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Date: 10th January 2025.

Why is the British Pound Declining?
 

Why is the British Pound Declining?


The Great British Pound is the worst performing currency of 2025 so far after witnessing sharp declines for 3 consecutive days. The decline is largely being triggered by the bond selloff, lack of business confidence due to the UK Autumn budget and political uncertainty. Will the trend continue?
 

GBPUSD-WEEKLY_Internal_658e980df67849b6951069c497ca2592

 

The GBP Index Declines 2% In 2025! Why Is The Pound Dropping?

The Great British Pound is the worst performing currency of the week and of the year so far. Below you can see a table showing the Pound’s performance in January 2025 so far.
GBPUSD -2.25%
EURGBP +1.69%
GBPJPY -1.44%
GBPCHF -1.42%
GBPAUD -1.91%
GBPCAD -2.00%
A key reason for the GBP’s decline is the latest labor budget, which is driving a selloff in UK bonds. Bonds across the global market are declining, including in the US and Germany. However, the global decline is mainly due to monetary policy. The decline in UK bond yields is due to concerns regarding the UK budget, higher costs for business and investor confidence. As a result, investors are selling UK bonds, but also reducing their exposure to the Pound.
Bond Selloff and Rising Yields: Higher bond yields can sometimes strengthen a currency by attracting increased investor demand. However, this effect is unlikely when rising yields result from a bond selloff driven by declining investor confidence.
The UK 30-Year Bond Yields are at their highest level since 1998 and the 10-Year Bond Yields are up to the highest level since the banking crisis of 2008. Investors’ concerns are that the higher costs for business will be passed onto consumers, triggering higher stickier inflation. As a result, the Bank of England will struggle to reduce the cost of borrowing in 2025 and foreign investors will become more cautious of operations in the UK.
The short-term impact is that the UK Chancellor may struggle to meet her fiscal rules. Her budget margin of £9.9bn to avoid overshooting borrowing has likely shrunk to about £1 billion due to market shifts, even before the OBR updates its forecasts. This uncertainty may force the Treasury to cut future spending plans, but the full picture won’t emerge until the OBR's March forecast. According to reports, the UK Chancellor cannot risk higher increases in taxes and will be forced to cut public spending.

The GBPUSD Falls To A 60-Week Low!

The GBP is struggling against all currencies, but the sharpest decline can be seen against the USD. The GBP’s decline is partially due to the incoming president, Donald Trump, who is expected to introduce Dollar-supporting measures, but also potentially impose tariffs on the UK.
 

GBPUSD-WEEKLY_Internal (2)_17acabd41a9a4cae8bfe4ccafe6d4668



The new White House administration is likely to impose new tariffs on imports from China, Canada, and Mexico. This is likely to potentially disrupt supply chains and prompt the Federal Reserve to adopt tighter monetary policy, thereby strengthening the national currency. Some experts believe the UK will face tariffs or be pressured to adopt more pro-American economic policies. This is also something the EU will likely experience. In addition to this, reports suggest that the UK Prime Minister, Keir Starmer, and Trump supporters are not on good terms, nor agree on much including on Geo-politics.
Therefore, the decline is also related to concerns the UK may be put into a difficult position by the new US administration. According to analysts, Dollar strength is likely to continue throughout the year due to the new administration’s measures, but also due to a hawkish Federal Reserve. In the latest FOMC meeting minutes, the committee stated it expects interest rates to decline at a slower pace. The Federal Reserve is likely to only cut 0.50% in 2025 and may not cut until May or June.

Liz Truss 2022 Or James Callaghan 1976?

Is this the first Pound crisis? The GBP has experienced many "sterling crises” in the past. For example, Black Wednesday from 1992 and after Brexit in 2016. However, there have been similar crises in the past which are very similar to the current situation. For example, the Liz Truss Budget from 2022 which saw the GBP decline more than 23%. During the Sterling Crisis of 1976 the GBPUSD fell from 2.0231 to 1.5669.
Both sterling crises were due to the budget, inflation and rising bond yields. Today’s issues for the GBP and UK are very similar, however, the performance of the GBP will depend on if the new SI contributions triggers lower economic activity, inflation and if the Federal Reserve indeed avoids cutting interest rates in the near future. If inflation rises it will dampen consumer demand and the Bank of England will be forced to pause any rate adjustments. As a result, the economy may contract or stall further pressuring the GBP.
However, this cannot yet be certain. KPMG experts anticipate accelerated economic growth this year, supported by monetary policy and increased government spending. They project GDP to rise to 1.7%, more than doubling last year’s 0.8%. This growth, according to their estimates, will be driven by a recovery in consumer spending, expected to increase by 1.8% compared to 1.0% last year. In addition to this, if the Federal Reserve unexpectedly opts for more frequent rate cuts, the GBP and EUR are likely to benefit.
When monitoring the price movement and patterns which can be seen in the exchange rate, the decline looks similar to the price movement seen in 2022, during the Truss reign. The price has now fallen below the support level from April 2024. The next support levels can be seen at 1.20391 and 1.17992. Technical analysis for the GBP can also be viewed in HFM’s latest Live Trading Session.
 

