The flow from stocks into US Dollars continued yesterday as the FOMC meeting minutes showed members seeing restrictive interest rates remaining for some time.
- As often happens in January during a strong bull market, there has been a major reversal ever since the start of 2024, with a strong selloff in stock markets and a Forex flow into the US Dollar. These moves continued yesterday after the FOMC meeting minutes revealed a hawkish tilt as members expressed a belief that interest rates would remain restrictive for a longer period, with major Asian indices ending the day lower following strong falls in US indices. This sent stocks lower and the US Dollar higher. However, markets still see a 72.6% probability of a first rate cut at the March 2024 meeting.
- The impact of the Japanese earthquake has seen expectations rise that the Bank of Japan will not be able to begin to move away from its ultra-loose monetary policy this month, and possibly not for some months to come. This is weakening the Japanese Yen, which is the weakest major currency since the Tokyo open today. The New Zealand Dollar is the strongest. There remain valid long-term bullish trends in EUR/USD and a bearish one in USD/JPY, although both saw strong counter trend moves yesterday.
- A standout asset in the market right now as 2024 gets underway is Bitcoin which is making a bullish consolidation after reaching a new 20-month high price two days ago above the round number at $45,000. This bullish breakout will attract interest from traders, especially trend traders.
- In the commodities markets, Cocoa futures stand out as being well established within a long-term bullish trend and are not too far off their highs.
- Results of the high-impact US data releases yesterday:
- ISM Manufacturing PMI - very slightly better than expected.
- JOLTS Job Openings – very slightly worse than expected.
- There will be some major data releases today:
- German Prelim CPI m/m
- ADP Non-Farm Employment Change
- US Unemployment Claims