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Monday’s Bullseye: 11 January 2021

Fawad Razaqzada Fawad Razaqzada 08/01/2021
Monday’s Bullseye: 11 January 2021 Monday’s Bullseye: 11 January 2021
Monday’s Bullseye: 11 January 2021 Fawad Razaqzada
Friday’s dire US jobs report was a reminder of the economic costs of the pandemic, which is still showing no signs of abating. Fresh lockdowns for most parts of Europe and elsewhere means the global recovery is likely to have stalled and we will probably see evidence of that in the upcoming global data releases. But despite the weak jobs report, the stock markets initially went up, while US bond yields and the dollar held onto their gains, causing an aggressive sell-off in precious metals. Judging by the reaction of bond yields and precious metals, it looks like investors are perhaps expecting inflation to return and are thus preparing for the Fed and other central banks to begin tapering talks in the not-too-distant future, before shrinking their huge balance sheets when the world economy is hopefully on a sustainable path of recovery in the years ahead.

One reason why inflation expectations have risen is due to the victory for the Democrats in the Senate, which means more fiscal support could be easily provided if the economy needed it. In fact, President-elect Joe Biden has pledged to expand the $900 billion stimulus package agreed in Congress. The potential for further government spending could push up inflationary pressure, which is why the dollar has shown signs of life again.
But are the markets getting ahead of themselves?

The Fed has committed itself to allow for inflation to overshoot the 2% average target, meaning that even when the pandemic is hopefully over, the era of ultra-low interest rates will remain in place for years to come. Indeed, the Fed has said it would also keep its $120bn-per-month QE programme until “substantial further progress has been made” in the recovery. This should keep the upside limited for the dollar and yields, and downside limited for gold and silver.

As far as the week ahead is concerned, well there isn’t an awful lot to look forward to. Donald Trump has finally admitted defeat after facing stern criticism this week for the actions that unfolded on Capitol Hill. So, there won’t be much political drama to look forward to either.

The week ahead features only a handful of potentially market moving data, while on the earnings front, no major US companies are reporting their results until Friday when three banks are scheduled to report.  We will have earnings from JP Morgan, Wells Fargo and Citi group all on Friday, ahead of a busier schedule in the following two weeks. 

Data highlights
 
  • Wednesday: Eurozone industrial production and US CPI
  • Thursday: Chinese trade figures, US jobless claims and a speech by Fed Chair Powell
  • Friday: UK GDP, manufacturing production and construction output; US retail sales and Industrial Production
Keep an eye on gold after its big drop this week. Has the metal topped out, or will the buyers step in again to buy this latest dip? The 200-day average has historically been a good area to look for a bounce, but will it hold this time? The bulls definitely need some confirmation now after what’s happened this week.

goldSource: ThinkMarkets and TradingView.com
Any opinions, news, research, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice. ThinkMarkets will not accept liability for any loss or damage including, without limitation, to any loss of profit which may arise directly or indirectly from use of or reliance on such information.

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Mohammed Zidan
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Mohamed Zidan
Chief Market Strategist, Dubai

Mohamed Zidan is a chief market strategist in Dubai and CFA Level III candidate. He reports to London office and has more than eight years of experience focusing on Forex, Commodities, Indices and global economic developments as well as central bank policies and intermarket analysis. worked as FX Analyst, and Strategist in several different organizations and for various departments. He holds a bachelor’s degree from Cairo University in Egypt. Mohamed Zidan is a regular guest on several major TV networks such as; CNBC Arabia, Fran24 Arabic, Alarabiya , Dubai TV, Sama Dubai, Skynews Arabia, Saudi National News, and Egypt National news.

Zidan presents insight to the markets movements, holds open discussions and relays possibilities related to the world’s financial market and economies.

Mohamed Zidan has been invited as a guest speaker for several international seminars. Zidan provides daily and weekly outlook for the markets. His experience ranges from currencies, commodities, stocks and options. he applies a top-down, global macro approach combined with price action to generate trade ideas and anticipate the next move.

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Victor Golovtchenko
Global Macro Analyst, Sofia

Victor Golovtchenko has been analysing and trading foreign exchange markets since 2004, and is actively involved in the online media space since 2014. His tenure as a Senior Editor at a major brokerage industry news outlet was followed with a breakthrough into the financial news space with the brand new TradeStar website.

As an affectionate macro-focused analyst, he has an integrated framework to look at financial markets as a whole, identifying gaps between currencies, stocks, bonds, and other asset classes to get a core complete picture of the macroeconomic environment.

Fawad Razaqzada
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Fawad Razaqzada
Market Analyst, London

Fawad is an experienced analyst and economist having been involved in the financial markets since 2010, producing market commentary and research for a number of global FX, CFD and Spread Betting brokerage firms. He leverages years of market knowledge to provide retail and professional traders worldwide with succinct fundamental & technical analysis. Fawad also offers trading education to help shorten the learning curves of developing traders.
 
His colleagues consider him an expert at reading price action on the charts. This together with his deep understanding of economics and fundamental analysis, and trading experience, puts him in a great position to forecast short term price movements. Fawad covers a wide range of markets, including FX, commodities, stock indices and cryptocurrencies and his comments are regularly quoted by the leading financial publications such as Reuters and Market Watch. In addition to ThinkMarkets, Fawad also provides analysis and premium trade signals on his own website at TradingCandles.com.
 
 

Carl Capolingua
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Carl Capolingua
Market Analyst, Melbourne

Carl has over 20 years' experience in financial markets and has held senior analyst roles at a number of financial institutions. Specialising in Australian and US stock markets in particular, Carl uses a top-down approach to assess the global macro picture before using both technical and fundamental techniques to select stocks. He regularly appears as an expert commentator on a number of media outlets throughout the Asia-Pacific region.
 
 
 

Mohammed Zidan
Mohamed Zidan
He has more than eight years of experience focusing on Forex, Commodities, Indices and global economic developments as well as central bank policies and intermarket analysis.
Victor Golovtchenko
Victor Golovtchenko
Victor Golovtchenko has been trading on the foreign exchange markets since 2004, and is actively involved in the online media space since 2014. His tenure as a Senior Editor follows his role with TradeStar.
Fawad Razaqzada
Fawad Razaqzada
Fawad is an experienced analyst and economist having been involved in the financial markets since 2010, producing market commentary and research for a number of global FX, CFD and Spread Betting brokerage firms.
Carl Capolingua
Carl Capolingua
Carl has over 20 years' experience in financial markets and has held senior analyst roles at a number of financial institutions.

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