Key Takeaways:

  • The Great British Pound is the worst performing currency of the year so far, having declined by more than 2.00%.
  • A key reason for the GBP’s decline is the latest labor budget, which is driving a selloff in UK bonds.
  • UK 30-year bond yields are at their highest since 1998, while 10-year yields have reached levels last seen during the 2008 banking crisis.
  • Investors reduce exposure to the GBP as the US edges closer to a new president and pro-Dollar supportive measures.
  • The UK labour government will not reconsider higher taxes but may be forced to reduce public spending.

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.


Click HERE to access the full HFM Economic calendar.

Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding of how markets work. Click HERE to register for FREE!

Click HERE to READ more Market news.

Andria Pichidi
HFMarkets

Disclaimer:
 This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

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Date: 13th January 2025.

Global Market Update: Asian Stocks Fall, Pound Weakens,Oil Surges Amid Fed and Geopolitical Shifts.


 
Global Market Update: Asian Stocks Fall, Pound Weakens,Oil Surges Amid Fed and Geopolitical Shifts

Asia & European Sessions:
  • Asian markets tumbled alongside European and US equity futures as investors scaled back expectations of near-term interest rate cuts by the Fed, following stronger-than-expected US payroll data.
  • Bank of America has revised its outlook, no longer anticipating two 25 bps rate cuts this year and warning that the Fed’s next move could be a hike. Goldman Sachs also adjusted its forecast, expecting two rate cuts instead of three for 2025.
  • Chinese equities also slid further despite data showing record exports for 2024, as concerns linger over potential higher US tariffs once President-elect Donald Trump takes office.
  • The Pound extended its decline from last week, hitting a multi-month low.
  • Oil prices surged to a 4-month high due to fresh US sanctions on Russia. These measures included restrictions on two major oil exporters, insurance companies, and over 150 oil tankers.
  • China Intervenes to support the Yuan: China intensified its efforts to stabilize the yuan after the currency neared record lows in offshore trading. The People’s Bank of China, along with other regulators, vowed to strengthen oversight of the foreign exchange market, crack down on disruptive activities, and prevent further declines in the yuan.
  • Geopolitical tension continues as Justin Trudeau stated that Canada is ready to respond with counter-tariffs against the US if President-elect Donald Trump follows through on his threat to begin a trade war in North America.
Canada is the largest buyer of US-made products, purchasing approximately $320 billion worth in the first 11 months of last year. He emphasized that Canada is the top export partner for 35 US states, and any trade restrictions would ultimately hurt American businesses and workers. Recalling the 2018 tariffs on steel and aluminum under the Trump administration, Trudeau pointed out that Canada had responded by imposing duties on various US goods, including appliances, bourbon whiskey, and boats. He reiterated that his government is ready to take similar action if necessary.
 
2025-01-13_11-05-17_66d69ddd746d4f1785907d2e58046922



Financial Markets Performance:
  • The USDIndex has inched up to 109.84, despite the fact that the Yen strengthened. EURUSD and cable remain under pressure.
  • The Pound fell as much as 0.7% to $1.2126, marking its lowest level since November 2023, amid stagflation concerns and budget jitters. This extended a 1.7% drop from the previous week.
“A slowing economy and widening deficits in both the current account and fiscal balances are weighing on the pound,” said Christopher Wong, a currency strategist at Oversea-Chinese Banking Corp.
  • Oil markets were in focus as UKOIL rose above $81 per barrel during Asian trading hours & USOIL to $77.55 driven by US sanctions targeting Russia’s energy sector.
  • Gold is steady at $2686.
Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.


Click HERE to access the full HFM Economic calendar.

Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding of how markets work. Click HERE to register for FREE!

Click HERE to READ more Market news.

Andria Pichidi
HFMarkets

Disclaimer:
 This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
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Date: 14th January 2025.
 
