Articles

Tokyo area inflation for December 2024.

Headline 3.0% y/y

expected 2.9%, prior 2.6%

Core (excluding fresh food) +2.4%

• expected 2.5%, prior 2.2%

Core-core (excluding food and energy) 2.4% y/y

• prior 2.2%

***

I’d think this will keep the Bank of Japan on track for a January interest rate hike.

Ueda spoke earlier this week:

• BOJ governor Ueda: We must raise rates if economic, price developments continue to improve

This article was written by Eamonn Sheridan at www.forexlive.com.

CNBC carried an interview with oil market analyst Vandana Hari, founder of Vanda Insights. Video is here.

In summary:

• Limited Influence of U.S. Leadership:

  • Despite former President Trump’s pro-drilling rhetoric, U.S. oil producers prioritize technological advancements over expanding drilling activities.

• U.S. Production Trends:

  • U.S. oil production grew by approximately 300,000 barrels per day in 2024, a significant slowdown from the nearly 1 million barrels per day increase the previous year.
  • Modest growth is expected to continue into 2025, driven by price sensitivity, with production likely to remain steady if WTI crude stays above $65–$70 per barrel.

• Global Production Growth:

  • Increased oil output is expected from Canada, Brazil, Argentina, Guyana, and Norway, with more consistent and predictable production trends.

• OPEC+ Strategy:

  • OPEC+ has delayed easing 2.2 million barrels per day of production cuts, showcasing a united and patient strategy for gradual supply increases.
  • The group aims to maintain Brent crude prices above $70 per barrel, which is likely the maximum price support they can offer without overextending its influence.
  • “I think that is where the market attention is focused because that’s the variable. With OPEC+, we’ve seen three postponements of the unwinding of the 2.2 million barrels per day. What that tells me is that OPEC+ despite all the talks in the market speculation is managing to remain cohesive”

This article was written by Eamonn Sheridan at www.forexlive.com.

The World Bank raised its 2024 China growth forecast to 4.9%, from 4.8% previously. In summary from the Bank’s report:

• Economic Growth Performance:

  • China’s economic growth was robust at 4.8% during the first three quarters of 2024.
  • Growth has slowed since Q2 2024 due to subdued domestic demand and a prolonged property sector downturn.

• 2024 and 2025 Projections:

  • Growth is estimated at 4.9% in 2024 and projected to moderate to 4.5% in 2025.
  • Policy easing measures are expected to provide moderate support.

• Key Challenges:

  • Subdued household and business confidence.
  • Continued headwinds from the property sector downturn.
  • Structural constraints including:
    • Low domestic consumption.
    • High debt levels among property developers and local governments.
    • An ageing population.

• Policy Efforts:

  • The government is providing policy stimulus to balance short-term demand support with long-term financial stability.
  • Emphasis on addressing the property sector crisis, strengthening social safety nets, and improving local government finances.

• World Bank Perspective:

  • Mara Warwick, World Bank Country Director for China, Mongolia, and Korea, emphasizes the need for:
    • Balancing short-term growth support with structural reforms.
    • Implementing clear and specific policy measures to boost market and household confidence.
    • Unlocking sustained recovery through structural adjustments.

***

None of those “key challenges” highlighted in the report should come as any surprise. The ‘World Bank perspective’ )policy adive) is not surprising either.

This article was written by Eamonn Sheridan at www.forexlive.com.

China Construction News with the report, citing a work conference held by the housing regulator on Tuesday and Wednesday.

In summary from the report, overblown adjectives included …

• Efforts to stabilize and prevent further declines in China’s real estate market will continue into 2025.

• Plans to reform the commercial housing sales system vigorously.
• Expansion of urban village renovations beyond the addition of 1 million units.

• Strict control over the supply of commercial housing.
• Increased focus on providing affordable housing for new citizens, young people, and migrant workers.
• Greater autonomy for local governments to purchase housing stock for stability, as suggested by the Central Financial and Economic Affairs Commission.

The background to the latest proposals here include:

• Policymakers introduced new measures since 2021 to revive the sector after a developer crisis triggered by a government-led crackdown.
• Measures include cutting mortgage rates, reducing minimum down payments, and offering tax incentives to lower housing transaction costs.

The current overview of the sector highlights some encouraging signs … but its early days yet:

• Real estate market shows signs of stabilizing, with year-on-year and month-on-month growth in home transactions during October and November.
• November saw the slowest decline in home prices in 17 months, driven by government efforts.

This article was written by Eamonn Sheridan at www.forexlive.com.

China’s National Bureau of Statistics (NBS) announced the revision on Thursday, following the completion of the fifth National Economic Census:

• Gross domestic product (GDP) in 2023 was raised by 3.4 trillion yuan to 129.4 trillion (US$17.73 trillion)
• said the change would have little impact on growth this year

China’s National Economic Census is a comprehensive survey conducted by the Chinese government to collect detailed data on the country’s economic activities. It is typically carried out every five years and aims to provide a complete picture of the structure, size, and performance of China’s economy. The census is managed by the National Bureau of Statistics (NBS) in collaboration with local governments.

NBS added:

• “Overall, the Fifth National Economic Census has yielded fruitful results, with the major data objectively reflecting the new progress and achievements in China’s economic and social development over the past five years”

More info in Chinese media, Global Times, for example.

This article was written by Eamonn Sheridan at www.forexlive.com.

