Fundamental Overview of Financial Markets 19.01.24

The U.S. labor market is poised to break historical records.

Yesterday american statistics took center stage across multiple key sectors. While the Philadelphia Federal Reserve's manufacturing index fell short and new home construction was neutral, weekly unemployment claims came in very strong reaching lows not seen since the 1960s. Some have already attributed this to a political context as the data was released just before the U.S. President's speech on the economy. However, the fact remains that the U.S. labor market is currently experiencing a "second wind." Riding on these statistical "tailwinds," the greenback continued to exert pressure on its currency competitors.

The rise of overseas currencies was observed including against the Russian ruble. Yesterday the USD/RUB managed to gain 0.11% reaching 89.05. As mentioned earlier, the nearest key sentiment shift level for the pair is 90 rubles. As it approaches, bears confidently respond to the price, as was the case this time. Moreover, the domestic currency is gaining additional support from rising oil prices and the approaching peak of tax payments on January 29 - during this period demand for rubles traditionally increases.

The energy sector proved to be quite eventful again yesterday. U.S. crude oil inventories last week fell by 2.5 million barrels exceeding the forecast of -0.3 million barrels. This is a significant factor in the upward movement as the U.S. and China are the main global consumers of crude oil. This was followed by a new statement from the leader of the Houthi rebels declaring direct confrontation with the U.S. and the U.K. Further escalation of the conflict in the Middle East also favors black gold.

The price level of 79.5 mentioned in previous reviews is currently actively being tested for the seriousness of intentions and if sellers cannot offer worthy resistance, the key threshold for a change in the medium-term downtrend will fall thereby opening up new growth horizons at 81.6 and 83.7.

The Moscow Exchange index slightly declined continuing to stay within a medium-term narrowing range - typically a period of gathering strength, a harbinger of a powerful price storm. Looking at individual stories, Gazprom stocks traded better and demand is also observed in Russian government bonds (OFZ).

In the digital asset market the excitement surrounding the launch of trading in spot exchange-traded fund (ETF) shares is beginning to subside. As a result, the price of the crypto town's first resident, Bitcoin, dropped by more than 3%, momentarily dipping to $40,704. Key immediate "psychological" supports are at levels 40,000 and 37,500. To resume the uptrend, bulls need to reclaim levels above $44,150.

Today important events include Christine Lagarde's speech in Davos at 13:00 Moscow time, providing a global forecast. Additionally, the University of Michigan's consumer sentiment survey will be released at 18:00 Moscow time. Closing out the five-day trading week will be a speech by a member of the Federal Reserve, Daly, at 00:15 Moscow time – yes, the markets will already be closed but this is the last speech by an FOMC member before the January meeting on the 31st.

Wishing you success and well-considered investment decisions!