Asia & European Sessions: Market Sentiment Shifts on Tariff Talks and Inflation Data Focus.
 

Asia & European Sessions: Market Sentiment Shifts on Tariff Talks and Inflation Data Focus

Asia & European Sessions:

  • Bearish momentum after Friday's meltdown, rising oil prices, technicals, and apprehension over upcoming inflation reports left the market heavy and buyers scarce.
  • Market sentiment got a boost by a Bloomberg source story suggesting that President-elect Trump's team considers a gradual fading in of tariffs. The report boosted stock market sentiment in Asia and Europe.
  • Trump team studies gradual tariff hikes . Bloomberg cited "people familiar with the matter" as saying that "members of President-elect Donald Trump's incoming economic team are discussing slowly ramping up tariffs month by month, a gradual approach aimed at boosting negotiating leverage while helping avoid a spike in inflation". "One idea involves a schedule of graduated tariffs increasing by about 2-5% a month, and would rely on executive authorities under the International Emergency Economic Powers Act." The sources said the proposal is still in its early stages and has not yet been presented to Trump.
  • Bond yields finished marginally off their highs on possibility of gradual tariffs. The curve steepened slightly to 39 bps from 37.5 bps Friday and is out from 31.7 bps at the start of the month.
  • Chinese shares rallied as much as PBoC to enhance policy tools, which allow institutional investors to access central bank funding for buying stocks. Coupled with a jump in new yuan loans that helped the Hang Seng to close 1.8% higher, while the CSI300 jumped 2.6%. Eurozone stock markets are also finding buyers, and the DAX is up 0.6%. The FTSE100 is underperforming, but yields are down also in the UK.
  • US inflation is the focal point this week with key data due out, and it doesn't look pretty. Attention is on CPI (Wednesday) where we are forecasting monthly increases of 0.3% for headline and core metrics, with the y/y measures at 2.8% for the headline and 3.3% for the core. However, also due are today's report from the NY Fed on 1-year inflation expectations, PPI today, and trade prices (Thursday), along with the price numbers in the Empire State (Wednesday) and Philly Fed (Thursday) indexes.

 

2025-01-14_11-45-32_45d69328e0c24e679faf3d54ca195333

 

Financial Markets Performance:

  • The USDIndex hit a session low of 109.33.
  • EURCHF presents a rectangle identified at 14-Jan-04:00. This pattern is still in the process of forming. Possible bullish price movement towards the resistance 0.9437 within the next 3 days.  Supported by Upward sloping Moving Average
  • Oil prices are slightly lower, and the USOIL contract is at USD 78.65 per barrel.
  • Gold is a tad higher at $2670.1 per ounce.
Always trade with strict risk management. Your capital is the single most important aspect of your trading business.
 
Please note that times displayed based on local time zone and are from time of writing this report.
 
Click HERE to access the full HFM Economic calendar.
 
Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding of how markets work. Click HERE to register for FREE!
 
Andria Pichidi
HFMarkets
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
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Date: 17th January 2025.
 
Last Trading day under Biden Administration.
 

Last Trading day under Biden Administration

Asia & European Sessions:

  • Yields remain richer after dovish comments from Fed Governor Waller. His comments that the FOMC could cut rates in 1H, and would not rule out March added to the bullish enthusiasm from the cooling in CPI and PPI. Additionally, thoughtful and tempered remarks from Treasury Secretary nominee Bessent did not ring any alarm bells.
  • Wall Street ended lower on profit taking following yesterday's big gains, failing to get any further mileage out of the rally in Treasuries. The NASDAQ slid -0.89%. The S&P500 dipped -0.21%, and the Dow was down -0.16%.
  • Pound plummeted after UK December Retail Sales. UK December retail sales contracted -0.3% m/m in the overall measure and -0.6% m/m excluding fuel. A disappointing report, especially as November readings were revised down from 0.2% m/m to 0.1% m/m in the overall number and to 0.1% m/m from 0.3% m/m in the ex-fuel report. There has been somewhat conflicting stories about retail sales developments ahead of Christmas, but these numbers confirm that consumption remains depressed, which adds to the disappointing monthly GDP reading this week. With inflation coming in lower than anticipated, the data will back expectations for another rate cut from the BoE at the next meeting.
  • The BOJ is expected to raise interest rates next week, barring any significant market disruptions as US President-elect Donald Trump takes office. Overnight index swaps on Friday indicated a 99% probability of a BOJ rate hike at its January 23-24 meeting, up from 71% on Wednesday. Momentum increased on Thursday following a Bloomberg report suggesting central bank officials see a strong likelihood of a rate hike unless Trump's inauguration introduces significant surprises.

