Image Source: Pixabay
 

Asian stocks were under pressure due to the recent rise in yields and reduced expectations of Fed rate cuts. The Nikkei 225 initially rose due to a weaker currency but later dropped from three-decade highs as it succumbed to the risk-off sentiment. The Hang Seng and Shanghai Comp also retreated due to mixed Chinese economic data, with Hong Kong particularly underperforming due to losses in the tech and property sectors.

December UK CPI inflation slightly exceeded expectations, with the annual rate rising to 4.0% from November's 3.9%. This marks its first monthly increase since February. Despite this, it's crucial to note that, due to sharp declines in the previous two months, the rate still saw a significant drop in Q4 from 6.7% in September. The core rate held steady at 5.1%, while services inflation increased to 6.4% from 6.3%. Inflation might see a modest uptick in January due to the latest Ofgem price cap implementation, but markets anticipate a continued decline thereafter, potentially reaching the 2.0% target before mid-year. The Office for National Statistics will release the November UK house price index today, following a 1.2% decline in October. While some indices suggest a rebound in prices, the official numbers will be scrutinized for signs of this trend. 

Today's December Eurozone CPI data, a second reading, is not expected to be revised. The initial report indicated a slight increase in headline inflation but a further decline in the core rate. Several ECB representatives will be speaking at Davos today, including ECB President Lagarde, ECB's Cipollone on "Euro Cyber Resilience", and ECB's Knot.

Stateside, a busy day for data includes retail sales and industrial production reports for December. A 0.4% rise is forecasted for retail sales during the festive month, while industrial production is expected to see a more modest 0.2% increase. Both releases will offer insights into Q4 GDP growth, expected next week. While it's anticipated that Q4 growth will slow after the robust 4.9% annualized expansion in Q3, early indications suggest solid growth. Additionally, the Fed Beige Book, featuring anecdotal economic reports, will be released today, with the previous one highlighting increased downside growth risks. Fed's Vice Chair of Supervision Barr will speak on cyber risks, Fed's Bowman on bank capital reforms, and Fed's Williams on "an Economy that Works for All: Measurement Matters".
 

Overnight Newswire Updates of Note

• US Spending Bill To Avert Shutdown Clears First Senate Hurdle
• US Set To Designate Iran-Backed Houthi Rebels As Terror Group
• Bond Traders Start To Hedge Against Half-Point Fed Cut In March
• China’s Economic Growth Disappoints, Fuelling Calls For Stimulus
• Chinese Price Gauge Shows Longest Deflation Streak Since 1999
• Polled Economists All Expect BoJ Holding In January After Quakes
• Japan Manufacturers Pessimistic As Dark Clouds Hang Over China
• Tory Resignations, Rebellions Expose Sunak’s Weak Grip On Party
• UK Saw Strong Wage Growth In Late 2023, Jobs Site Indeed Says
• EU Moves Ahead With Plans For New Naval Operation In Red Sea
• Russia Call Peace Meetings Pointless, Says Plan Cannot Succeed
• Global LNG Fleet Avoiding The Red Sea As More Tankers Diverted

(Sourced from Bloomberg, Reuters and other reliable financial news outlets)
 

FX Options Expiries For 10am New York Cut 

(1BLN+ represent larger expiries, more magnetic when trading within daily ATR)

• EUR/USD: 1.0850 (1.1B), 1.0890-1.0900 (1.3B), 1.0970-75 (1.5B)
• EUR/USD: 1.1000 (500M), 1.1015-25 (695M), 1.1050 (700M), 1.1060-65 (825M)
• EUR/USD: 1.1070-75 (2.0B). USD/JPY: 144.00 (890M), 145.00 (370M)
• USD/JPY: 145.75 (1.2B), 147.00 (425M), 147.35 (1.2B)
• GBP/USD: 1.2600 (400M), 1.2625 (335M), 1.2700 (685M), 1.2715-25 (435M)
• GBP/USD: 1.2795 (500M), 1.2885-1.2900 (540M), 1.2965 (730M)
• AUD/USD: 0.6735 (355M), 0.6750 (940M). NZD/USD: 0.6330-50 (690M)
• USD/CAD: 1.3235-40 (2.3B), 1.3375-80 (1.3B)
   

CFTC Data As Of 12/01/24

• USD bearish increasing 12,192 
• CAD bearish decreasing -551 
• EUR bullish neutral 16,243 
• GBP bullish increasing 1,647 
• AUD bearish decreasing -2,158 
• NZD neutral neutral -110 
• MXN bullish neutral 2,606 
• CHF bearish neutral -644 
• JPY bearish neutral -4,841
   

Technical & Trade Views

SP500 Bullish Above Bearish Below 4750

• Daily VWAP bullish
• Weekly VWAP bullish
• Below 4730 opens 4700
• Primary support 4670
• Primary objective is 4830

(Click on image to enlarge)

EURUSD Bullish Above Bearish Below 1.0930 - 1.0850 Target Hit -  New Pattern

• Daily VWAP bearish
• Weekly VWAP bullish
• Above 1.10950 opens 1.10
• Primary resistance 1.10
• Primary objective is 1.0730

(Click on image to enlarge)

GBPUSD Bullish Above Bearish Below 1.2750

• Daily VWAP bearish
• Weekly VWAP bullish
• Above 1.28 opens 1.2870
• Primary resistance  is 1.2820
• Primary objective 1.2580

(Click on image to enlarge)

USDJPY Bullish Above Bearish Below 146.40 - 147 target Hit - New Pattern

• Daily VWAP bullish
• Weekly VWAP bullish
• Below 146 opens 145.50
• Primary support 143.50
• Primary objective is 149

(Click on image to enlarge)

AUDUSD Bullish Above Bearish Below .6650

• Daily VWAP bearish
• Weekly VWAP bearish
• Above .6680 opens .6550
• Primary support .6525
• Primary objective is .6933

(Click on image to enlarge)

BTCUSD Bullish Above Bearish below 45200

• Daily VWAP bearish
• Weekly VWAP bullish
• Below 45000 opens 44600
• Primary support  is 40000
• Primary objective is 50000

(Click on image to enlarge)

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