January was eventful, and while we are witnessing important central bank meetings next week, including the Federal Reserve, the European Central Bank, and the Bank of Canada, we are expecting an even more exciting week with the continuation of important earnings reports, which will heavily influence the economic performance over the coming years.

It is important to note that the New Year holidays in China and several other Asian countries may lead to a decrease in market liquidity, which could heighten trading risks.

In the week ahead, we have the Fed meeting and FOMC Statement, GDP, and Personal Income and Spending in the US, while out of the US, we have China PMIs, Bank of Canada Policy Rate, and European Central Bank Policy Rate.

Earnings

The Q4 2024 earnings season highlighted overall positive performance across sectors. Financial giants like Bank of America (BAC) and Morgan Stanley (MS) exceeded expectations, driven by strong revenue growth. Consumer-focused companies like Procter & Gamble (PG) and Johnson & Johnson (JNJ) delivered stable earnings, slightly surpassing estimates, signaling resilience in consumer spending. Tech firms, including Netflix (NFLX), reported solid results, benefiting from robust subscriber growth. Meanwhile, industrials like 3M (MMM) showed steady performance despite challenges, and airlines such as United Airlines (UAL) capitalized on strong travel demand. Overall, results reflected adaptability across industries amid economic uncertainty.

In the week ahead, investors will focus on key earnings reports from major companies across various sectors. Notable names to watch include tech giants like Microsoft (MSFT), Meta Platforms (META), Tesla (TSLA), Apple (AAPL), and Amazon.com (AMZN), which are expected to provide insights into tech sector trends. Consumer and luxury leaders Louis Vuitton (LVMUY) and AT&T (T) will also be in the spotlight, alongside energy heavyweights Exxon Mobil (XOM), Chevron (CVX), and Shell (SHEL). Financial powerhouses Visa (V) and Mastercard (MA), as well as industrial leaders like Caterpillar (CAT) and aerospace giant Boeing (BA), are also on the docket. Additionally, earnings from Alibaba (BABA), T-Mobile US (TMUS), IBM (IBM), Qualcomm (QCOM), and Biogen (BIIB) will round out a busy week for market watchers.

USA

Last week’s focus was on Washington’s new administration and President Trump’s executive orders on immigration, energy, foreign policy, and trade. However, President Trump’s speech later at the World Economic Forum in Davos and his comments on Energy and Central Banks’ decisions also was vital. On the executive orders’ front, while delays in tariffs got a positive reaction in the markets, lifting restrictions on liquid natural gas exports, addressing regulatory burdens, and plans to refill the Strategic Petroleum Reserve, aiming to boost private sector investment despite uncertainty about long-term oil prices, moved the markets.

On the economic data front, energy inventories fell to their lowest level since March 2002, Initial jobless claims rose to a six-week high due to Southern California wildfires, while continuing claims reached their highest since November 2021. The housing market improves by Existing home sales, and economic activities are raised by better manufacturing PMIs, while the service sector weaken! This week in the US we have New Home Sales, Durable Goods orders, CB Consumer Confidence, Fed Meeting, Q4-2024 GDP, and inflation metrics, which will provide fresh insights into the economy’s performance.

In the week ahead, all eyes will be at the FOMC meeting. While President Trump is expected to put pressure on the Fed for more rate cuts, we still anticipate two rate cuts in 2025. The Fed has already cut rates by 100 bps since September 2024, bringing the upper target range to 4.50%. Given strong economic growth, persistent inflation—with PCE inflation at 2.4% and core PCE at 2.8% and ongoing market uncertainty, we expect the Fed to hold rates steady during its first meeting of 2025 on January 31. The unemployment rate fell to 4.1% in December, supported by robust job growth over the past two months.

Following the Fed meeting on Tuesday and Wednesday, attention will turn to GDP data and Personal Income & Spending. Q3 2024 GDP grew at a strong 3.1% annualized pace, driven by a 3.7% rise in personal consumption and 2.1% growth in business investment. While inventories and net exports weighed on growth, the economy remains resilient. For Q4, GDP is expected to expand at a 3.0% annualized rate, supported by solid consumer spending (projected at 3.5%) and a modest rebound in residential investment.

On the Personal Income & Spending front, after positive results in November, we remain optimistic about December’s numbers. In November, personal spending rose 0.4%, with real spending increasing by 0.3%. Goods spending saw its fastest growth since January 2023, likely driven by holiday sales, while services spending softened. For December, personal spending is forecasted to grow by 0.7%, with personal income rising by 0.4%. However, inflation in personal spending—measured by the Fed’s preferred inflation index—may decelerate. The PCE deflator is expected to rise by 0.3% MoM (2.6% YoY), while core PCE is projected to increase by 0.2% MoM (2.8% YoY).