 

2025-01-17_11-14-18_b41a3063c42b49ca90a8b060ee7ba1ae

 

Financial Markets Performance:

  • The USDIndex ended weaker too at 108.974, dipping from the day's high of 109.384.
  • GBPUSD dipped to 1.2159 after data, before correcting back to 1.2197 due to oversold conditions.
  • Yen remains supported by hawkish BoJ bets and USDJPY has corrected to 154.95 as markets weigh the chances of a rate hike next week.
  • USOil was well supported above $77.80, amid weaker than expected US inflation boosted dovish Fed bets, demand expectations and ahead of Trump administration. USOIL & UKOIL continued to trade near 6-months highs, as traders weigh potential supply disruptions and the ongoing decline in US stockpiles. OPEC meanwhile is sticking with a demand outlook that expects a rise of 1.43 million barrels per day next year, which reflects steady growth. Confirmation of a ceasefire and hostage deal between Israel and Hamas may have helped prices to ease slightly.
  • Gold steadied above $2700 level.
Always trade with strict risk management. Your capital is the single most important aspect of your trading business.
 
Please note that times displayed based on local time zone and are from time of writing this report.
 
Click HERE to access the full HFM Economic calendar.
 
Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding of how markets work. Click HERE to register for FREE!
 
Andria Pichidi
HFMarkets
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
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Date: 21st January 2025.
 
Gold Surges Past Key Resistance Level, Undeterred by Looming Tariffs.
 

Gold Surges Past Key Resistance Level, Undeterred by Looming Tariffs

Gold prices have risen to their highest level since November 6th, nearing a full correction from the post-election decline. In recent months, analysts have made clear predictions regarding the price of Gold rising to $3,000 in the first half of 2025. This prediction took a hit after the US elections triggered a 6.50% rise in the US Dollar. Is a $3,000 target possible?

How Does Trump Influence Gold?

The focus of the market over the past week has been the influence of a Trump Presidency on tradable assets. So far in January 2025, the price of gold has risen by more than 4.00%. This suggests that investors are confident Trump will not negatively impact gold in the medium to long term. However, investors are also considering the possibility of higher import duties on nearly all goods entering the United States, particularly from Canada, Mexico, and China.

 

XAUUSD_Internal_e14020b4f8144673915e24ac0a51329e

 

These measures could disrupt global supply chains if these countries choose to retaliate. As a result, the Federal Reserve may cut less in 2025 and the US Dollar may increase further. This is the market’s main concern and could potentially pressure Gold prices lower. In 2018, during the previous “trade wars”, Gold prices fell for 6-consecutive months. However, many economists believe the Federal Reserve will be forced into cutting on 3 occasions. If this does transpire, the price of Gold will be supported further.

Trump did not give any concrete signals on tariffs during his speech. The Republican administration seems likely to focus on targeted tariff increases, particularly on critical imports such as electric vehicles. Tesla Stocks are already trading 0.50% higher before the market opens.

UCFTC Gold Report And Influential Factors

The US Commodities Future Trading Commission also confirms the increase in demand via order flow analysis. The Commission’s data shows net speculative positions rose to 279.4K from 254.9K last week. Buyers have been actively forming positions, with their balance reaching 221.6K compared to 9.1K for sellers. Last week, buyers added 14.9K contracts, while sellers reduced theirs by 3.1K, reflecting strong confidence in the continued upward trend of XAU/USD.

When monitoring external factors and its influence on the price of Gold, traders will most likely continue to monitor Bond Yields, Earnings Reports and the US Dollar. Currently, lower bond yields are supporting Gold prices but this is something investors will need to continue monitoring. Gold prices may also potentially benefit from weaker earnings data to a certain extent. The most volatile day this week will most likely be on Friday as the Bank of Japan confirms its Interest rate decision and global economies release their PMI reports.

Gold’s Performance - Technical Analysis.

The price of Gold this morning is trading 0.75% higher than its open price. The retracement seen during the previous week was weaker than the average retracement size seen over the past 30-days indicating the momentum of the bullish price movement. The average bullish impulse wave measures 2.75% and the current impulse wave reads 1.49%. Therefore, if the asset was to continue similar price movements, the price potentially could rise to $2,763. However, this would depend on how upcoming events influence the price.

