The first week of 2024 was relatively volatile while traders found their feet- we saw stock markets sell off pretty much everyday through the week and various data releases which moved the market- we saw GBPEUR as low as 1.15 and GBPUSD as low as 1.26 before both rising around 1% each respectively. After a pretty uneventful FOMC minutes report and a positive NFP report out of the U.S showing that the labour market is still strong, showed that though rate cuts are on the cards for the Fed, there is no real urgency.
Looking at this week, on Monday we have European consumer confidence data out where the forecast is -15.1- while though an improvement compared to November is still a pretty bad outlook, I do not believe this will be something that will move the markets however it will be important to note in case it is a leading indicator for retail sales later this month.
The next important release is U.S inflation on Thursday for December, we are expecting to see a drop down to 3.8% for Core inflation (Down by 0.2%) and an increase of 0.1% for the YoY number, this will probably be welcomed and add fuel to the rumours of rate cuts for the Fed.
On Friday we have GDP, trade balance, industrial and manufacturing production data out of the UK, unfortunately the expectation on GDP is for the UK to dip into negative territory, however industrial production is expected higher, this will be a volatile morning for Sterling for sure so if you plan to make trades at the end of the week this release is one to consider planning around.
Generally this month the markets will be moving off rate cut expectations, the main data releases we need to keep an eye on is inflation, employment data and anything to do with spending- the UK housing market is supposedly still performing well (According to numbers)- however the reality of housing is that it takes a year to show if there has been a dip, and we can see clearly from prices sold and listed prices that the housing market in the UK is dropping, and the data I mentioned before is important to note as it will dictate when the Bank of England should cut rates in the UK.
Aside from rate cuts, there is also an election this year in the U.S and potentially the UK, with generally the outlook for both elections a change of leadership is expected- this is important to note as usually the numbers always look better in an election year and generally stock markets usually perform well in an election year.