Trading Signals and Trade Ideas From FCA Regulated Experts

Markets focussed on recession threat🔻

Posted: 19th January 2023

Good morning and welcome to episode 767 of ‘Talking Bull’. Here are the latest headlines today, US retail sales dip sharply, US producer prices moderate, Fed Stays hawkish, Markets focussed on recession threat, Equities slide, Yen surges again & Australian employment declines.

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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Show notes:

Joe was made 0.82R on GBPJPY.

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 217.64% collectively since we began recording Talking Bull on the 30th October 2019.


US retail sales dip sharply

US retail sales declined 1.1% for December compared with expectations of a 0.8% decline and the November decline was also revised to 1.0% from 0.6% reported originally. There was a sharp decline in gasoline sales for the month.

Underlying sales declined 1.1% compared with expectations of a 0.4% decline and followed a 0.6% decline the previous month. There was also a 0.7% decline in the control group after a 0.2% decline for November.

US producer prices moderate

US producer prices declined 0.5% for December compared with expectations of a 0.1% decline with the annual increase slowing to 6.2% from 7.3%. Underlying prices increased 0.1% on the month with a slowdown in the year-on-year increase to 5.5% from 6.2%.

The Fed’s Beige Book indicated that districts expect little growth in the months ahead while inflation pressures overall had eased and are expected to moderate further.

Fed Stays hawkish….

Overall Fed rhetoric has remained hawkish. Philadelphia head Harker, for example, stated that the Fed needs to get the Fed Funds rate above 5.0% and it will be a while before it can ease policy sharp losses.

…. But markets focussed on recession threat

Although there was further hawkish Fed rhetoric, markets were focussed on the US recession threat after another round of weak data. Treasuries gained further support and the 10-year yield dipped to 4-month lows below 3.35%.

Equities slide

Fears over a potential US recession were important in dragging equities lower during the day with significant losses on Wall Street, although there was some resilience in Asia.

Yen surges again

After sharp losses following the Bank of Japan policy decision, there was a very strong rebound in the yen with expectations that the bank would eventually have to yield to underlying pressures. The yen also gained support as risk conditions deteriorated.

The dollar also recovered ground and the US currency index bounced from fresh 7-month lows as risk appetite deteriorated.

Australian employment declines

The latest Australian labour-market report recorded an employment decline of close to 15,000 compared with expectations of an increase close to 25,000 and the unemployment rate was slightly higher than expected at 3.5%.

Data Today

13.30: US jobless claims

13.30: US Philly Fed index

16.00: US EIA crude oil inventories

18.15: US Fed Governor Brainard speech

07.00 (Fri): UK retail sales

Key events over the next week

January 24th: Global PMI data

January 25th: Canada interest rate decision

Gun to head challenge – Update

Today’s trade idea

BUY EURCHF @ 0.99047
Stop: 0.9871
Target: 0.9981



Have a great week everyone.

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