Errante’s The Week Ahead: 13th – 17th January 2025

Errante’s The Week Ahead: 13th – 17th January 2025 

Highlights of the Week: 

  • Focus on US Inflation and Retail Sales Data: Key metrics such as CPI, PPI, and Retail Sales will shape expectations for the Federal Reserve’s monetary policy trajectory. 
  • AUD and GBP Employment Data: Crucial employment figures from Australia and the UK will influence market dynamics for AUD and GBP pairs. 
  • CHF/JPY Technical Developments: The pair’s triangle pattern signals heightened volatility, with recent failures indicating potential bearish momentum. 

What Now? 

US Treasury yields surged last week following a strong December jobs report, with nonfarm payrolls rising by 256,000—the highest in nine months—and unemployment falling to 4.1%. This robust data pushed traders to delay expectations for Federal Reserve rate cuts, leading to a bond selloff. The 30-year Treasury yield topped 5% for the first time in over a year, while 10-year yields reached multi-year highs, driven by renewed inflation concerns ahead of the December CPI report, projected to rise to 2.9%. Analysts warn that 10-year yields may hit 5%, intensifying market volatility. 

Gold’s Paradox: A Safe Haven Amid Strong Data 

Gold prices defied expectations, rallying 1.5% to $2,732 per ounce after the jobs report. Despite factors like a stronger dollar and rising yields, gold’s appeal as a hedge against systemic uncertainties—such as mounting debt, geopolitical tensions, and economic fragility—bolstered its performance. Investor sentiment reflects caution, with gold’s proximity to record highs signaling market wariness of long-term risks. Upcoming inflation data will likely shape gold’s trajectory, with a higher CPI potentially fueling further gains. 

Oil Surges Amid Sanctions 

Oil prices climbed above $80 per barrel as new US sanctions on Russia tightened global supply. Brent crude spiked 5%, supported by shrinking US stockpiles and reduced Russian exports, although overbought technical signals and policy uncertainties temper optimism. 

Outlook for the Week Ahead 

The US dollar is set for continued strength amid rising yields and economic resilience. Inflation data will be pivotal, with a hotter-than-expected CPI potentially extending the dollar’s rally and pressuring gold, while softer inflation could ease the hawkish narrative. 

Market Events and Announcements: 

Times are in GMT+2. 

Monday, January 13, 2025: 

  • 13th-15th – CNY – New Loans: A significant gauge for Chinese economic activity, forecasted at 890B, reflecting policy support efforts. 

Tuesday, January 14, 2025: 

  • 3:30 PM – USD – Core PPI (m/m): Expected at 0.2%, providing insights into inflationary pressures within producer prices. 
  • 3:30 PM – USD – PPI (m/m): Forecast at 0.3%, complementing the core measure in shaping inflation expectations. 

Wednesday, January 15, 2025: 

  • 9:00 AM – GBP – CPI (y/y): A print of 2.7% is anticipated, influencing BoE policy expectations. 
  • 3:30 PM – USD – CPI (m/m) and (y/y): Expected at 0.2% monthly increase, a critical measure of US inflation trends. 
  • 3:30 PM – USD – Core CPI (m/m): Also forecast at 0.3%, highlighting core inflationary pressures. 
  • 3:30 PM – USD – Empire State Manufacturing Index: Forecast at -1.8, reflecting manufacturing sector health. 
  • 5:30 PM – USD – Crude Oil Inventories: Anticipated at -1.0M, focusing on supply and demand dynamics. 

Thursday, January 16, 2025: 

  • 2:30 AM – AUD – Employment Change: Forecast at 15K, a key indicator for Australian labor market strength. 
  • 2:30 AM – AUD – Unemployment Rate: Expected at 4.0%, critical for assessing economic health. 
  • 9:00 AM – GBP – GDP (m/m): A modest growth of 0.2% is forecast, signaling UK economic activity. 
  • 3:30 PM – USD – Core Retail Sales (m/m): Forecast at 0.5%, highlighting consumer spending strength. 
  • 3:30 PM – USD – Retail Sales (m/m): Anticipated at 0.5%, a broader measure of retail sector performance. 
  • 3:30 PM – USD – Unemployment Claims: Expected at 210K, providing weekly labor market insights. 
  • 3:30 PM – USD – Philly Fed Manufacturing Index: Forecast at -8.5, reflecting regional manufacturing sentiment. 

Friday, January 17, 2025: 

  • 4:00 AM – CNY – GDP (q/y): A significant print of 5.0% is expected, reflecting China’s growth trajectory. 
  • 4:00 AM – CNY – Industrial Production (y/y): Forecast at 5.4%, gauging industrial sector performance. 
  • 4:00 AM – CNY – Retail Sales (y/y): Expected at 3.5%, highlighting consumer spending trends. 
  • 9:00 AM – GBP – Retail Sales (m/m): Anticipated at 0.4%, reflecting the health of the UK retail sector. 
  • 3:30 PM – USD – Building Permits: Forecast at 1.46M, a key housing market indicator. 

Market Insights: Key Charts to Watch 

Chart 1: AUD/USD – Daily Chart: 

The pair continues its long downtrend initiated in October 2024, breaking below its previous support level last week. With the Australian unemployment rate set for release, the pair’s trajectory hinges on labor market conditions. A higher unemployment rate could exacerbate the pair’s bearish trend, targeting lower Fibonacci levels. The pair remains entrenched in a bearish trend, trading at $0.6144 and breaking below key support. Momentum indicators signal further downside potential. 

Main Scenario: A sustained move below $0.61472 could target $0.61052 and $0.60587 (161.80% and 200% Fibonacci levels). 

Alternative Scenario: A recovery above $0.62268 (61.80% Fibonacci level) could signal a short-term rebound. 

Key Levels: 

  • Support: $0.61472, $0.61052, $0.60587 
  • Resistance: $0.62268, $0.63019 

Chart 2: CHF/JPY – Daily Chart: 

The pair’s trading within a triangle pattern reflects uncertainty, with a recent failure swing from the upper edge adding to bearish sentiment. Breaking below the previous bottom indicates momentum is favoring the downside, targeting key support levels. 

The pair trades near 171.79, breaking below its recent bottom. The triangle pattern signals further downside risk amidst strong bearish momentum. 

Main Scenario: A move below $171.665 could target $170.785 and $169.814 (161.80% and 200% Fibonacci levels). 

Alternative Scenario: A reversal above $173.328 (61.80% Fibonacci level) could indicate a return toward the upper triangle edge. 

Key Levels: 

  • Support: $171.665, $170.785, $169.814 
  • Resistance: $173.328, $174.900 

Errante’s Weekly Newsletter brings you critical market insights to keep you ahead in the financial world. Stay informed and make strategic decisions with Errante. 

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