US, Europe, and Asian-pacific markets all saw a tremendous improvement to the past week’s percentages higher. As bond yields and the USD fell, gold prices increased 2.93% in the strongest week since April 2022.
As the Gold price was stagnating, Bitcoin surprisingly surged beyond the $20,000 milestone, partly driven by softer inflation data.
With the World Economic Forum starting off in Switzerland, markets will also be swayed by major economic prints later in the week.
This past week, stock exchanges all around the world experienced an improvement in the sentiment of the international market. The S&P 500 and Nasdaq 100 both increased on Wall Street by +2.67% and 4.82%, respectively.
The Nikkei 225 and Hang Seng Index increased by 1.16% and 3.56%, respectively, in the Asia-Pacific region.
S&P 500 Index d/d
Following the upward trend established in Asian markets overnight, European markets edged tentatively higher on Monday, helped by encouraging investor sentiment brought on by the U.S.’s previous week’s data on lowering inflation.
Early trading saw the pan-European Stoxx 600 index rise 0.2%, led by gains of 0.7% in healthcare companies and a 0.7% decline in the travel and leisure sector. The DAX 40 and FTSE 100 had gains of 3.26% and 1.88%, respectively.
With an annual rate of 6.5% compared to 7.1% in November, US inflation slowed down even further in December.
However, that was in keeping with what was anticipated. The cost of food and housing remained high while the energy component continued to deteriorate.
However, markets interpreted this as another piece of evidence that the Federal Reserve will soon end its run of rate hikes.
US Dollar Forecast
The US dollar was losing strength at the same time. The DXY Dollar Index hit a low point on Friday, not seen since June 2022. The top-performing major currencies were the Australian Dollar, Euro, and Japanese Yen.
Looking ahead to the coming week, the Bank of Japan might, for once, be a noteworthy event for USD/JPY on Wednesday.
That’s because there has been growing anticipation that more adjustments to the monetary policy toward normalization could be in store since the central bank abruptly changed it in December. The BOJ is expected to keep its monetary policy unchanged.
Japan will also release December inflation data at the end of the week.
The US PPI and Core PPI data will also be released, so the fundamentals could drive the markets.
Canada and the United Kingdom will each release CPI data, which are seen as high-impact events and could bring sharp movements for the USD/CAD and GBP/USD exchange rates.
The Chinese GDP, as well as other local employment data, will be closely watched by the Australian Dollar.
Additionally, the earnings season is rapidly improving.
Canadian CPI Expected to Drop
The Canadian CPI is anticipated to show a 0.6% decrease in the preceding month on Tuesday as opposed to a 0.1% increase in the last reporting period.
According to analysts’ predictions, Canada’s consumer price index report will reveal Canada’s consumer price index for December. It will likely reveal Canada’s consumer price index report for December.
That’s excellent news for the economy, but analysts predict that energy prices will play a large role in the slowdown and that the yearly rate of underlying inflation won’t change significantly.
In order to achieve this goal, the Bank of Canada pledged to raise its benchmark interest rate at a record-breaking rate of 400 basis points in just nine months, to 4.25%.
In accordance with the money markets, there is a roughly 70% possibility that the interest rate will increase by another quarter-point on January 25.
Eyes on World Economic Forum, Switzerland
This week, European markets will pay close attention to the World Economic Forum in Switzerland. In Davos, business and government leaders mix with academics and entrepreneurs.
The conflict in Ukraine, economic instability and uncertainty, and climate change are among the major topics that delegates will debate and discuss.
The WEF this year is taking place in the midst of a cost-of-living crisis for many, and several leaders are skipping the event as issues at home persist.
The sole member of the Group of Seven expected to attend this year’s forum is German Chancellor Olaf Scholz.
For the first time since the start of the COVID-19 pandemic, the annual event will be broadcast in its usual mid-January time period. The elite of the world, from presidents to music stars, will attend the five-day conference, which starts on Monday.
This year’s theme is Cooperation in a Fragmented World.
On the icy grounds, prominent figures will include William, a musician-turned-tech investor, Qualcomm CEO Cristiano Amon, and Davos veterans Jamie Dimon of JP Morgan and Cristiano Amon of Qualcomm.
Salesforce Co-Founder and CEO Marc Benioff will also be in attendance after making a tough decision to reduce 10% of his personnel this month.
Contrary to the spring/summer Davos in 2022, Benioff will be without a co-CEO because his former running colleague Bret Taylor recently resigned to focus on his next project.
The top business minds will convene at a time when investors are still reeling from the stock market crash of 2022, and recession worries are running high due to rising interest rates. The conflict between Russia and Ukraine is still prevalent.
There will probably be worries about the future of cryptocurrencies in the wake of the FTX crisis in the backdrop.
Additionally, Elon Musk’s manipulation of Tesla’s stock price may draw some attention at the gathering of the elite due to his ownership of Twitter.
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BOE Gov Bailey Speaks As Gold Price Stalls
Due to Martin Luther King Jr. Day, US banks will be closed Monday. The markets might be shaken later when BOE Governor Bailey speaks. According to him, the XAU/USD might approach and surpass fresh highs as long as the Dollar Index keeps falling.
The price of gold increased as the USD fell further against its competitors. At the time of writing, the price of the metal is $1,917. The bias is bullish; therefore, despite brief declines, the price of yellow metal may rise again.
After the release of the US Consumer Price Index, the XAU/USD price increased fundamentally.
Technically speaking, the cost of gold decreased a little. However, the prognosis remains bright despite brief declines. The price activity indicated an upward continuation after overcoming the $1,879 resistance.
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Bitcoin’s Best Surge Since Before the Pandemic
For months, positive news has been scarce for cryptocurrency investors. Nevertheless, late on Friday, they received some: For the first time since the disastrous collapse of the FTX exchange last November, Bitcoin surprisingly surged beyond the $20,000 milestone.
Since a 31% rise in 2020 before the pandemic struck, the token’s progress so far in the first month of a year has been the best.
The increase has assisted in pushing the total value of digital assets beyond $1 trillion, which was reached in November before the collapse of the FTX market.
BTC/US Dollar 1 day
On the other side, Ether, the second-largest cryptocurrency and coin connected to the Ethereum blockchain, also increased by about 2% to $1,566. Shiba Inu price today went up over 6% at $0.0000010, while Dogecoin price was also over 2% higher at $0.08.
As prices for Tether, Stellar, XRP, Polkadot, Chainlink, Solana, Avalance, Polygon, Apecoin, Tron, Solan, Litecoin, and Uniswap were trading higher over the previous 24 hours, other cryptocurrencies’ performance today also improved.
The rise in cryptocurrency is partially a wager on punishing interest rate increases, a scenario that has also helped stocks, bonds, and gold.
Even then, given that central banks like the Federal Reserve are promising to maintain high policy rates until still-strong inflation is defeated, investors are speculating as to whether all these assets have moved too quickly.
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