 

XAUUSDDaily_Internal_f746ba41bec0417a9742eb838bc65f20

 

Currently, technical analysis is providing a bullish bias as the asset breaks through the resistance level seen on a daily timeframe. In addition to this, the price trades above all Moving Averages and Cumulative Delta Statistics show higher volume in favour of buy orders. For this reason, the asset is witnessing bullish signals. However, if the price declines or retraces, traders should be cautious, as the bullish trend may regain momentum when the price approaches the 200-Period Moving Average on the 5-minute timeframe.

 

Key Takeaways:

  • Gold prices have risen to their highest level since November 6th.
  • Last week, buyers added 14.9K contracts, while sellers reduced theirs by 3.1K, reflecting strong confidence in the continued upward trend of XAU/USD.
  • Currently, technical analysis is providing a bullish bias as the asset breaks through the resistance level seen on Gold’s daily timeframe
  • Economists believe the Federal Reserve will be forced into cutting on 3 occasions.
 
Always trade with strict risk management. Your capital is the single most important aspect of your trading business.
 
Please note that times displayed based on local time zone and are from time of writing this report.
 
Click HERE to access the full HFM Economic calendar.
 
Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding of how markets work. Click HERE to register for FREE!
 
Michalis Efthymiou
HFMarkets
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
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Date: 22nd January 2025.
 
Netflix Earnings Surge Driving the NASDAQ to Monthly Highs!

 

Netflix Earnings Surge Driving the NASDAQ to Monthly Highs!

The NASDAQ increases in value for a fourth consecutive day, gaining momentum after Netflix stocks rise more than 15%. Earnings reports are gaining speed for the technology sector, but why has Netflix stocks seen such a high and sudden rise in demand?

Netflix Stocks Increase 15% Supporting the NASDAQ!

Netflix stocks have been one of the best-performing stocks within the NASDAQ, rising more than 79% in 12 months. However, even for Netflix, a 15% rise in less than 24 hours is considered substantial. The quarterly earnings report was made public by Netflix after the market closed on Tuesday. The earnings report confirmed the following:

  1. Netflix beat their earnings per share expectations - $4.27 reported vs $4.21 expectations.
  2. Netflix’s revenue surpasses the previous quarter - $10.25 billion this quarter vs $9.82 billion in the previous quarter.
  3. The online streaming company confirms projects to expand into live sport and event streaming will proceed. In addition to this, the company’s forward guidance for 2025 remains positive.

Netflix is the 10th most influential company for the NASDAQ meaning the positive earnings data and bullish price movement supports the overall price of the NASDAQ. In addition to this, the positive earnings improve the sentiment towards the entire US technology sector. Investors will now turn their attention to the quarterly earnings report for Intuitive Surgical. Intuitive Surgical stocks on Tuesday rose 1.94%.

How is the Economy And Politics Affecting the NASDAQ?

 

NASDAQ2HR_internal_8bc3a962288945f39850ac46545e3500

 

The US stock market is witnessing an upward correction after struggling in the last weeks of 2024. The bullish price movement is a result of a sharp decline in bond yields, the new US administration and earnings season. Investors remain relieved that bond yields have fallen back down from the 5.00% level. If bond yields continue to decline further, particularly below 4.50%, the move would be deemed as positive for the US stock market.

President Trump took office on Monday and so far the pro-US rhetoric from the President, Vice President and Secretary of State continues to support the stock market. So far, the main concern is how upcoming tariffs can negatively affect inflation and growth. However, some economists advise tariffs will become the “norm” and may have a lesser effect compared to 2018. However, this is something traders will continue to evaluate and monitor.

The VIX this morning fell 0.83% lower and trades more than 5.70% lower over a 7-days. The lower VIX indicates a higher risk appetite towards the stock market. If the VIX continues to decline a strong buy indication may materialize.

On the most influential stocks for the NASDAQ, 82% rose in value on Tuesday. However, Apple stocks, the most impactful stock, fell 3.19% due to poor sell data. If Apple stocks continue to decline, the NASDAQ’s upward trend may come under strain. In the meantime, investors over the next week will continue to monitor upcoming earnings reports.

NASDAQ - Technical Analysis

The price of the index is trading significantly higher than all Moving Averages on a 2-hour timeframe and relatively high on oscillators. These factors indicate that buyers are controlling the order book. However, price action also confirms the latest impulse wave measures 3.43% which is normally the point at which the index retraces. This is something that investors may also consider.

The retracement potentially also may be triggered by Netflix buyers quickly selling to cash in profit after the sudden 15% bullish surge. If a retracement does indeed form, price action and the 75-period EMA indicates that the pullback may drop as low as $21,391.30.

