Good morning and welcome to episode 766 of ‘Talking Bull’. Here are the latest headlines today, Tight ranges on Monday, Chinese data beats expectations, Little change in risk conditions, Dollar recovers slightly from 7-month lows, Key Bank of Japan decision Wednesday, Caution from Canadian businesses, BoE Bailey warns over sticky inflation, UK average earnings accelerate & UK inflation data Wednesday.
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 offside 0.17R on NZDUSD.
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 215.98% collectively since we began recording Talking Bull on the 30th October 2019.
Tight ranges on Monday
Narrow ranges prevailed on Monday with the US market holiday dampening activity.
Chinese data beats expectations
China reported that GDP was unchanged in the fourth quarter of 2022 with year-on-year growth of 2.9% from 3.9% previously and above consensus forecasts of 1.6%. Industrial production increased 1.3% over the year compared with expectations of 0.2% and the retail sales decline was held to 1.8% after a 5.9% decline previously and substantially stronger than expectations of a 9.5% slide.
The National Bureau of Statistics stated that it expects the economy to improve this year.
Little change in risk conditions
The Chinese data helped underpin confidence in the global outlook, although there was also scepticism that the data was accurate and equities overall were mixed.
Dollar recovers slightly from 7-month lows
The dollar has held just above 7-month lows over the past 24 hours with narrow ranges prevailing ahead of the Bank of Japan policy decision and USD/JPY edging higher.
Key Bank of Japan decision Wednesday
The Bank of Japan will announce its latest policy decision on Wednesday Asian time. There has been increased speculation that the central bank will make further adjustments to the yield curve control programme and potentially let yields move higher.
There will be high volatility following the policy decision.
Caution from Canadian businesses
The Bank of Canada business outlook survey reported a slowdown in expected sales growth. Most companies expect a recession in the next year while there was a slight easing of upward pressure on wages and inflation pressures also eased slightly.
The latest CPI inflation data is due on Tuesday.
BoE Bailey warns over sticky inflation….
Bank of England Governor Bailey stated that the market risk premium from September’s Truss budget has disappeared for the time being at least and that the emergency bond-buying programme has been wound up with a net profit which will benefit the Treasury.
As far as the economy is concerned, Bailey expects that inflation will fall, but stated that the labour shortage is a major risk to the central case for inflation falling.
…. and UK average earnings accelerate
UK labour-market data recorded an unchanged unemployment rate of 3.7% and a further increase in monthly employment. Headline and underlying earnings increased 6.4% in the three months to November and above expectations of 6.2% which will maintain speculation that underlying inflation will increase
UK inflation data Wednesday
The UK will release the latest inflation data at the European open with expectations that the headline rate will decline to 10.5% from 10.7%.
The core rate is forecast to retreat to 6.2% from 6.3%.
10.00: German ZEW index
13.30: Canada consumer prices
13.30: US Empire manufacturing survey
03.30 (approx. Wed): Bank of Japan policy decision
07.00 (Wed): UK consumer prices
Gun to head challenge – Update
Today’s trade idea
Have a great week everyone.