USD/JPY The USDJPY keeps firm negative tone and dips to new lowest levels in over seven months on Friday, in extension of strong acceleration on Thursday, when the pair lost 2.3% of its value, in the biggest daily drop since Dec 20. The dollar was deflated by growing expectations that the Fed would continue slow the pace of its rate hikes, following further easing of US inflation. Also, Japanese yen received fresh support from talks that the Bank of Japan would soon start modifying its monetary policy, which is still unchanged, despite the other central banks already strongly tightened its monetary policies. The pair is on track for the biggest weekly loss since late November and weekly close below psychological 130 support for the first time since June 2. Bearish daily studies add to negative near-term outlook, as bears eye initial target at 127.58 (Fibo 61.8% of 112.53/151.94, break of which would generate fresh bearish signal for extension of steep downtrend from 151.94 (2022 peak, the highest in nearly 33 years) towards target at 124.66 (20MMA). Broken 130 support reverted to solid barrier, along with 55WMA (131.12), marking significant resistance zone which should limit corrective upticks (as daily studies are oversold) and keep bears in play. Res: 129.39; 130.00; 130.56; 131.12. Sup: 127.58; 127.00; 126.25; 125.48. Interested in USD/JPY technicals? Check out the key levels

EUR/JPY The cross extends steep fall into second straight day, losing 1.3% until early US session on Friday, following 1.6% drop on Thursday, as yen rose sharply on weaker dollar and speculations that BoJ is about to start revisions of its ultra-loose monetary policy. Strong bearish acceleration broke through pivotal support at 140.00 (psychological) and 139.12 (Fibo 61.8% of 133.39/148.40 rally), retracing the most of 137.38/142.85 corrective leg and signaling that larger bears are tightening grip for possible continuation after limited corrective phase. Formation of 10/200DMA death-cross contributes to negative outlook, as bearish momentum is strengthening on daily chart and RSI and Stochastic indicators are heading south. Firm break of 137.33/38 pivots (Sep 26/Jan 3 lows) would signal continuation of the downtrend from 148.40 (2022 high). Upticks under broken 140 support, reverted to solid resistance, should offer better selling opportunities. Res: 139.12; 140.00; 140.37; 140.68. Sup: 137.91; 137.38; 136.93; 135.51.

In today's live stream, Coach covered the Cable setup and the Divergences in Euro and Aussie. He updated Precious metal and the progress of the forecasted Platinum High.

