Yields on 10-year U.S. Treasury bonds fell about 10 basis points to around 4.52% on Monday, as a sell-off in technology company stocks fueled by concerns about U.S. dominance in artificial intelligence triggered a broader mood of risk aversion.

Investors have also been evaluating President Trump’s policies as they await the Federal Reserve’s decision on monetary policy this week. It is widely expected that the Fed will keep the federal funds rate at its current level, but market participants will be watching closely for any signals on its plans for the coming year. Currently, markets are pricing in rate cuts of about 50 basis points in 2025. In addition, the release of GDP growth data and the PCE report will also be in the spotlight.

This week :

Monday: Chinese PMIs, German IFO.

Tuesday: US durable goods orders, US consumer confidence.

Wednesday: Australia Q4 CPI, BoC policy decision, FOMC policy decision.

Thursday: GDP and unemployment rate in the Eurozone, ECB decision, Q4 GDP in the US, number of unemployment claims in the US.

Friday: Tokyo CPI, Japan unemployment rate, Japan industrial production and retail sales, Switzerland retail sales, France CPI, Germany CPI, Canada GDP, US Core PCE, US Q4 ECI.

Wednesday, 29.01

Australia’s Q4 y/y CPI is expected to be 2.5% vs. 2.8% previously, while q/q is expected to be 0.3% vs. 0.2% previously.

The RBA is focusing on core inflation data, with the y/y CPI average expected to be 3.3% vs. 3.5% previously, while the q/q reading is expected to be 0.6% vs. 0.8% previously.

As a reminder, the RBA further softened its stance during its last policy decision, moving closer to its first interest rate cut. The market sees a 54% chance of a 25 basis point rate cut in February, although the first fully priced cut is expected in April.

The BoC is expected to cut interest rates by 25 basis points and lower the interest rate to 3.00%. Recall that at its last meeting, the BoC cut interest rates by 50 basis points, but dropped the statement that “if the economy develops broadly in line with our latest forecast, we expect to cut the interest rate further,” suggesting that we have reached the peak of “dovishness” and the central bank will now move to a 25 basis point cut and slow the pace of easing.

Canada’s latest employment report was much better than expected, while the CPI report was mostly in line with forecasts, showing once again that the central bank has regained control of inflation.

The CAD hasn’t reacted much to economic data lately, as attention has focused on Trump’s threats of tariffs and their negative impact on Canada’s economy. Trump has said he intends to impose 25% tariffs on Canadian imports as early as February 1.

The Fed is expected to keep interest rates unchanged at 4.25-4.50%. As a reminder, the central bank cut rates by 25 basis points at its last meeting in December, raising growth and inflation forecasts and lowering the expected rate cut in 2025 from 100 basis points to 50 basis points (in line with market valuations at the time).

The central bank is likely to emphasize the need to wait a bit longer for the next rate cut in order to get more economic data and more clarity on Trump’s policies. As the Fed’s Waller recently mentioned, the pace of rate cuts will depend on the progress of inflation. He did not even completely rule out a March cut, which was perceived by the market as a “dovish” surprise.

The latest U.S. inflation data turned out to be softer than expected, marking the top of the inflation curve and re-pricing expectations for rate cuts. Before the data, the market was even pricing in the chances of no rate cuts in 2025.

Thursday, 30.01

The ECB is expected to cut rates by 25 basis points and lower the interest rate to 2.75%. The latest CPI report for the eurozone showed that core inflation remains fairly stable, especially on the services side.

What’s more, despite all the gloom, the latest preliminary PMIs showed a significant rebound in economic activity, which may even increase if the Russian-Ukrainian war is ended – which, unfortunately, could take another 180 days according to the latest information coming from President Trump’s camp.

There was also news that the EU will promote artificial intelligence, advanced research and clean technology to compete with the US and China, as well as a push to reduce and simplify regulations and increase investment. The outlook for a good 2025 for the euro and European stocks is strengthening by the day.

(ForexLive)

USDCHF technical analysis

usd/chf long term analysis
USDCHF Wekly – MACD suggests possible declines in the longer term.

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The above analysis is based on the PA+MACD strategy, a detailed description of which you can read HERE . I will talk more about the PA+MACD strategy applied to these currency pairs during the live trading sessions, which you can attend from Monday to Friday.

 

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