From a market reaction perspective, we expect the USD to remain fundamentally supported in the coming week, based on the factors outlined above. However, any doubts about President Trump’s intentions to impose tariffs, a less hawkish tone from the Fed than anticipated, or a Q4 GDP rate that disappoints markets could lead to a retreat in the USD. From a technical standpoint, bullish momentum appears to be waning, with the RSI below 40 and the OBV line trending downward. Nonetheless, strong support is observed around the 105.50 level, where we anticipate increased demand for the US dollar, potentially limiting further declines if the DXY falls below its initial support at 106.00.

In the stock market, earnings continue to bolster market sentiment. With the Fed holding current rates and the potential for more positive earnings surprises, we can remain optimistic about further market progress in the week ahead. From a technical perspective, the first support for SP500 sits at 6,000, while the pivot point at 5,930 serves as a critical level for bulls. Holding above this level could enable the market to achieve new all-time highs in the short term before any potential reversal.

ECB Rate Cut: Implications for the Euro and Eurozone Growth

The European Central Bank (ECB) is set to announce its monetary policy decision this week on Thursday, and market participants widely anticipate another 25 basis point cut to the Deposit Rate, bringing it to 2.75%, due to weakening economic activities. This expected easing reflects the ECB’s commitment to tackling sluggish growth in the Eurozone and achieving its 2% inflation target by late 2025. Recent remarks from ECB policymakers underscore the need for continued monetary easing due to the Eurozone’s subdued economic growth and lingering inflation pressures. Despite headline inflation easing to 2.4% year-over-year, services inflation remains elevated at 4.0%, accompanied by robust wage growth. These factors necessitate a cautious but steady rate-cutting path.

With slower economic growth and possible tariffs by the USA on European products, we expect the ECB to continue its dovish policies, and we expect to see this tone in the statement as well. Therefore, we expect to see comments about potentially cutting rates by 25 basis points at subsequent meetings in March, April, June, and September, which will drop the policy rate to 1.75% by the end of 2025.

Besides the ECB meeting, we have more economic data to watch. Preliminary Q4 2025 GDP rates for France, Germany, and the Eurozone as a whole will offer insights into growth dynamics. A slowdown or contraction in GDP could exacerbate bearish pressures on the euro. Similarly, the December preliminary HICP inflation figures for France and Germany will be closely watched. Any signs of slowing inflation may bolster the case for further monetary easing by the ECB.

On top of economic data and expectations, the Eurozone is facing political and macroeconomic challenges as well. In Germany, ahead of the February election, uncertainties are increasing, and voters are increasingly turning to right-wing parties, which economically can be positive but in the short term, it increases the challenges. These developments, coupled with France’s political challenges, are weighing on investor confidence and pressuring the euro.

Economic concerns also persist, particularly regarding Germany’s energy and growth outlook. Preliminary December PMI figures hinted at improvement but remained below 50, signaling contraction in the manufacturing sector across member states. As the economic powerhouse of the Eurozone, Germany’s struggles are particularly concerning.

Fundamentally, the euro appears poised for further downside in the coming days. Weak economic data, dovish ECB policy, and ongoing political uncertainties are likely to weigh on the common currency. A key support factor could emerge if U.S. President Trump hesitates to impose tariffs, which might provide temporary relief for the euro.

Generally, the Euro’s bearish momentum could persist if the ECB’s forward guidance confirms or exceeds market expectations for additional rate cuts. Investors should prepare for extended volatility in EUR pairs, especially during ECB President Lagarde’s press conference and subsequent macroeconomic releases. However, the ECB’s forward guidance, alongside President Christine Lagarde’s press conference, will play a pivotal role in shaping market expectations and volatility in EUR pairs. Any dovish tone or confirmation of additional rate cuts could amplify bearish sentiment toward the euro.

From a technical point of view, 1.045 is the key pivot; breaching under this level will open the door for recent lower lows under 1.02. On the flip side, the key resistance sits at 1.055, which is less likely to be touched in the short term.

Gold in the Week Ahead: Navigating Uncertainty and Market Volatility

Gold’s performance remains closely tied to global economic uncertainties. Recent developments, particularly US President Trump’s controversial policy plans, are adding significant volatility to the market. Investors are particularly concerned about potential trade wars and the long-term economic impacts of Trump’s tariffs, which have already led to increased market anxiety. It probably doesn’t need repeating, as you know, gold typically does well when there’s a large or even a moderate amount of uncertainty in the market, as it receives more demand due to its safe-haven position.

