![\"\"](\"\/wp-content\/uploads\/2024\/01\/image-22.png\")
<\/figure>\n\n\n\nGBP \u2013 GDP rate for November due out next week<\/h2>\n\n\n\n
The pound is about to end the week lower against the EUR, and the US dollar, yet stronger against the JPY. On a monetary level, we note the relatively quiet week from BoE policymakers and as such pound traders may be more interested in financial releases stemming from the UK. In particular, the S&P Manufacturing PMI figure for December tended to highlight the potentially dire situation of the sector yet market worries tend to be balanced by the increased economic activity of the services sector. Nevertheless, we maintain our concerns for the UK economy heading in 2024 and as such, pound traders may be interested in next week\u2019s financial releases, where the UK\u2019s preliminary GDP rate for November is due to be released on Friday. Should the GDP rate imply that the UK economy has continued contracting, we may see the pound weakening and vice versa.<\/p>\n\n\n\n JPY is about to end the week in the reds against the dollar, EUR and the pound in a sign of broader weakness. On a monetary level, we note that BOJ Governor Ueda appears to have signaled clearly the bank\u2019s willingness to abandon their decades-long monetary policy \u201cif the virtuous cycle between wages and prices intensifies and the likelihood of achieving the price stability target of 2 percent in a sustainable and stable manner rises sufficiently\u201d, which may have provided support for the Yen. However, we note the The common currency is about to end the week in the reds against the USD and GBP but higher than the Yen. On a monetary level, we note the relatively quiet front from ECB policymakers and as such our attention turns to the financial releases stemming from the Euro area this week. In particular, we begin with the Manufacturing PMI figures for December for the Euro Area as a whole, France and Germany, which all came in better than expected earlier on this week. The better-than-expected PMI figures may have provided some relief for the EUR, yet we should still note that despite the narrowing contraction of the Manufacturing sector, it is still in contraction territory and the better-than-expected figures were just barely higher. As such, despite the PMI release, it may be concerning for Eurozone\u2019s economy that the two largest countries in the bloc, continue to experience a contraction in their manufacturing activity as it could heighten fears for a potential recession in the bloc. Therefore, from a macro perspective we may see the EUR weakening, should the recession fears intensify. Moreover, despite December\u2019s lower-than-expected Preliminary HICP rates for France and Germany on a mom level, they are still higher than the last readings, implying entrenched inflationary pressures in the bloc. Hence should ECB policymakers maintain the call to maintain rates at their current levels for a longer period we may see the EUR getting some support.<\/p>\n\n\n\n AUD is about to end the first week of 2024 in the reds against the USD. On a monetary front, we note that RBA\u2019s interest rate decision that was due to occur on the 2nd of January appears to have been pushed back to the 6th of February. On a macroeconomic level, we note the release of Australia\u2019s Manufacturing and services PMI figures both for December, which both came in lower than expected, implying a wider contraction of economic activity in both the manufacturing and services industry. The lower-than-expected releases may have weighed on the Aussie during the week. On an economic level, we turn our attention to China, which released its NBS and Caixin Manufacturing PMI figures for December, which continue to contradict one another and as such may have led to increased volatility in the Aussie given their close economic ties. On a fundamental level, we note the increasing tensions between the island of Taiwan and China, which could lead to increased volatility in the region and could weigh on the Aussie in the near future.<\/p>\n\n\n\n The Loonie is about to end the week against the USD in the reds. On a fundamental level, we note that oil prices over the week are on track to end the week slightly higher. As such, should oil prices continue their upward trajectory, we may see the higher oil prices providing support for the Loonie, given Canada\u2019s status as a major oil producer. Moreover, with the continued tensions in the Middle East and in particular Iran, the Red Sea closing and Libya, we may see oil prices remaining slightly elevated over the next week. On a macroeconomic level, we note Canada\u2019s employment data which is due to be released later on today during the American session, which is expected by economists to highlight a loosening labour market and as such could weigh on the Loonie. Yet Canada\u2019s Ivey PMI figure is expected to increase, which may imply an expanding manufacturing industry for Canada and as such could provide some comfort for CAD traders. Lastly, Loonie traders may be interested in Canada\u2019s trade balance for November next Tuesday, where should it come in higher than expected, it may provide support for the CAD and vice versa.<\/p>\n\n\n\n Overall we expect market activity in the coming week to intensify, as we kickstart the new year with key financial releases. In regards to US stock markets, we saw the bears taking control over the markets, with all three major indexes seemingly on track to end the first trading week of the year in the reds. In the coming week, we may see market interest start shifting towards US stock markets as the![\"\"](\"\/wp-content\/uploads\/2024\/01\/image-23.png\")
<\/figure>\n\n\n\nJPY \u2013 Difficult start for Japan<\/h2>\n\n\n\n
Earthquake that hit Japan on New Year\u2019s day may be having a monetary impact as well. The earthquake that struck Japan which measured a 7.6 magnitude on the Richter scale, may place higher barriers for the bank to change their monetary policy stance, as the economy may not be able to withstand such a large change under such circumstances. As such, the bank may delay any potential change in its monetary policy decision, which could weaken the Yen. On a macroeconomic level, we note Japan\u2019s Tokyo Core CPI rate for December which is due to be released next Tuesday. Should the Core CPI rate imply that inflationary pressures are persisting in the Japanese economy, the need to abandon the bank\u2019s ultra-loose monetary policy may be enhanced, thus potentially supporting the Yen and vice versa.<\/p>\n\n\n\n![\"\"](\"\/wp-content\/uploads\/2024\/01\/image-24.png\")
<\/figure>\n\n\n\nEUR \u2013 EU treads on the edge of recession<\/h2>\n\n\n\n
![\"\"](\"\/wp-content\/uploads\/2024\/01\/image-25.png\")
<\/figure>\n\n\n\nAUD \u2013 Worries for China<\/h2>\n\n\n\n
![\"Busy](\"\/wp-content\/uploads\/2024\/01\/image-26.png\")
<\/figure>\n\n\n\nCAD \u2013 Canada\u2019s trade balance for November due out next week<\/h2>\n\n\n\n
![\"Busy](\"\/wp-content\/uploads\/2024\/01\/image-27.png\")
<\/figure>\n\n\n\nGeneral Comment<\/h2>\n\n\n\n
earnings season begins, with big banks such as JP Morgan (#JPM), Bank of America (#BAC), Wells Fargo (#WFC) and Citigroup (#C) making their releases. We also note that the US bond yields in particular the 5-Year and 10-Year moving higher this week. It should be noted that the rise of US yields may have weighed on gold\u2019s price as did the strengthening of the USD, given their negative correlation. Lastly, we note that volatility appears to be picking up in the Middle East with Iran having faced a terrorist attack and protests hindering the production of Libya\u2019s largest oil field, which may lead to elevated oil prices. Moreover, the heightened risks of attack by Houthi rebels in the Red Sea appear to have intensified and as such, hindering passage through one of the world\u2019s most vital trade arteries could have an impact on the global economy. Lastly, tensions between Taiwan and China appear to be escalating and as such we are keeping a close eye on the developments, as they could upset the delicate stability in the region.<\/p>\n\n\n\n