Good morning and welcome to episode 765 of ‘Talking Bull’. Here are the latest headlines today, US consumer inflation expectations decline, Markets firm-up on Fed view, Choppy trading in Treasuries
Risk appetite holds firm, Further yen demand, Dollar recovers slightly from 7-month lows, Decline in yen shorts, Bank of Canada survey on Monday & Chinese data also due.
We take a technical look at key markets that are likely to be impacted by today’s events. Also, we participate in a ‘Gun to the head’ challenge where each of us calls a live trade. These will expire at 9pm tonight and we will keep track of the progress over time.
We hope you enjoy it!
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Joe was onside 0.12R on EURNZD, Steve was stopped on USDCAD.
We have included an illustration based on a £1000 account. This will follow the combined return of our morning trades by risking 1% of the trading capital per trade. The 1% risk is a variable monetary amount and will rise and fall based on the success of the calls.
We are currently up 216.52% collectively since we began recording Talking Bull on the 30th October 2019.
US consumer inflation expectations decline
The University of Michigan consumer confidence index strengthened to 64.6 for January from 59.7 the previous month and above consensus forecasts of 60.0. There was a significant improvement in the current conditions component and a smaller improvement in the expectations component.
The 1-year inflation expectations index retreated sharply to 4.0% from 4.4% the previous month while the 5-year index edged higher to 3.0% from 2.9%.
Choppy trading in Treasuries
There was choppy trading in Treasuries during Friday with the 10-year yield held below the 3.50%, but unable to hold below 3.45%.
Risk appetite holds firm
The decline in US inflation expectations triggered further hopes that the Fed can adopt a less hawkish policy. There was also fresh optimism that there would be a rebound in the Chinese economy which would underpin the global outlook and equities held firm on Friday.
Further yen demand
The yen gained further strong support against major crosses with further speculation that the Bank of Japan would shift to a less expansionary policy at the latest policy decision.
USD/JPY posted fresh 7-month lows at 127.25 before a recovery.
The latest statement is due during the Asian session on Wednesday.
Dollar recovers slightly from 7-month lows
The dollar index posted fresh 7-month lows in Asia on Monday before managing to secure a net recovery as USD/JPY bounced and equities were hampered by pressure for at least a limited correction.
Decline in yen shorts
The yen gained further CFTC data recorded a decline in short yen positions to near 35,000 contracts from close to 47,000 the previous week and the smallest short position since later August 2022 which will limit the scope for further short covering and yen buying.
Bank of Canada survey on Monday
The Bank of Canada business outlook survey will be released on Monday with the data on inflation expectations watched particularly closely.
Chinese data also due
The latest Chinese data in Asian trading on Tuesday including GDP and industrial production will also be important for overall risk conditions.
15.00: Bank of England Governor Bailey testimony
15.30: Bank of Canada outlook survey.
07.00 (Tues): China GDP
07.00 (Tues): UK labour-market report
Key events over the next week
January 18th: Bank of Japan policy decision
January 18th: UK consumer prices
Gun to head challenge – Update
Today’s trade idea
Have a great week everyone.