Gold’s appeal has been further amplified by the intensifying fears of global trade wars. Prices surged to an 11-month high, reaching $2,785 per ounce—levels not seen since November of the previous year. The rally reflects increased demand for safe-haven assets as concerns over the future of global trade continue to mount. As President Trump pushes ahead with plans to overhaul the US tariff system, the market has become increasingly wary of potential escalations with key trading partners such as China, Mexico, and Canada. The anticipation surrounding these developments, combined with the broader geopolitical climate, presents an environment ripe for continued demand for gold. This combination of trade and immigration policies is seen as potentially inflationary, which could force the Federal Reserve to keep interest rates higher for a longer period in an effort to control rising prices. While a hawkish Fed typically exerts downward pressure on gold, the uncertainty surrounding global trade and economic growth is likely to continue driving investors toward gold as a safe-haven asset.

Another development that traders will be watching closely is inflation. While Trump’s policies were initially expected to drive inflation, thereby supporting the Federal Reserve’s elevated interest rates, much will depend on the details of the upcoming economic measures. In the meantime, gold continues to attract investor attention as a store of value amidst the ongoing uncertainty.

In conclusion, the week ahead presents both risks and opportunities for gold. On one hand, rising US interest rates and inflation data could weigh on gold. On the other hand, the geopolitical risks tied to Trump’s trade policies and the broader market volatility create an environment that could fuel further demand for the precious metal.

From the technical point of view, XAUUSD remains bullish and is targeting the 2,800 area, with strong support sitting at 2,730.

Oil Market Outlook for the Week Ahead

This week’s EIA data has reinforced that WTI crude trading around $75 is well-aligned with current market conditions. US crude and petroleum inventories at the start of 2025 fell below both 2023 and 2024 levels, as well as the five- and ten-year seasonal averages.

Oil prices faced challenges this week, with President Trump pushing for OPEC to cut oil prices and the potential impact of tariffs on global growth weighing on the market. At the World Economic Forum in Davos, President Trump outlined policies, including the push for lower oil prices and immediate interest rate cuts. This has led investors to reconsider the energy sector, seeing it as a potential new bull market despite recent bearish price movements.

Despite these pressures, the global inventory situation is not as pessimistic as it was in Q4 of 2024. However, more significant inventory draws are needed to drive prices higher, as current levels are not enough to push prices up on their own.

Fundamentally, it seems like a fair price to see WTI around current levels. From a technical point of view, it appears that the correction has ended and now it’s gaining more demand, with the RSI recovering from the oversold area and OBV turning higher. The first support and resistance are sat at 72.80 and 76.40, respectively.

Bitcoin Market Insight: Recent Developments and Future Outlook

Bitcoin has been experiencing significant momentum, holding a low of 101k to surpass 107k in recent days, fueled by President Trump’s executive order aimed at promoting the development of cryptocurrencies in the U.S. This has sparked speculation about the potential creation of a national Bitcoin reserve. However, while the order has increased optimism in the crypto space, market reactions have been mixed due to the lack of clarity on the specifics of Trump’s policies and potential challenges from Congress.

Trump’s crypto executive order, titled “Strengthening American Leadership in Digital Financial Technology”, has created a working group tasked with exploring a national digital asset stockpile, which could include Bitcoin. The President’s past comments on creating a Bitcoin national reserve and his stance on pro-crypto policies have brought increased attention to the potential for the U.S. to hold Bitcoin as a strategic reserve. This move, along with the growing market valuation of crypto assets, is sparking hopes for greater legitimacy and demand for Bitcoin, pushing its price upward.

Yet, the creation of a national crypto reserve remains uncertain, as the process would likely require Congressional approval and face resistance from fiscally cautious lawmakers. The SEC’s recent decision to rescind SEB 121, a major accounting requirement for digital asset custody services, also adds to the regulatory uncertainty surrounding the market.

Despite these challenges, Bitcoin whales have been ramping up purchases, with large players like MicroStrategy continuing to accumulate Bitcoin. This activity comes after a quieter start to January and is a sign of institutional interest returning to the market. As of January 2025, MicroStrategy holds a staggering 461,000 BTC, valued at approximately $48.86 billion. The company’s decision to redeem its 2027 Convertible Notes by February 2025, settling the debt with shares instead of cash, is seen as a strategic move to conserve funds for further Bitcoin acquisitions.

The increase in Bitcoin whale activity suggests a potential price floor during bull markets, although retail demand has softened in recent weeks. While the market sentiment remains cautiously optimistic, Bitcoin’s future direction will largely depend on continued regulatory developments and institutional interest.

Looking ahead, Bitcoin’s short-term price action is bullish, with support levels around 100k and resistance at 109k. If Bitcoin can break through the 109k resistance, further gains could push it towards new record highs, with the 115k level being a logical target. However, the market must continue to see positive fundamentals, including increased demand and regulatory clarity, to sustain this upward momentum.

In conclusion, Bitcoin is poised for potential growth, but its path forward will depend on the balance between regulatory clarity, institutional support, and market demand. With key players continuing to accumulate Bitcoin, the market is likely to see continued interest, but how the regulatory landscape develops will be crucial for the sustainability of the current rally.