FUNDAMENTAL REVIEW FOR THE WEEK (8-12 January 2024)

The opening of markets after the holidays took place in a fairly classic format. Trading participants began to close purchases opened during the New Year's rally. The result is a downward correction in the American stock section and a bullish trend in the dollar. Also at the moment, the greenback received good support from strong labor market statistics on Friday.

Figures on payrolls and unemployment came out significantly better than expected, which did not fail to affect investor confidence regarding the timing of the Fed rate cut at the coming meetings. At the close of the week, the growth frenzy for the dollar subsided, but may continue with renewed vigor at the beginning of the current five-day market period. It is important to look at the trading formations at the opening of trading in Europe and during the American session on Monday.

As for the current week, there will be few fundamental events. The inflation data from the Western continent on Thursday stands out. Risk appetite in the markets is directly influenced by this report. A slight increase in US headline CPI inflation is forecast at 0.1% yoy, with core inflation falling by 0.2% yoy. “On paper” these indicators are in favor of “risks”. However, we should not forget that last Friday the non-farm balance was also in their favor, but in reality they got the opposite picture.

If we consider not only current data on consumer prices, but look at the situation more broadly, then a second wave of inflation in the States is quite possible due to current problems with oil delivery in the Red Sea (with a detour of at least 10 days for merchant ships) This is with will most likely lead to an increase in commodity inflation and the Fed may again move to the hawkish camp. But here and now the market is waiting for the Stars and Stripes to lower their bank interest rates. Therefore, a cross-section of US data on Thursday will be a key reference point for markets in general and the dollar in particular.

What's important on Monday?

Eurozone investor confidence index for January at 12.30 Moscow time, as well as report on consumer sentiment in the Eurozone for December and the unemployment level in the EU at 13.00 Moscow time. In the USA, Mr. Bostic from the Fed will appear on air at 20.00 Moscow time.

Good luck and profitable investment decisions!