Last week witnessed several significant economic data releases globally:
- United States: The Federal Reserve kept interest rates unchanged at 4.25%-4.50%, while data showed a slowdown in consumer confidence and a decline in durable goods orders. However, new home sales unexpectedly increased. GDP growth slowed to 2.3%, but consumer spending reached its highest level since 2021.
- Europe: The European Central Bank cut interest rates to 2.75%, reflecting slower economic growth.
- Canada: The Bank of Canada continued its monetary easing, while GDP contracted slightly.
- Asia: Inflation declined in Australia, while Japan’s Tokyo Consumer Price Index (CPI) rose. In China, Purchasing Managers’ Index (PMI) indicators declined, signaling weaker economic activity.
Market Analysis
USD/CAD
Last week, the Bank of Canada lowered interest rates by 25 basis points, from 3.25% to 3.00%, in line with market expectations, marking the sixth consecutive cut.
The USD/CAD pair continued its upward trend, reaching 1.4792 today, the highest level for 12 years. Since its low of 1.3419 on September 25, 2024, the pair has surged 10%, reaching 1.4792 today.
Factors contributing to CAD weakness: Trump’s tariffs: The U.S. President Donald Trump imposed a 25% tariff on Canadian imports.
- Weak Canadian economy.
Technical Indicators:
- RSI: Currently at 65, indicating bullish momentum.
- MACD: Shows a bullish crossover between the MACD line and the Signal Line, supporting continued upward movement.
Alphabet (GOOGL)
Alphabet is set to release its earnings report on Tuesday, with an expected EPS of $2.12, up from $1.64 in the previous quarter. Revenue is projected at $96.69 billion, compared to $86.31 billion previously.
On Friday, January 31, 2025, Alphabet’s stock reached a new all-time high of $205.48. The bullish momentum appears to continue, supported by:
- RSI: Currently at 64.
- MACD: Shows a bullish crossover between the MACD (blue) and Signal Line (orange), supporting a positive outlook.
Gold
Gold prices continued their upward trajectory, hitting an all-time high of $2,817 on Friday, January 31, 2025.
Reasons for the surge:
- Market uncertainty and concerns over tariffs that Trump is expected to impose on Canada, Mexico, and China.
Technical Indicators:
- RSI: Currently at 69, signaling strong bullish momentum, but approaching overbought levels.
S&P 500
Despite challenges, technical indicators support a bullish outlook for the S&P 500:
- MACD: Shows a bullish crossover between the MACD (blue) and Signal Line (orange).
- RSI: Currently at 54, indicating positive momentum.
- The key resistance level to break is 6,128 points, the all-time high recorded on January 24, 2025.
Key Events This Week
Markets are anticipating several critical economic indicators and events this week:
- Monday:
- Caixin Manufacturing PMI (China).
- Manufacturing PMIs for the Eurozone, UK, and the U.S.
- Eurozone CPI.
- U.S. Construction Spending and ISM Manufacturing PMI.
- Tuesday:
- U.S. Factory Orders and Job Openings Reports.
- Wednesday:
- Caixin Services PMI (China).
- Services PMIs for Australia, Japan, the Eurozone, the UK, and the U.S.
- U.S. ADP Non-Farm Employment Change.
- ISM Non-Manufacturing PMI (U.S.).
- U.S. Crude Oil Inventories.
- Thursday:
- Bank of England’s Interest Rate Decision (Expected to cut rates by 25 basis points from 4.75% to 4.50%).
- UK Construction PMI.
- U.S. Initial Jobless Claims.
- Canada’s Ivey PMI.
- Friday:
- Japan’s Household Spending Report.
- U.S. Non-Farm Payrolls, Average Hourly Earnings, and Unemployment Rate.
- U.S. Michigan Consumer Sentiment Index.
- Canada’s Employment and Unemployment Reports.
Please note that this analysis is provided for informational purposes only and should not be considered as investment advice. All trading involves risk.
