Daily Market Outlook, January 13, 2025 

Patrick Munnelly, Partner: Market Strategy, Tickmill Group

Munnelly’s Macro Minute...

"Asian Markets InThe Red As Robust US Payrolls Release Ratchets Rates Higher”

Asian stocks and bonds fell after strong U.S. payroll data released on Friday, while the pound extended its decline from last week amid concerns over the UK’s strained public finances. The MSCI regional equities index declined for the fourth straight session as traders recalibrated their expectations for potential Federal Reserve rate cuts in response to the robust U.S. jobs report. Futures for both European and U.S. equities pointed to further losses. Oil prices surged to a four-month high as new U.S. sanctions on Russia threatened to disrupt supplies, while a measure of the dollar climbed to a two-year high. Chinese stocks continued their slide despite domestic data showing record-high exports last year. However, this could represent a peak in the nation’s trade momentum, with former U.S. President Trump plans to impose higher tariffs on Chinese imports when he takes office next week. Brent crude rose above $81 per barrel after gaining nearly 4% on Friday, driven by the U.S.’s most aggressive sanctions yet on Russia’s oil sector. The sanctions targeted two major exporters, insurance companies, and over 150 vessels. This spike in oil prices could pose additional challenges for central banks, particularly the Federal Reserve, if it leads to higher inflation. GBP weakened further overnight, dropping to as low as 1.2126 against the USD, marking a decline of over 3% since the start of the year. Finance Minister Rachel Reeves's weekend trip to China, which resulted in news of only a modest investment deal, seems to have done little to shift sentiment surrounding the UK's ongoing fiscal concerns.

Markets are likely to navigate several potentially unexpected developments this week, following the activity seen during the first full week of the year. As the final week before President-elect Trump’s inauguration on January 20th, there is a high chance he will quickly implement executive orders on various policy issues, potentially including tariffs. Meanwhile, this period marks a relative lull in activity from major central banks, which are set to resume decisions toward the end of the month. 

The focus of this week’s economic indicators will be on US CPI and retail sales. The main event in the US will be the CPI report on Wednesday, a significant release ahead of the Federal Reserve’s January 29 meeting, particularly given recent bond market volatility. Economists anticipate a slowdown in month-on-month growth for both headline and core CPI to +0.2%, down from November’s +0.3%. Ahead of that, on Tuesday, the PPI report—a complementary measure of inflation—is expected to show +0.3% MoM growth, slightly easing off from the +0.4% recorded in November. Retail sales figures, scheduled for Thursday, will offer insight into consumer strength, with predictions of +0.3% MoM growth, below November’s +0.7%. On Friday, industrial production data is expected to show a mild +0.1% MoM recovery following a -0.1% contraction in November.

In the UK, inflation will dominate attention amid ongoing market turbulence, with CPI, PPI, and RPI reports set for release on Wednesday. On Thursday, markets will shift focus to monthly GDP data for November, offering further clues about the UK’s economic position. Elsewhere in Europe, Italy will provide updates on industrial production and trade balance figures. In Asia, China’s Q4 GDP report will take the spotlight, accompanied by retail sales data, highlighting the health of its economy. 

On the monetary policy front, the European Central Bank (ECB) will release the account of its December meeting, while commentary from various Federal Reserve officials and the Fed’s Beige Book will shed more light on upcoming policy moves. Finally, corporate earnings season begins, with US banks reporting on Wednesday, followed by TSMC’s earnings announcement on Thursday. Additionally, the US financial sector will start releasing Q4 and full-year earnings reports, drawing significant market attention. 

Overnight Newswire Updates of Note

  • Global Bond Tantrum Is A Wrenching And Worrisome Start To New Year

  • Warnings Of 3% Inflation Add To Bank Of England’s Headache

  • UK PM Aims To Refocus Attention On Growth After Hit From Markets

  • UK Chancellor Insists She Will Act To Meet ‘Non-negotiable’ Fiscal Rules

  • UK Promises Huge Increase In Computing Capacity To Build AI Industry

  • Apple £1.5B Class Action Case Kicks Off In UK Courts

  • Europe’s Largest Pension Fund Sold Tesla Stake Over Musk’s Pay

  • PBoC’s Pan: China Policy Focus To Shift More To Consumption

  • Chinese Exports Rise To Record Levels Ahead Of Looming Trump Tariffs

  • Former Fed Vice Chair Sees No Risk To Fed Autonomy Under Trump

  • US President-Elect Trump’s Return Raises Prospect Of Global Tax War

  • Canada PM: Counter-Tariffs Ready If Trump Launches Trade War

  • Bullish Brent Bets At May High Even Before US Sanctions On Russia

  • Russian LNG Cargo Near Spain To Test Impact Of Latest Sanctions

          (Sourced from reliable financial news outlets)

