North American News
US indices closed lower on the day. S&P index stays above the 4100 level
- The major US indices are closing lower on the day with the NASDAQ down and even -1.0%.
The major US indices are closing lower on the day. However, there is some sunshine technically as the S&P index is closing above the 4100 level.
A look at the final numbers are showing:
- Dow Industrial Average -35 points or -0.10% at 33891.01
- S&P index -25.42 points or -0.61% at 4111.07
- NASDAQ index -119.49 points or -1.00% at 11887.46
- Russell 2000.25 -27.81 points or -1.4% at 42.25
US January employment trends 118.74 vs 116.31 prior
- Employment trends survey from The Conference Board
- Prior was 116.31 (revised to 117.06)
US dollar continues to strengthen as risk trades struggle
- The fallout from non-farm payrolls continues
The market is pricing in a higher path for the Fed funds rate ahead of tomorrow’s speech from Fed Chairman Jerome Powell and that means a higher US dollar.
The implied peak is now up to 5.11%, which essentially matched the Fed dot plot of 5.00-5.25% and rates remain at 4.75% through year end.
This comes on a rethink following extraordinarily strong data on Friday on US non-farm payrolls and the ISM services survey. It points to an economy that will be more resilient than believed at the turn of the year. Some indicators (housing is one) are even pointing to a re-acceleration in activity.
That’s something the Fed may be keen to lean against. It would mean that US rates will have to move higher than other central banks, creating a wider spread. A hawkish shift from the Fed could ultimately curb global growth as well and that’s weighing on commodity currencies today.
Commodities
Gold is firm around $1860s, after hitting a high above $1880
- Last week’s strong US labor market report warranted further US Federal Reserve action.
- Money market futures have shown 50 bps of rate hikes priced in for the May meeting.
- Gold Price Analysis: Neutral with risk skewed to the downside.
Gold price fall is being stopped as bulls entered the market at last Friday’s low of around $1860 and reclaimed $1870. A staggering US Nonfarm Payrolls report and markets repricing further interest rate hikes augmented demand for the greenback, a headwind for the non-yielding metal. At the time of writing, the XAU/USD exchanges hands at $1868.77, up by half of a one percentage point.
Silver seems vulnerable, short-term trading range breakdown in play
- Silver registers a modest recovery from a nearly one-month low and snaps a two-day losing streak.
- Oversold RSI (14) on hourly charts helps the XAG/USD to find support near the 23.6% Fibo. level.
- The technical setup, however, favours bearish traders and supports prospects for additional losses.
Silver stages a modest intraday recovery from a nearly one-month low, around the $22.20-$22.15 region touched earlier this Monday and reverses a part of Friday’s heavy losses. The white metal, for now, seems to have snapped a two-day losing streak, though the near-term technical setup seems tilted firmly in favour of bearish traders.
The steep decline witnessed over the past two trading sessions confirmed a near-term breakdown through the $23.00-$22.90 strong horizontal support. The said area marked the lower end of a nearly two-month-old trading range and coincided with the 23.6% Fibonacci retracement level of the recent rally from October 2022. Furthermore, acceptance below the 50-day SMA adds credence to the negative outlook for the XAG/USD.
That said, the oversold RSI (14) on hourly charts assists the XAG/USD to find support near the 38.2% Fibo. level and stall its sharp pullback from the highest level since April 2022 touched last week. Hence, it will be prudent to wait for some follow-through selling below the $22.20-$22.15 area before positioning for a fall below the $22.00 mark, towards the next relevant support near the 100-day SMA, around the $21.60-$21.55 zone.
WTI crude oil settles at $74.11
- Up $0.72 or 0.98%
The price of WTI crude oil futures are settling at $74.11. That’s up $0.72 or 0.98%.
The low price today reached a $72.25. The high was at $74.41.
EU News
European equity close: French stocks lag in broad slide
- Closing changes in the European market
- Stoxx 600 -0.8%
- German DAX -0.8%
- France’s CAC -1.4%
- UK’s FTSE 100 -0.8%
- Spain’s Ibex -0.6%
- Italy’s FTSE MIB -0.1%
BOE Pill: We are prepared to do more to get inflation back to target
- BOE Pill says:
- We are prepared to do more to get inflation back to target
- Changing 2% inflation target would not be a great idea
- Chances of inflation becoming more embedded in the UK is greater than continental Europe
- Monetary policy tighetening is having an impact
- Still a lot to come through
- We will do whatever we need to do to get inflation back to target sustainably
- We have to guard against doing too much with monetary policy
- We are reaching a point where it concerns on our minds
- We haven’t quite gotten to a point for discussion about rates at turning point
Other News
Japan denies that it is close to nominating a list of potential BOJ governors
- That is a swift and firm denial
This relates to the report from Kyodo News. The ruling party is out with a comment that there is “no truth” to said media report that they are at the final stages of nominating a successor to Kuroda.
Goldman cuts probability of US economy entering recession from 35% to 25% in the next year
- Soft landing? Or overheating economy
Goldman Sachs has cut its probability of a US recession to 25% from 35%. That is less than half the 65% consensus from the latest Wall Street Journal survey.
The cut comes after the better-than-expected jobs data on Friday. It is still unsure if the US is heading into a soft landing scenario, or a scenario where growth picks up and with it inflation and potentially inflation expectations? That is what the Fed is guarding against.
Cryptocurrency News
XRP price loses its 25% month-long uptrend as Ripple CTO calls buyback proposal a “scam”
- XRP price declines 3% over the last 24 hours as the altcoin fails to tag immediate support at $0.396.
- Ripple CTO David Schwartz stated the XRP buyback proposal “looks an awful lot like a scam to me”.
- Since then the altcoin has executed a technical Golden Cross pattern on the daily chart, increasing the chances of recovery.
XRP price recovery over the month of January has been rather dull in comparison to the rest of the large-cap cryptocurrencies, such as Ethereum and Solana. To add to this slow rally, external developments surrounding Ripple have further made it difficult for the altcoin to continue its uptrend.
Controversy over the XRP buyback proposal cannot have helped. In a recent tweet, Ripple’s Chief Technology Officer (CTO), David Schwartz, slammed the proposal, originally made by Ripple proponent Jimmy Valee of Vahil Capital, that one day XRP could replace the US Dollar as the world’s reserve currency due to a runaway global debt crisis.
Eventually, Valee estimates, XRP could be worth between $37,500 and $50,000 per token. Schwartz, in a tweet to Maverick_XRP, who asked for his thoughts on the buyback, said,
“I haven’t looked at it very closely. But what I have seen looks an awful lot like a scam to me. If we’ve learned anything from 2012 and 2022 it’s that anyone promising high returns with low risk is almost certainly going to rob you.”
The buyback theory, which has been floating around since 2021, sees a future in which governments around the world start buying back XRP from retail investors at a premium as a new reserve currency to replace the US Dollar in response to a spiraling global debt crisis.
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