weaker dollar and stronger Eurozone PMI data. The ECB is expected to cut rates by 25bps next week while signaling further easing in 2024.

The pound climbed to $1.24 after better-than-expected U.K. PMI data. However, falling new orders and rising costs raise concerns. The BoE is likely to cut rates by 25bps in February.

The yen strengthened after the BoJ raised rates to 0.5%, the highest in 16 years. Japan's core inflation rose to 3%, supporting further tightening while manufacturing contracted for a seventh month.

Commodities​

Gold rose above $2,770 per ounce, its highest since October, driven by a weaker dollar and Trump's call for lower interest rates. Safe-haven demand persists amid tariff uncertainty and global central bank policy decisions.

Silver climbed to $30.70 per ounce, supported by Fed rate cut expectations, weaker dollar, and strong industrial demand. Supply concerns and China's role as a major consumer added to bullish sentiment.

Equities​

U.S. indices closed the week higher, benefiting from the weakness in the dollar index, marking a second consecutive week of gains. Leading the rally were stocks such as Netflix, Amazon, Meta, and Google, while Apple and Tesla stood out on the downside.