Outlook: Today we get import/export prices and consumer confidence, with a couple more Feds to speak. Consumer confidence may have been trumped by yesterday’s inflation seeming tamer.   Everyone is satisfied that the inflation data came in as forecast, but it will take only a short while for critics to start complaining the numbers should have been lower and what’s wrong with economists, anyway? The Cleveland Fed has 5.87% y/y for Dec core CPI but the forecast was for 5.7%. The Cleveland Fed must be biased. So is the Atlanta Fed, whose sticky-price core is 6.6%. Let’s all use the q/q annualized, because that appears so much better! Q4 CPI annualized is a mere 1.6%, better than 2% in Q3. The core version is only 3.2% from 6% in Q3. Core services were up but core goods prices fell by 4.8% in this version. Housing is on the way down, too, so after leaving it out entirely this time, let’s put it back next time. Therefore, the Fed will definitely be cutting rates before year-end and maybe even in Q3!   This is normal exaggeration and standard undue extrapolation. Just because it’s normal doesn’t mean it’s right. Granted, the Fed will be happy to change its mind and not see a pause/cut as premature if it can be satisfied some lag or another is not going to jump up and bite it on the rear. That will have to include suppressed wage growth and energy costs staying tame. We are inclined to doubt that giant rate hikes can tame inflation that fast, and we worry that once it sinks in that inflation will be higher for longer, too, traders will throw a tantrum. Goldman has a cute estimate of the probability of recession–45-55%. This is funny in its own way. It also says if we do get a recession, it will be mild and short-lived. And it won’t stop US equities from performing well. The S&P will close this year up 12% y/y, following the 19.4% drop in 2022, the worst performance since 2008. That’s even if the S&P falls in Q1.   Bottom line, we have a revised likelihood of only a mild recession in the UK and Europe coupled with no recession at all in the US. But inflation is higher over there and the BoE and ECB are playing catch-up with the Fed. They are still hiking, and by the bigger 50 bp than the Fed’s newly measly 25 bp. The FX market wants to buy sterling and euros. Separately, the BoJ might be changing its tune next week and pressure against the 10-year is already driving the yen. We agree with the yen story, but the UK/eurozone story is excessively optimistic. It neglects the war, for example, not to mention the relatively stronger capability of unions to get wage-push inflation and their relatively higher starting point. Take a look at the weekly euro/dollar chart. The Schaff cycle indicator is already topping out, implying the max gain for the euro is 1.0942 (the 50% retracement) or 1.1272 (the 62%). Yes, the dollar got seriously overbought last year. But for good reasons, and those reasons can return. By mid-year, the US will still have decent growth, still-falling inflation and the highest rates anywhere. In the absence of a crisis, risk-on can still drag it down, but the minute some serious risk appears–N. Korea, Russia’s nuclear, climate crisis or an unknown unknown, the dollar becomes not only the safe haven, but a darn good one. More about inflation: The NY Fed’s Underlying Inflation Gauge (UIG) doe Dec has the full price version down 0.3% from Nov at 5.4% and the prices-only version down 0.5% at 4.5%. So, prices-only is a mere 4.5% vs. 6.5% for standard CPI. Include a bunch of other factors, “underlying” is 5.4% vs. 6.5% for the standard CPI.   Meanwhile, the Atlanta Fed offers the sticky price inflation rate for Dec at 6.7% y/y, while the core sticky-price index rose 6.6%. Both fell at a hefty pace, if slightly less than the month before..   Both charts show convincing moderation in inflation. It’s certainly true that inflation is falling, but it’s still at a high level and a level far above what the Fed wants on the PCE basis. It’s unreasonable to imagine inflation by any measure can fell enough in two or three quarters to have the Fed ready to cut rates. The Fed is far more likely to stand firm on what it will have already done. This is an excerpt from “The Rockefeller Morning Briefing,” which is far larger (about 10 pages). The Briefing has been published every day for over 25 years and represents experienced analysis and insight. The report offers deep background and is not intended to guide FX trading....

In the first Live from the Vault of 2023, Andrew Maguire reports on Russia’s Sberbank issuing its first gold-based blockchain asset in a game-changing manoeuvre that might instigate further de-dollarization of commodity trading. The precious metals expert provides an in-depth commentary on the LBMA’s recent presentation on physical silver, which has indeliberately exposed some of the market's price-setting machinations.

S&P 500 didn‘t like CPI coming in line with expectations, and it was indeed„ buy the rumor sell the news“ reaction, followed by cutting into 4,010 on confirming bond and dollar price action. No fresh fuel though making for a larger reaction. And today we have some telling bank earnings, facilitating the approach to 3,955 – and University of Michigan consumer confidence data which wouldn‘t prove any huge disappointment. Just around the expected figure, making for an uneventful session Friday, with the only two daily questions being whether the buyers can reconquer 3,980, and whether the sellers can push below 3,955 closer to 3,910 or at least midpoint. Remember, the Fed is hawkish and will remain hawkish, and the rally is running on borrowed time. Keep enjoying the lively Twitter feed serving you all already in, which comes on top of getting the key daily analytics right into your mailbox. Plenty gets addressed there (or on Telegram if you prefer), but the analyses (whether short or long format, depending on market action) over email are the bedrock. So, make sure you‘re signed up for the free newsletter and that you have my Twitter profile open with notifications on so as not to miss a thing, and to benefit from extra intraday calls. Let‘s move right into the charts. S&P 500 and Nasdaq outlook Given the banking earnings aftermath, the key „point of control“ at 3,955 has to hold so as to prevent levels mentioned in the opening part of today‘s analysis. Close above 3,980 would be ideal for the bulls, but unless 4,010 is cleared, stocks remain in a precarious zone, and vulnerable to swift reversals at the 200-d MA. Copper Copper consolidation mentioned yesterday, looks to be starting. Risk-on consequences, so watch out.

