Buckle Up for EU-China Trade Tensions

In this piece, we argue that there is a high probability that the EU will increase the tariff on Chinese electric cars, but there are also good arguments why that might not lead to a large-scale trade war.

Light Macro Data to Kick Off the Week

In the US, the highlight this week is the CPI inflation release tomorrow. The January US CPI print will be key in determining whether the recent upside surprises in US macro translates into higher price pressures. Recently, markets have dampened rate cut expectations for 2024 as most US data points have surprised to the upside.

Central Bankers Advocated Cautious Wait-and-See Bias

Central bankers advocated a cautious wait-and-see bias, pushing back against a too aggressive start of the easing cycle. Still they were not specific on the timing of the inaugural rate cut, leaving the market room for interpretation. Upcoming data now will decide to which side of the above-mentioned levels the interest rate domino’s will fall. In a daily perspective on Friday, US yields added 2 bps across the curve.

Forex and Cryptocurrencies Forecast

Last week saw a scarcity of significant macroeconomic data. In anticipation of new drivers, market participants analysed the state of the US labour market and statements from Federal Reserve officials.

Bitcoin Pushes Cryptos Upwards

The crypto market reached a capitalisation of $1.82 trillion in the early hours of trading on Monday. By the early European session, it had corrected to $1.8 trillion, but this is still more than 10% above the levels of a week earlier.

NZD/USD Dips Despite Hawkish RBNZ

The New Zealand dollar is lower on Monday. In  the European session, NZD/USD is trading at 0.6127, down 0.35%. The New Zealand dollar ended the week on a high note, gaining 0.86% against the US dollar on Friday.

GBP/USD Eyes Bailey, Jobs Report

The British pound is showing limited movement at the start of the week. In Monday’s North American session, GBP/USD is trading at 1.2610, down 0.15%.

GBP/JPY – Testing Highs Ahead of Key UK Economic Data

UK wage growth key to BoE sustainably hitting inflation target GBPJPY struggling near recent highs Divergence points to loss of momentum

What Next for the RBNZ?

Expectations have fluctuated wildly in New Zealand since the RBNZ November Monetary Policy Statement. Back then the RBNZ surprised almost all with the threat of further tightening in 2024 if inflation pressures didn't recede fast enough. Central to their thesis was concern that:

A Step in the Right Direction for the UK But BoE Will Remain Cautious

Then there's the unemployment rate which fell to 3.8% but is no longer reliable as a sole indicator. At a time when the BoE would like absolute clarity on the labor market, it's left to piece together a variety of data and surveys to form a judgment. Not ideal when central banks everywhere are petrified to move too early and risk stoking inflationary pressures again.