 

NASDAQ30MIN_internal_db83d657b9b945ba9f70983eea722846

 

Key Takeaways:

  • The NASDAQ increases in value for a fourth consecutive day, but price action signals a possible retracement before continuing its bullish trend.
  • Netflix stocks increase more than 15% due to strong earnings data.
  • Netflix beat earnings and revenue expectations by 1.39% and confirmed projects to add live sports streaming to its platforms.
  • The VIX trades more than 5.70% lower over a 7-days and US Bond Yields remain at recent lows.
  • On the most influential stocks for the NASDAQ, 82% rose in value on Tuesday.
Always trade with strict risk management. Your capital is the single most important aspect of your trading business.
 
Please note that times displayed based on local time zone and are from time of writing this report.
 
Click HERE to access the full HFM Economic calendar.
 
Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding of how markets work. Click HERE to register for FREE!
 
Michalis Efthymiou
HFMarkets
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
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Date: 23rd January 2025.
 
How Low Can Oil Prices Fall After Renewed Downward Pressure?

 

How Low Can Oil Prices Fall After Renewed Downward Pressure?

Since Donald Trump became President of the US, Crude Oil prices have fallen 3.70% retracing back from the 27-week high. Analysts still believe the price of oil per barrel will fall under the Trump presidency, as per previous statements. President Trump himself previously stated he wants oil priced closer to $45 per barrel. However, how long can oil prices fall and how quickly?

What’s Driving Oil Prices Lower?

 

Oil 2-Hour Chart

 

Investors are closely watching the next steps of U.S. President Donald Trump’s administration. Yesterday, Trump announced plans to impose a 10% tariff on all Chinese exports, scaling back from the 100% tariff he promised during his campaign. This news has reassured investors, but experts caution that this move could be just the beginning. Over time, the U.S. may increase pressure on its top economic rival, potentially slowing the Chinese economy and reducing its energy demand.

China is currently the largest importer of Crude Oil followed by the US, India and Japan. Therefore, a poorer economic outlook for China can pressure oil prices in 2025. The performance of the Chinese economy will also depend on the 10% tariffs and if these will indeed rise over time.

The US President is also attempting to create an imbalance between supply and demand in order to pressure prices lower. On the President's first day he launched significant changes to the US’s energy policy, reversing restrictions on coastal oil field development imposed by the former President. Trump also advocated for boosting oil production at existing fields and declared a national energy emergency, aiming to attract investment in the mining sector and bolster the US oil reserves. If Trump is successfully able to considerably increase supply, the price of Crude Oil is likely to come under pressure. Only if demand equally improves will supply-demand imbalances be avoided.

Meanwhile, a sharp drop in oil prices is being mitigated by poor weather conditions along the Gulf Coast, which could disrupt production in key high oil-producing countries. Although, this is not likely to continue in the medium to long term. The Middle East and high-producing countries in recent years have aimed to keep oil prices between $70-$80 per barrel. Therefore, traders will also monitor if these countries will look to structure countermeasures to reduce the downward pressure. For example, by reducing production levels.

How Low can Crude Oil Prices Fall?

The average price of oil over the past 5 years is $70 per barrel, $5 (-5.60%) lower than the current price. However, the average price of this period takes into consideration the oil crisis from 2022 where prices rose above $100. More realistic support levels can be seen at $62 per barrel. The price has found support at this level in 2021, 2023 and 2024.

 

Oil Monthly Chart

 

Some economists, such as Tom Kloza, suggest that Crude Oil could potentially drop to $40 per barrel. This would occur if OPEC nations decide to reverse previous production cuts. However, most economists believe it's more realistic to expect Crude oil prices to drop between $54 to $62 per barrel in the medium to long term. Other organizations, such as the US Energy Information Administration believe oil will only drop to $74 per barrel in 2025 and $66 per barrel. According to the EIA, their predictions, which are higher than most, are due to strong economic activity.

In terms of indications and technical analysis, most point towards a downward trend. The price of Crude Oil is currently trading below most trendlines and the Volume-Weighted Average Price. In addition to this, Oscillators such as the RSI and MACD also indicate sellers are controlling the price movement. However, Crude Oil Traders should note this outlook may change if the price gains bullish momentum above $76.38.

Key Takeaways:

  • President Trump aims to bring Crude Oil prices back down closer to $40 per barrel.
  • Trump is driving a supply-demand imbalance to lower prices, starting with reversing oil field restrictions.
  • Economist Tom Kloza suggests Crude Oil could drop to $40 per barrel if OPEC reverses previous production cuts.
  • Most economists believe oil prices will fall to between $54 to $62.
  • The average price of Crude Oil over the past 5 years is $70 per barrel.
 