The final day of the week has seen US banks kick off earnings season, with no nasty surprises so far, says Chris Beauchamp, chief market analyst at online trading platform IG. Stocks push on to the weekend with modest gains “It has been a solid week overall for risk assets. Stocks got the inflation reading they wanted, putting them in a forgiving mood for the start of earnings season. Some better GDP figures from the UK and Germany added to the cheerier atmosphere on Friday, and while equities might look a bit overextended in the short-term, they do seem poised for a better start to the year than many had feared.”   FTSE 100 closes in on 7900 “It was too much to hope that the FTSE 100 might find another burst of energy and take out the 7900 level today, but an almost straight-line move since the beginning of the year has certainly helped put the index on top. So far the Christmas trading statements have been broadly encouraging, and with recession fears capped for the time being the index’s blend of global companies seems to offer a promising mix for investors looking for a home where tech stocks do not feature too highly.”

Summary United States: War Not Yet Won on Inflation The December Consumer Price Index data was the most significant macroeconomic development of the week and showed modest deflation to finish 2022. We now expect the Fed to hike the federal funds rate by just 25 bps at its next policy meeting on February 1, but a slower pace of tightening does not necessarily mean less. Next week: Retail Sales (Wed), Industrial Production (Wed), Existing Home Sales (Fri) International: What's Happening in the Rest of the World? Brazil's December CPI data showed inflation receding less than expected. Over the past several months, inflation has sharply fallen from its peak, but with Lula now in office, fiscal policy may begin to move in a more inflationary direction. Down under, inflation pressures in Australia remain persistent. After receding from its 7.3% peak in October, headline CPI re-accelerated to 7.3% year-over-year in November. Housing, food and transport prices saw the most significant price rises. Last but not least, U.K. November GDP registered a surprise 0.1% month-over-month gain, lowering the likelihood that a U.K. recession occurred at the end of last year. Next week: China GDP (Tue), Canada CPI (Tue), Bank of Japan/Japan CPI (Wed/Thu) Interest Rate Watch: Pace of Fed Tightening to Downshift Further We have changed our expectation for the outcome of the February 1 FOMC meeting from a rate hike of 50 bps to 25 bps. But we maintain our view that the FOMC will ultimately raise its target range for the federal funds rate by a cumulative amount of 75 bps from its current setting of 4.25%-4.50%. Credit Market Insights: Consumers Continue to Tap Credit...for Now The swing in revolving credit over the past year or so reflects, at least in part, consumers reaching for their credit cards to help sustain spending as decades-high inflation outpaced income growth. Topic of the Week: Brazil's "January 6 Moment" While political risk is typically elevated in Brazil and could weigh on local asset prices, we believe Brazil's "January 6 moment" will not have a long-lasting impact on local financial markets nor the economy. Download the full report here   Publish to Reports FeedBack to edit