FX Options Expiries For 10am New York Cut 

(1BLN+ represents larger expiries, more magnetic when trading within daily ATR)

  • EUR/USD: 1.0475 (EU4.09b), 1.0300 (EU3.35b), 1.0200 (EU2.98b)

  • USD/JPY: 158.00 ($930.5m), 153.50 ($310m)

  • USD/CNY: 7.1000 ($360.7m)

  • USD/CAD: 1.3780 ($700m), 1.4410 ($486.5m), 1.3500 ($396.8m)

  • AUD/USD: 0.6760 (AUD451.2m), 0.6335 (AUD408m), 0.7235 (AUD405m)

  • GBP/USD: 1.2375 (GBP381m)

CFTC Data As Of 10/1/25

  • Currency Futures Positions

  • Swiss Franc: Net short of -28,382 contracts.

  • British Pound: Net long of 19,323 contracts.

  • Euro: Net short of -68,507 contracts.

  • Japanese Yen: Net long of 2,311 contracts.

  • Cryptocurrency Futures

  • Bitcoin: Net short of -129 contracts.

  • US Treasury Futures

  • CBOT US Treasury Bonds: Reduced by 19,961 contracts to 26,342 net short.

  • CBOT US Ultrabond Treasuries: Reduced by 15,012 contracts to 204,292 net short.

  • CBOT US 2-Year Treasuries: Reduced by 6,298 contracts to 1,252,975 net short.

  • CBOT US 10-Year Treasuries: Reduced by 141,543 contracts to 591,374 net short.

  • CBOT US 5-Year Treasuries: Reduced by 1,895 contracts to 1,760,422 net short.

  • Equity Futures Positions

  • S&P 500 CME (Fund Managers): Net long position increased by 2,531 contracts to 1,042,431.

  • S&P 500 CME (Speculators): Net short position increased by 78,396 contracts to 347,102.

  • Key Highlights

  • Currency Futures: There is a continued bearish outlook (net short positions) on the Euro and Swiss Franc, but slight bullish sentiment for the British Pound and Japanese Yen.

  • Cryptocurrency: Bitcoin futures show a minimal speculative net short position.

  • US Treasury Futures: Overall, speculators are reducing net short exposure across all categories of Treasury bonds, showing less bearish sentiment on US debt.

  • Equity Futures: Diverging views between equity fund managers (more bullish on S&P 500 futures) and equity speculators (increasing bearish bets).

Technical & Trade Views

SP500 Short Against 6040

  • Daily VWAP bearish

  • Weekly VWAP bearish

  • Seasonality suggests bearishness Into Jan 20th

  • Long above 6075 target 6165

  • Short Below 6045 target 5743

EURUSD Short Against 1.0435

  • Daily VWAP bearish

  • Weekly VWAP bearish

  • Seasonality suggests bearishness into March 30th

  • Above 1.0505 target 1.0634

  • Below 1.0435 target 0.9758

GBPUSD Short Against 1.2614

  • Daily VWAP bearish

  • Weekly VWAP bearish

  • Seasonality suggests bearishness into March 10th

  • Above 1.2685 target 1.2812

  • Below 1.2615 target 1.1878

USDJPY Long Against 153.77

  • Daily VWAP bearish

  • Weekly VWAP bullish

  • Seasonality suggests bearishness into jan 23rd

  • Above 1.5377 target 165.50

  • Below 152.41 target 150

XAUUSD Short Against 2692

  • Daily VWAP bullish

  • Weekly VWAP bullish

  • Seasonality suggests bearishness into Jan 15th

  • Above 2725 target 2762

  • Below 2692 target 2475

BTCUSD Short Against 101,960

  • Daily VWAP bearish

  • Weekly VWAP bearish

  • Seasonality suggests bearishness into Jan 15th

  • Above 104,020 target 110,000

  • Below 101,942 target 86,266