Always trade with strict risk management. Your capital is the single most important aspect of your trading business.
 
Please note that times displayed based on local time zone and are from time of writing this report.
 
Click HERE to access the full HFM Economic calendar.
 
Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding of how markets work. Click HERE to register for FREE!
 
Michalis Efthymiou
HFMarkets
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
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Date: 24th January 2025.
 
The BoJ Hikes, But JPY Struggles To Maintain Momentum!

 

The BoJ Hikes, But JPY Struggles To Maintain Momentum!

The Bank of Japan has shocked the market by hiking 0.25%, the highest hike in 18 years. Despite the boost from the interest rate hike, the Japanese Yen remains far from being one of the day's top-performing currencies. Traders consider whether the outlook for the Japanese Yen is likely to change in 2025?

 

EURJPY3hour_internal_58e683cf69c74822a9a9d24f86d12b29

 

EURJPY - Mixed Performance After the Bank Of Japan Increased Rates!

The EURJPY only traded 0.10% lower during this morning’s Asian Session, which may seem unimportant. However, the EURJPY has fallen 0.50% since the Bank of Japan’s rate decision was made public. Investors are considering if the EURJPY will see a change in trend and decline downwards after increasing in value throughout the week. Technical analysts advise even though the Japanese Yen may perform well in 2025, the currency may struggle in the short term.

In terms of economic and monetary policy influences the EURJPY potentially can come under pressure and move in favor of the JPY. This is mainly due to the market expecting the European Central Bank to cut 100-basis points in 2025. In addition to this, economists also believe the Bank of Japan will hike again in the second quarter. However, many traders believe the Japanese Yen may not see gains imminently or in the short term. Particularly, as both the French and German PMI data rose above previous expectations.

 

EURJPY15min_Internal_4c3454797a5a4c5ea476053678f98ead

 

Bank of Japan - How High Will Rates Rise?

The Bank of Japan decided to adjust interest rates by 0.25%. The central bank's policy rate rose from 0.25% to 0.50% bringing the rate to a 17-year high. The hike is an important move for the Bank of Japan as it is the first time they have hiked 0.25% since 2007. Of the 9 members who voted on interest rates, 8 voted to hike and only 1 voted against.

The rate decision is known to be positive for the JPY, but the press conference that followed also provided further support. Governor Ueda’s forward guidance on inflation and the economic outlook was largely positive. Amongst the positive tone were the Governor’s insights into the wage negotiations.

Last year, Japanese companies agreed to a 5.1% wage increase, the largest in 30 years. It was for this reason, the Bank of Japan was able to go from negative interest rates to where we are today. The Bank of Japan’s interest rates had been at 0.00% or lower, since 2010. For 2025, the trade union is pushing for at least a 5% hike overall and a 6% increase for smaller companies to reduce income gaps with larger firms. The Governor stated that these negotiations are progressing smoothly and that companies are likely to continue to increase wages.

The governor also advised the costs of imports are increasing due to a weak Japanese Yen and indicated that this is something the Central Bank wishes to correct. The Governor said the central bank would like rates to rise to the neutral range. However, this range is normally known to be between 1% and 2.5%. In the upcoming weeks, investors will be attempting to determine how high rates can go over the upcoming months.

EURJPY - Strong European PMI Data Supports the Euro!

The EURJPY exchange rate will also largely depend on the EUR and the European Central Bank. The European Central Bank will announce its rate decision on the 30th. Economists expect the ECB to cut 0.25% and indicate a full 1.00% cut in 2025. The bearishness of the ECB will also be a key factor in the pricing of the EURJPY.

The Euro is the best performing currency of the day after obtaining further support from the French and German PMI release. The French Services PMI read 45.3, higher than the 42.4 expectations. German Services and Manufacturing PMI also rose above expectations and read higher than the previous month. Below traders can view today’s analysis of today's PMI reports.

 

Speaking at the World Economic Forum in Davos amongst other bankers was José Luis Escriva, Governor of the Spanish Central Bank. Mr Escriva emphasized that the ECB should tailor its policy to remain neutral, neither slowing nor stimulating economic growth. He also stressed the importance of maintaining flexibility amid geopolitical uncertainty and adapting to new developments. However, most European bankers have warned that tariffs from the US would result in a pause.