Whether or not to invest in Gold depends on your financial goals, risk tolerance, and trading strategy. However, many professionals recommend dedicating a part of your portfolio to Gold, as it can be a good investment given that it’s a tangible asset that retains its value over time. Additionally, it can serve as a hedge against inflation and is a safe haven in times of economic or political uncertainty. There are different ways to invest in Gold: you can buy physical or digital Gold, you can buy shares of Gold miners, you can also use ETF to be exposed to Gold or trade Gold over the short-term with financial derivatives like those offered by the regulated broker, ActivTrades: CFD or Contract For Difference. If you’re thinking about adding Gold to your portfolio, let’s have a look at what can influence the price of Gold in 2023. A price analysis of Gold Like most commodities, the price of an ounce of Gold reached a new high during the first quarter of 2022 with the war between Russia and Ukraine. However, prices of Gold traded downward from April until November, when it reached a yearly low of approximately $1,617, bringing the price of Gold close to its April 2020 levels. Since then, prices have gained around 10% and investors are wondering whether or not the yellow metal could reach the $2,000 level next year. Daily Gold Chart - Source: ActivTrades’ online trading platform (ActivTrader) A reminder of what makes the price of Gold move up and down A wide range of factors may have an effect on the price of Gold, such as supply and demand, interest rates, the value of the American Dollar, sanitary conditions, especially regarding the COVID-19 in regions like China, and political as well as geopolitical happenings, like the war in Russia. Supply and demand are two of the primary forces that are responsible for determining the price of Gold. Because Gold is a finite resource, its price has a tendency to rise in response to increased demand for it. For instance, if there is an increase in demand for Gold jewellery or investments backed by Gold, the price may rise to accommodate this need. On the other hand, the price of Gold may decline if there is an increase in the supply of Gold, or if there is a reduction in the demand for it. Interest rates are another significant variable that may have an effect on the price of Gold. The opportunity cost of keeping Gold falls when interest rates are low, so Gold becomes a more appealing investment option during these times. As a direct consequence of this, there is a possibility that the demand for Gold would grow, hence driving up its price. On the other hand, when interest rates are high, the opportunity cost of keeping Gold rises. This means that Gold becomes less appealing as an investment when interest rates are high, especially as other safe investments are available and offering a yield, like US government bonds. This might result in a decline in the demand for Gold, which would then lead to a decrease in its price. In addition, the price of Gold may be influenced by political events. For instance, if there is political instability or uncertainty in a large Gold-producing area, this may cause investors to seek safe havens for their money, or it could disrupt Gold production, which in turn may cause the price of Gold to increase. In a similar vein, if a nation that has a sizable amount of Gold reserves declares that it intends to sell a sizable percentage of that Gold, the amount of Gold that is available on the market may grow, which may result in a decline in the price of Gold - and vice-versa. Higher inflation and uncertainty about global growth prospects could support Gold prices (or weight on it) In times when there is a lot of uncertainty about the path that economic growth will take, or when there is a lot of volatility in the financial markets, Gold is often thought of as a safe haven asset. In the case of higher inflation, it is also frequently considered the investment vehicle of choice - and inflation has reached unseen levels in decades in many countries in 2022! Nevertheless, Gold has performed poorly while inflation was reaching record levels. Why? Because it all depends on the monetary policy that is in place in relation to the inflation level. The Federal Reserve intervened many times during the year 2022 in an effort to offset the considerable increase in inflation levels. Because of this, the Federal Reserve has significantly raised interest rates, which has the effect of making government bonds (which are also an asset that is considered a safe haven) more...

