Weekly Market Commentary | 27.01 – 2.02

Curious to know what’s happening on the markets this week? Take a quick tour of the latest news, economic updates, and trading setups that will keep you up-to-date and in the know!

Monday

The week begins quietly on the economic calendar, but markets are already reacting to the recent release of DeepSeek AI, a new artificial intelligence agent. This development has sent shockwaves through the tech sector, leading to a sharp drop in stock exchanges as concerns about a tech bubble resurface.

From the calendar:

• China Manufacturing PMI: Came in worse than expected, falling below the critical 50 mark, signaling contraction.
• Upcoming Event: Speech by SNB Chairman Schlegel, offering potential insights into Swiss monetary policy.

Tuesday

Key U.S. data will dominate Tuesday’s session, providing insights into durable goods orders and consumer confidence. These releases are expected to shed light on the health of the U.S. economy.

• Durable Goods Orders: Forecasted to rise by 0.1%, signaling minimal growth in capital expenditures.
• CB Consumer Confidence: Anticipated to hit 105.9, reflecting cautious optimism among U.S. consumers.

Wednesday

Wednesday is packed with significant events, particularly in the realm of monetary policy and inflation.

• Australia CPI: Expected to rise to 2.5% year-over-year from the previous 2.3%, signaling persistent inflationary pressures.
• BoE Governor Bailey Speech: Governor Bailey will address market participants, potentially providing forward guidance on UK monetary policy.
• Bank of Canada Interest Rate Decision: A 25-basis point rate cut is widely expected, which could weaken the Canadian dollar.
• Federal Reserve Interest Rate Decision: No changes are expected, with rates likely to remain at 4.5%. The FOMC statement and press conference will be crucial for gauging the Fed’s outlook.

Thursday

Thursday brings another critical day, with the ECB’s interest rate decision taking center stage, alongside key U.S. economic data.

• ECB Interest Rate Decision: Expected to announce a rate cut from 3.15% to 2.90%, reflecting a shift in monetary policy to support growth.
• U.S. Advanced GDP: Forecasted at 2.7%, indicating solid economic growth despite global headwinds.

Friday

Friday will focus on inflation data from key economies and U.S. employment costs, providing a complete picture of the global economic landscape as the week concludes.

• Tokyo Core CPI: Forecasted to remain at 2.5%, reflecting stable inflation in Japan.
• German Preliminary CPI: Expected at 0.1%, indicating subdued price pressures in Europe’s largest economy.
• Canadian GDP: Predicted to contract by -0.1%, underlining Canada’s economic struggles.
• U.S. Core PCE Price Index: The Fed’s preferred inflation gauge is expected to rise by 0.2%, highlighting sticky inflation.
• Employment Cost Index (U.S.): Forecasted at 0.9%, pointing to elevated labor costs.

Setups for This Week:

EUR/USD

• Primary View: The price is moving to the upside, forming higher highs and higher lows. As long as we stay above the orange support, sentiment remains positive.
• Alternative View: A drop below the orange support will be a signal to sell.

USD/JPY 

• Primary View: The price is in a sideways trend, aiming for the yellow horizontal support. Sentiment is currently negative.
• Alternative View: A bounce off the lower yellow line will be a signal to buy.

Brent Oil

• Primary View: The price is declining within a falling wedge pattern. A breakout to the upside will be a signal to buy.
• Alternative View: A bounce off the upper line of the wedge will be a signal to sell.

Source: https://www.axiory.com/analytics/weekly-market-commentary/weekly-market-commentary-27-01-2-02