The US dollar fell by more than 1.7% last week
Gold is above $1,900 levels for the first time since April
China announces growth figures and disappointed expectations of the world’s second largest economy
Davos conference, January 16-20 After
the US inflation figures topped the events of last week, the financial markets will return in a new week, with new economic figures that will cast a shadow over the trading of the current week, topped by the first meeting of the Bank of Japan in the year 2023, in addition to some separate numbers, and before we go over them, we will summarize the most important events of the past week.
On Tuesday, the World Bank lowered its forecast for global growth in the current year to 1.7%, compared to 3% in its previous forecast six months ago.
With the absence of economic data issued on Monday and Tuesday, the first most important economic figures during the week were announced on Wednesday, represented by inflation numbers from Australia, which exceeded expectations.
Inflation in Australia exceeds expectations (fayezalajmi-4x.com).
After the Australian inflation figures, the US economy announced US inflation figures Thursday, which fell for the sixth month in a row, affecting market movements in the remaining hours before the close of trading on Friday.
By the end of the week’s trading Friday, the United Kingdom’s Statistics Office announced growth figures. Growth in the United Kingdom exceeded expectations in November (fayezalajmi-4x.com).
Before closing the week, the Consumer Confidence Index survey numbers from the University of Michigan showed an increase in the index to 64.6 in the January survey, compared to 59.7 in December, as the expectations index rose to 62 from 59.9.
During the week, we witnessed statements by the head of the US Federal Reserve at the beginning of the week, who did not address monetary policy at the symposium held in Stockholm entitled Exploitation of Central Banks, while the head of the Federal Reserve in Atlanta Bostick and the head of the Federal Reserve in Philadelphia Harker indicated that the US Federal Reserve raised interest by 25 basis points in the February meeting is reasonable with The latest figures for inflation.
US inflation figures, which the markets were looking forward to building centers, prompted the US dollar index to decline by more than 1.7% when it closed the closing session for the week at 102.14 levels, its lowest level since June last year, while the yellow metal rose above $1900 an ounce for the first time since April of last year, benefiting from These retreats.
These numbers supported rising market expectations about the US Federal Reserve slowing the pace of monetary tightening in the coming period and stopping raising interest rates before the middle of the year, as the FedWatch futures market estimates issued by CME for pricing a 25 basis point rate hike at the Bank’s meeting on November 1 rose to 93% from 75% at the beginning of the week to 78% for the March meeting, compared to less than 60% at the beginning of the week.
The euro against the dollar concluded the week with gains of about 190 points, when it closed at 1.0830 levels, while the pound sterling recorded gains of about 140 points, when it closed at 1.2230 levels.
The Japanese central bank leads the events of the current week As we mentioned earlier, with the beginning of the week, the markets are anticipating many economic data, which will be important to follow during the week, as the Bank of Japan takes the lead in events when it meets on the morning of Wednesday, January 18th, to announce its monetary policy for the coming period.
The Central Bank of Japan surprised the markets at its last meeting at the end of December last year when it adjusted the yield ceiling for Japanese government bonds for ten years and allowed the yield to fluctuate up to about 0.50% higher or lower compared to its previous target of zero, in an unexpected move for the markets, which opened the door to the abandonment of the bank.
on its facilitation policy. Last week, Japan announced an increase in the inflation rate in Tokyo to 4% in December from 3.6% in November, the largest increase since 1982, exceeding expectations that indicated a rise to 3.8%.
On the other hand, the yield on Japanese government bonds for ten years rose to the highest target of the Bank of Japan’s latest target, reaching its highest level in eight years at 0.530% on Friday, prompting the Bank of Japan to spend approximately 3.2 trillion yen on bond purchases to stop the rise, bringing the total spending of the Bank of Japan to about 27 percent.
One trillion yen in purchases since the cap was set on Dec. 20.
This meeting is considered to be the penultimate one for the bank’s president, Kuroda, after ten years in his position as governor of the Bank of Japan, as Kuroda will step down from his post in next April, with it not being clear who will succeed him until the moment.
With the recent rise in bond yields, it is not excluded that we will witness an intervention by the Central Bank of Japan or a hint at its meeting next Wednesday, and approaching another step towards exiting the yield control policy, especially since the official inflation figures from Japan, which will be issued at the end of this week, Friday, are expected to rise to 4.
% in December, compared to 3.7% in the November reading, which are much higher numbers compared to the bank’s target of 2%. Some expectations indicate that the bank may raise the 10-year yield ceiling again at its meeting on Wednesday to 0.75% or even 1%, while some expectations indicate that the bank will permanently abandon the yield curve policy. The Japanese yen topped the gains in the currency markets last week, rising by about 420 points when closing at 127.84 levels, the highest levels since May of last year.
China announces growth figures
China announces growth figures
On the other hand, the second largest economy in the world will announce quarterly growth figures for the fourth and last quarter of last year tomorrow, Tuesday, as it is estimated that the economy may grow by about 1.6% in the fourth quarter, compared to 3.9% in the third quarter, to reflect the damage inflicted on the Chinese economy by Continuous closures in the last quarter of the year, in addition to the decline in the real estate sector.
China, along with growth figures, will announce retail sales, investment and industrial production figures for December, with pessimistic expectations of the impact of Covid restrictions on the Chinese economy.
United States of America
The United States of America will announce the producer price index, the component that complements inflation, in addition to retail sales on Wednesday, while the manufacturing numbers will be on the table of events, represented by the Empire State index tomorrow, Tuesday, and the Philadelphia index on Thursday.
Also during the week, we will follow the statements of the US Federal Reserve members about the bank’s monetary policy, as the Federal Reserve member Williams will speak tomorrow, Tuesday, while Harker will speak on Wednesday, and Brainard will speak on Thursday, followed by the statements of Wheeler on Friday.
The US markets will be off for the weekend today, Friday, to celebrate Martin Luther King Day, before returning to work tomorrow, Tuesday.
Euro-zone Business confidence index for the eurozone and the German economy ZEW will be announced tomorrow, Tuesday, in additio
n to the final reading of inflation in Germany and the eurozone on Tuesday and Wednesday, respectively. During the week, we will follow the statements of the President of the European Central Bank, Christine Lagarde, on Thursday and Friday at the World Economic Forum in Davos.
Canada
Canada will announce its inflation figures tomorrow, Tuesday, as expectations indicate that monthly inflation will decline to 0.6%, while it is expected to rise to 4.9% on an annual basis, compared to 5%, while retail sales figures are expected to be released by the end of the week, Friday.
United kingdom
The UK will release its inflation figures on Wednesday as it is expected that the consumer price index will decline by 10.5% in December from 10.7% in November. The UK will also release retail sales by the end of the week on Friday. Australia Employment numbers from Australia top the events of the Asian session on Wednesday, as the Australian economy is expected to add about 21,000 jobs in December, with the unemployment rate stable at 3.4%.
Davos kicks off The activities of the global conference
in Davos are expected to start today, Monday, and continue until Friday, January 20, when the conference will return to its winter headquarters in Switzerland for the first time since 2020, after the outbreak of the Corona virus among heads of state, finance ministers, and central bank governors, as the markets will focus on discussions of countries on how to avoid The risks of a global economic recession and the global inflation crisis, in addition to the developments of the Russian-Ukrainian war.
01/11/2024
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