As we move into the second decade of the twentieth century, the world faces a set of risks that people have never seen or have forgotten their existence for decades, such as: High inflation with the rapidly increasing cost. Geopolitical confrontation with the spectre of nuclear war. Cyber Security, high tech risks. Environmental sustainability. Widespread social unrest with increasing polarity. The Risk of poly-crises. What is remarkable is that businessmen and policymakers of recent generations who have never experienced such risks are now being called upon to face them. In addition, in the next few years, it will be required from them to face a new era with: Lower economic growth. Lower global investment. Globalization being challenged. Human development diminishing. Climate change causes multiple risks. This is a new era where in addition the problem of unsustainable debt levels is very likely to re- emerge in sectors and countries around the world causing instability. All these risks are converging to shape the conditions for a decade likely to be dominated by uncertainty and turmoil. Let's examine some of the results of these risks in more detail: High cost of living This year and possibly next year, the most considerable risk will be the increase in the cost of living. Governments and central banks are likely to face persistent inflationary pressures in the coming years as the likelihood of a protracted war in Ukraine are high. In addition, in Asia, the inability to deal with the pandemic is expected to continue to contribute to the rise in prices, while the trade war between East and West will push the disconnection of the supply chain. The resulting lack of supply will lead to persistent inflation and stagflation, the socio-economic consequences of which may be severe, given the historically unprecedented high level of public debt. World arms race Russia's invasion of Ukraine will lead to an increase in military spending and a proliferation of investments in new military equipment technologies that could lead to a global arms race. The long- term global risk landscape could be defined by multi-faceted conflicts and asymmetric warfare resulting in the targeted development of new technology weapons on a larger scale than seen in recent decades. Risks from cutting-edge technologies The increasing involvement of technologies in the critical functioning of societies will expose populations to immediate threats that could shake social cohesion. In fact, cybercrime is expected to increase, with attempts to disrupt resources and services supported by critical technologies. Thus, cyber-attacks on technologies for managing agriculture and water, financial systems, public safety, transport, energy, space and undersea communications infrastructure will become increasingly common. A significant risk of new technologies in developed and developing countries will be their use to misinform or under-inform all people. It is also expected that there will be a misuse of personal data that undermines the right to privacy, even in well-regulated, democratic countries. Environmental risks Although climate and environmental risks are the risks for which we are least prepared, increasing demands on public and private sector resources from other crises will reduce the speed and scale of efforts to de-fossil fuel in the coming years. Such a development will exacerbate the effects of climate change, biodiversity loss, food security and natural resource consumption. It will accelerate ecosystem collapse and threaten food supplies and livelihoods in climate-vulnerable economies. It will amplify the effects of natural disasters and limit further progress in mitigating the climate crisis. Polarity As high inflation and slowing economic growth will wipe out middle-class incomes in all countries of the world, social unrest and political instability will no longer be limited to emerging countries but will also spread to developed countries. Citizens' frustration with losses in human development will increase. Declining social mobility, together with widening inequality, will pose critical challenges to political systems around the world. Thus, it is very likely that we will increasingly see the unfolding of the governing power of leaders who will be at the extremes of either the right or the left. Additionally, political polarization among economic superpowers in the coming years may reduce the space for collective problem-solving, fracture alliances, and lead to a more volatile global environment. The risk of poly-crisis In the future, it is very likely that we will see poly-crises with parallel creation of disparate crises, but which will interact with each other in such a way that the overall impact far exceeds the sum total of the partial crises. A potential poly-crisis related to the supply and demand of natural resources may arise from the interconnection of environmental, geopolitical and socio-economic risks. Therefore, it will be required to investigate the connection between different risks and focus on predicting their degree of correlation, building preparedness measures to minimize the scale and scope of multiple crises before they occur. The...

The Fed pivot trade got another boost on Thursday, this after US CPI declined further in December. Traders are now fully embracing a 2023 Fed policy turnaround despite still higher core services inflation reads and strong employment numbers.

Good Morning! US CPI for Dec-22 came out lower at 6.42% (Y/Y%) from 7.12% seen in Nov-22. This lead to a sharp fall in the Dollar index, taking Euro higher towards 1.0850/09. EURUSD and USDJPY have fallen sharply along with weak Dollars and look bearish for the near term. Pound and Aussie have risen and may test 1.23 and 0.70 respectively. USDCNY has fallen below 6.75 and looks bearish towards 6.70/68 while USDRUB has broken below 68 which if sustains would open up chances for a further decline to 67. USDINR can fall to 81.25/81.00 while EURINR can trade in a ranged fashion while below 89. The US Treasury yields have declined sharply on a slowdown in the US inflation. The US Headline CPI (YoY) fell to 6.42% in December from 7.12% in November. The Treasury yields have limited room from here as strong supports are coming up that can trigger a reversal. The German yields have come closer to their key support and can see a fresh rise in the coming days. The 10Yr and 5Yr GoI can fall further in the near-term. Dow can see a test 34500 on the upside. DAX continues to rise and can advance further towards the crucial resistance at 15200-15300. Nikkei has declined sharply failing to rise above 26600. Shanghai looks range bound. Nifty can fall towards 17600 or lower if it fails to bounce back above 17800. Brent and WTI have come up to their crucial resistance at $85-86 and $80 respectively. Need to see if Crude prices will above to break higher or not. Gold has risen sharply to 1900 after the release of softer US CPI data. US CPI for Dec-22 comes lower at 6.42% from Nov-22 CPI release of 7.12%. Copper remains bullish and has scope to test key resistance at 4.30. Silver is stuck between 23.00-24.50 range.