Share:

European markets underwent another modestly negative session yesterday, weighed down by negativity from the other side of the Atlantic after US investors reacted negatively to a weak outlook from Microsoft.

The Nasdaq 100 led the way lower initially, pulling sharply away from its 200-day SMA, however a late rebound saw the index close well off the lows of the day after the Bank of Canada raised rates by 25bps, as well as signalling a rate pause for the next few meetings, as they assess the impact of multiple rate hikes on the Canadian economy.

It appears that markets reacted to this announcement on the basis that the Federal Reserve might look to do something similar when they meet next Wednesday, given that US markets turned around off their lows after the Canada rate decision was announced. This would be a huge assumption and could well end in tears next week. We certainly won’t have to wait long to find out.

Having seen Microsoft disappoint on guidance, attention quickly shifted to the next set of earnings numbers, notably Tesla after the bell, where we saw a similar focus on margins and guidance.

As a result of yesterday’s rebound in US markets, European markets look set to open higher this morning as we look ahead to today’s US Q4 GDP.  

Having started the first half of last year with two successive quarters of negative GDP growth, the US economy saw a return to positive GDP growth in Q3, of 3.2%, after a late upgrade from, 2.9% at the end of last year, with personal consumption coming in at 2.3%, a decent improvement on the 2% seen in Q2, and a significant improvement on the first iteration which only came in at 1.4%.

The upward revision higher came about as a result of a rebound in consumer spending, as well as higher government spending.

As we look towards today’s first iteration of Q4 GDP is seems quite likely that we’ll see a slowdown from the strong performance in Q3. Expectations are for a modest slide to 2.5%, although with signs in recent months that consumer spending is slowing you might think that there could be considerable downside risks to that estimate. Despite these concerns the estimates for personal consumption are for an increase from 2.3% to 2.8%. Quarterly core PCE is expected to fall sharply to 3.9% from 4.7%. 

Weekly jobless claims are also in focus after slipping to 190k last week and matching the lows seen last September. The slide in claims since the 241k peak in November suggests that the US labour market is still very tight, with little indication despite the recent announcements around job losses across the tech sector that the jobs market is deteriorating. That doesn’t mean however that what we’re starting to see in tech won’t ripple out across the rest of the economy in due course. Expectations are for claims to edge higher to 205k.  

EUR/USD – Continues to range between the highs this week at 1.0927, and wider resistance at the 1.0950 area which is 50% retracement of the move from the 2021 highs to last year’s lows at 0.9536. A move through 1.0950 opens up a move towards 1.1110. Support remains back at the 1.0780 area.

GBP/USD – Rebounded from the 1.2260 area yesterday retesting 1.2400 in the process. We need to see a move through the 1.2450 area to target further gains. Above 1.2450 could see a move towards 1.2600. A move below 1.2250 could see a move towards 1.2170. 

EUR/GBP – Pulled back from the 0.8850 area yesterday with resistance at the previous highs at 0.8900. Still have support above the 50- and 100-day SMA which we saw last week at the 0.8720/30 area. Below 0.8720 targets 0.8680.

USD/JPY – Slid back from trend line resistance from the October highs, which now sits at 131.00, earlier this week. Further declines could see a return to the lows at 127.20. We have interim support at the 128.20 area initially.

FTSE 100 is expected to open 19 points higher at 7,764.

DAX is expected to open 88 points higher at 15,169.

CAC40 is expected to open 36 points higher at 7,080.

Share: Feed news

Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 70.5% of retail investor accounts lose money when spread betting and/or trading CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money.

Follow us on Telegram

Stay updated of all the news

Join Telegram

Recommended Content


Follow us on Telegram

Stay updated of all the news

Join Telegram

Recommended Content

Editors’ Picks

AUD/USD finds buyers near 0.6950 amid subdued US Dollar

AUD/USD finds buyers near 0.6950 amid subdued US Dollar

AUD/USD is defending the 0.6950 support amid a broadly subdued US Dollar so far this Wednesday. US President Joe Biden's annual State of the Union speech fails to yield any relevant market reaction. US data and Fedspeak coming up next. 

AUD/USD News

EUR/USD grinds higher past 1.0700 even as US President Biden’s SOTU sounds tough on China

EUR/USD grinds higher past 1.0700 even as US President Biden’s SOTU sounds tough on China

EUR/USD floats around 1.0725-30 after snapping a four-day downtrend as the pair traders struggle to believe in the hawkish comments from US President Joe Biden’s State of the Union (SOTU) speech.

EUR/USD News

Gold eyes $1,880 as investors digest Powell’s guidance and Biden’s SOTU

Gold eyes $1,880 as investors digest Powell’s guidance and Biden’s SOTU

Gold price (XAU/USD) is aiming to capture the immediate resistance of $1,880.00 in the Asian session. The precious metal rebounded after dropping to near $1870.00 and is expected to add gains ahead as the risk appetite of the market participants is improving.

Gold News

Why Cosmos price is likely to rally toward $17 in February

Why Cosmos price is likely to rally toward $17 in February

Cosmos price continues to display strength as the uptrend seems unfazed by investors who may be taking profit off January's 70% gain. Considering the overall bullish stance in the crypto market, a 15% rally from today’s market value is a conservative estimate.

Read more

Soft landing, hard landing, no landing?

Soft landing, hard landing, no landing?

The Dollar has started the year on a soft footing on the view that the Fed can respond to a soft US landing, as the Rest of the World recovers. The recent run of data, especially out of the US, questions whether the Fed needs to cut rates at all.

Read more

Majors

Cryptocurrencies

Signatures