Good morning and welcome to episode 772 of ‘Talking Bull’. Here are the latest headlines today, German business confidence improves, Hawkish ECB rhetoric continues, Bank of Canada now on hold, Dollar overall still struggling, US GDP data Thursday & Chinese markets closed.
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 1.41R on EURGBP.
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 215.23% collectively since we began recording Talking Bull on the 30th October 2019.
German business confidence improves
The German IFO business confidence index strengthened to 90.2 for January from 88.6 the previous month and in line with consensus forecasts. There was an unexpected small decline in the current conditions assessment, but this was offset by a significant improvement in the expectations index.
The IFO stated that the German economy is starting the New Year with more confidence.
Hawkish ECB rhetoric continues
ECB council member Nagel stated that interest rates need to increase further and would not be surprised if hikes continued to rise further after March.
Fellow member Makhlouf stated that rates needed to increase at the February and March meetings.
Bank of Canada now on hold
The Bank of Canada increased interest rates to 4.50% from 4.25% at the latest policy meeting which was in line with consensus forecasts.
The bank also signalled that rates were now on hold amid expectations that inflation has peaked.
The pause was condition on the economy performing in line with updated expectations.
Dollar overall still struggling
The dollar rallied at times on Wednesday, but was unable to hold the gains amid speculation that the Federal Reserve would adopt a less hawkish stance.
The relative under-performance for Wall Street stocks also curbed underlying support for the US currency.
The dollar index was close to 9-month lows on Thursday, but found support on a dip t this area.
US GDP data Thursday
The first estimate of US fourth-quarter GDP will be released on Thursday.
Consensus forecasts are for annualised growth of 2.6%. Weak data would trigger fresh recession speculation.
Chinese markets closed
Hong Kong markets re-opened on Thursday, but Chinese markets will remain closed for the remainder of the week for the lunar new-year holidays.
13.30: US GDP (Q4 first reading)
13.30: US jobless claims
Key events over the next week
January 27th: US PCE prices index
February 1st: US ISM manufacturing index
February 1st: US Federal Reserve policy decision
February 2nd: Bank of England policy decision
February 2nd: ECB policy decision
February 3rd: US employment report
Gun to head challenge – Update
Today’s trade idea
Have a great week everyone.
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