Key Takeaways:

  • The Bank of Japan increases interest rates by 0.25%, the strongest hikes in 18 years.
  • The BoJ Governor advises wages in Japan will rise in 2025 and a weak JPY is triggering inflation.
  • German Services and Manufacturing PMI also rose above expectations and read higher than the previous month.
  • The Euro is the best-performing currency of the day after obtaining support from strong PMI data from Germany and France.
Always trade with strict risk management. Your capital is the single most important aspect of your trading business.
 
Please note that times displayed based on local time zone and are from time of writing this report.
 
Click HERE to access the full HFM Economic calendar.
 
Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding of how markets work. Click HERE to register for FREE!
 
Michalis Efthymiou
HFMarkets
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
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Date: 27th January 2025.
 
Mild Risk-Off Sentiment: Stocks Slide, Yen Gains, and Bitcoin Dips Amid Tariff Tensions and Fed Anticipation.

 

Mild Risk-Off Sentiment: Stocks Slide, Yen Gains, and Bitcoin Dips Amid Tariff Tensions and Fed Anticipation

Asia & European Sessions:

 

  • European stock market indexes are lower in early trade, after a mixed session in Asia, where concern over the weaponization of tariffs and a possible tech shakeup put mainly China bourses on the back foot.
  • Trump’s threat to impose tariffs on Colombia, citing the country’s refusal to accept military flights carrying deported migrants, prompted Bogotá to threaten retaliatory measures. However, the White House later announced Colombia had agreed to accept the flights, defusing immediate tensions. Trump also signalled potential tariffs on Canada and Mexico starting February 1.
  • The Hang Seng is up 0.6%, while the Nikkei dropped as central bank action remains in focus and the yen rallied. DAX and FTSE100 are down -1.2% and 0.4% respectively in early trade and a -2.8% correction in the NASDAQ is leading US futures lower.
  • Bonds meanwhile are rallying as risk aversion picks up.
  • The Yen rose against the US dollar during Asian trading hours, as investors sought its safety amidst concerns about President Donald Trump’s tariff. On Friday, the yen briefly climbed 0.8% after the BOJ raised its policy rate to the highest level since 2008 but later retreated. BOJ Governor Kazuo Ueda indicated the central bank would maintain rate hikes as wage and price growth broadened but gave few hints on the pace of future increases.
  • Bitcoin saw a sharp decline as traders took profits just days followed Trump’s Friday announcement of a long-anticipated executive order establishing a working group to guide the White House on cryptocurrency policy. This group has been tasked with drafting a regulatory framework for digital assets within six months, while also exploring the idea of creating a national crypto stockpile.
  • Earnings reports from over 100 S&P500 companies will dominate headlines, featuring major players like Meta (META), Microsoft (MSFT), Apple (AAPL), and Tesla (TSLA). Wednesday is shaping up to be the busiest day, with additional reports from Starbucks (SBUX), Exxon (XOM), and Chevron (CVX).
  • The Federal Reserve will also be in focus on Wednesday, announcing its latest policy decision. While rates are expected to remain unchanged, investors will closely monitor Fed Chair Jerome Powell's remarks for clues about monetary policy for the rest of 2025.

 

yeh_internal_7f1210e657bd4207a3beb090e6e3148e

 

Financial Markets Performance:

  • The USDIndex is little changed at 107.40. Expectations of widespread tariffs on imports from countries like China, Canada, and Mexico have fueled inflation fears, driving US Treasury yields higher and bolstering the dollar.
  • The USDJPY traded at 155.88 after the BOJ raised rates and revised inflation forecasts higher.
  • The Mexican peso, often sensitive to tariff news, fell 0.7% to 20.409 per dollar, while the Canadian dollar weakened to 1.4385 per dollar.
  • The euro edged down 0.2% to $1.0455 ahead of an ECB meeting expected to lower borrowing costs. The British pound traded lower at $1.2428.
  • Bitcoin slipped below $98,300. Other tokens like Solana and Cardano, which had surged following Trump’s election victory, experienced even steeper losses, according to Bloomberg data.
  • Oil prices are down -0.4% at $74.28 per barrel.
  • Gold is down -0.6% at a still-high $2753.80 per ounce.

 

Gold_internal_9ffed649973b4a36adbb8ac531ef2dbb

 

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.
 
Please note that times displayed based on local time zone and are from time of writing this report.
 
Click HERE to access the full HFM Economic calendar.
 
Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding of how markets work. Click HERE to register for FREE!
 
Andria Pichidi
HFMarkets
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
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