Market Update – January 5 – FOMC: Inflation still Public Enemy No. 1

The FOMC minutes continued to show inflation was the overriding concern. Participants generally noted that upside risks to the inflation outlook “remained a key factor” for policy. It was repeated that a restrictive stance would have to be maintained for a sustained period until inflation was “clearly” on a path toward 2%. US Data yesterday was with ISM Manufacturing PMI’s missing at 48.4, but Jobs Openings remaining very strong beating expectations at 10.46m. Kashkari called for 5.4% terminal rate,

The USD Index holds 104.00 yesterday as the USD steadied post FOMC mins. 104.20 now.
EUR – back to test 1.0600. Germany November trade balance beats €10.8 billion vs €7.5 billion.
JPY – rallied from hit new 7-mth lows under 130.00yesterday to 132.50 now
GBP – Sterling rallied to 1.2080 before sinking back to key 1.2000 today.
Stocks – The US markets closed up (+0.40-0.76%). US500 -28.03 (0.75%) at 3853. TSLA +5.12%, BABA +13%, XMSFT -4.37%. 

USOil – Tanked –9% Monday, Tuesday ($72.75 lows) and has recovered 1.1% today to trade at $73.50 ahead of inventories later 
Gold – Breached $1850 in early trades, rallied to $1860 and trades at $1850now. 
BTC Sentiment woes continue – the biggest coin trades at $16.8k today. FTX’s former top lawyer aided U.S. authorities in Bankman-Fried case

Today – German Trade Balance, EZ Construction PMI, UK and US Services and Composite Final PMIs, EZ PPI, US Challenger Layoffs, Canadian Trade Balance, US Claims, US EIA Inventories, speeches from Fed’s Bostic and Bullard.

Biggest FX Mover @ (07:30 GMT) EURAUD (-0.45%). Declined from 1.5660 pivot yesterday to test 1.5400, before recovering and rallying to test 1.5600 today.  MAs aligned higher, MACD histogram & signal line positive and rising. RSI 52.00 & neutral, H1 ATR 0.00306, Daily ATR 0.01388.

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Stuart Cowell

Head Market Analyst

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