It’s a patchy week of holidays, official and unofficial. Today definitely falls into the unofficial holiday category. I won’t be around much (but that’s just between you and me, K?)

The best trade idea might be to chill out and recharge, but different people have different ideas. If you would like to share trade ideas, this is the thread for you!

This article was written by Eamonn Sheridan at www.forexlive.com.

WTI crude oil settled lower by 48-cents after trading higher earlier in the day. There are some positive signs that China will stimulate demand in the year ahead and that should improve supply/demand balances but the oil market is in a wait-and-see mode.

Technically, the range trade continues.

This article was written by Adam Button at www.forexlive.com.

• 4.532% is the high-yield at the auction

This article was written by Adam Button at www.forexlive.com.

It’s a “quiet” news day today—the day after Christmas (and Boxing Day in many parts of the world). On this “all is calm” day, I wanted to share something you might not know: I’ve written a book that complements my technical analysis work on Forexlive.com.

Inspired by Sara Eisen’s “shameless” (her words!) promotion of her book, Currencies after the Crash: The Uncertain Future of the Global-Paper-Based Currency System, on CNBC this morning, I took a moment to check my own book on Amazon. It’s called Attacking Currency Trends, and I noticed it’s currently on sale (though I don’t set the price and it fluctuates).

I’m proud to say it holds a 4.6-star rating (same as Sara’s book), with 87% of reviewers giving it 4 or 5 stars. The book aligns with the principles I emphasize in my posts on Forexlive.com, making it a valuable resource for traders. Consider it an investment in sharpening your trading skills as we head into 2025. It is also useful in other markets.

If you have already purchased and read, thank you and feel free to share your thoughts in the comments. Shameless…yes, but beneficial to your trading….yes too.

You can find it and purchase it with your Amazon Christmas gift card, by clicking HERE (or below).

This article was written by Greg Michalowski at www.forexlive.com.

The US stocks are opening lower, but not as bad as the pre-market levels implied by the futures.

A snapshot of the market is showing:

• Dow -115 point Friday points or -0.27% at 43181.45
• S&P -15.0 points or -0.25% at 6025.04
• NASDAQ -48.01 points or -0.24% at 19983.11.

The small-cap Russell 2000 is trading down 14.93 points or -0.66% at 2244.91.

Apple has traded at a new record high of $259.97

This article was written by Greg Michalowski at www.forexlive.com.

• Prior week 220K
• Initial jobless claims 219K vs 224k estimate
• 4-week moving average 226.5K vs 225.5K estimate
• Prior week continuing claims 1.874M revised to 1.864M
• Continuing claims 1.910M vs 1.880M estimate
• 4- week moving average of continuing claims 1.878M vs 1.880M last week.

This article was written by Greg Michalowski at www.forexlive.com.

Boxing Day in Europe and Canada, and the hangover day after the Christmas Day holiday in the US. Nevertheless, the US stock market and bond markets will be open all day.

The USD is higher vs the major currencies:

• EUR +0.05%
• JPY +0.15%
• GBP +0.27%
• CHF +0.13%
• CAD +0.22%
• AUD +0.21%
• NZD +0.21%

US stocks are lower after closing the shortened day on Christmas Eve higher. On Tuesday:

• Dow rose 390.88 points or 0.91%
• S&P rose 65.97 points or 1.109%
• Nasdaq rose 266.34 points or 1.35%

In premarket trading today, the futures are implying a lower open:

• Dow -209 points
• S&P -26 points
• Nasdaq -110 points

In the US debt market, the yields are resuming it’s move higher

• 2-year 4.353%, up 2.9 bps
• 5-year 4.462%, up 4.1 bps
• 10-year 4.633% up 4.6 bps
• 30-year 4.813%, up 5.4 bps

Mastercard is reporting that retail sales for Christmas rose 3.8% surpassing estimates of 3.2%:

• Overall Growth: Retail sales rose 3.8% between November 1 and December 24, surpassing Mastercard’s forecast of 3.2%.
• Comparison to Last Year: The growth exceeded the 3.1% increase recorded during the same period last year.
• Final Surge: The last five days of the holiday season accounted for 10% of total holiday spending.
• Major Retailers: Companies like Walmart, Target, and Amazon ramped up promotions to attract shoppers in a highly competitive season.
• Online Sales: Online retail sales grew by 6.7%, outpacing overall retail sales growth, driven by strong demand and promotions from platforms like Shein, Temu, and PDD Holdings.
• Consumer Trends: Shoppers focused on value and concentrated e-commerce spending during major promotional events like Black Friday and Cyber Monday.
• Exclusions: Mastercard SpendingPulse data excludes automotive sales but includes both in-store and online transactions.

The US will release the weekly jobless claims data at 8:30 AM ET with the expectations of 224K vs 220K last week. The claims data has been up and down volatile with the prior week coming in much higher at 242K. Continuing claims are expected at 1.880M vs 1.874M last week.

The US treasury will auction 7 year notes at 1 PM ET. On Tuesday the Treasury auctioned 5 year notes:

• High yield 4.478%,
• Tail -0.2 bps vs 6-month average of 0.4 bps
• Bid to cover 2.40X vs 6-month average of 2.39X
• Directs (domestic) took 20.3% vs 17.5% average
• Indirects (international) took 67.3% vs 69.6% average

This article was written by Greg Michalowski at www.forexlive.com.