Forex Signals Brief January 17: Higher China GDP Data Doesn’t Help Commodity Dollars
Today the Chinese data was impressive, with the GDP beating expectations in Q4 of 2024, but commodity dollars declined nonetheless.
Yesterday in the UK, November’s monthly GDP turned positive at +0.1% compared to the previous -0.1%, though it fell short of the +0.2% expected and provided little support for the pound. Overall, market movements were muted, with minimal activity. In the U.S., the dollar traded with mixed performance, showing slight losses against most major currencies and a more pronounced drop against the yen. Retail sales data presented a mixed picture. While the headline figure grew by 0.4%, below the 0.6% forecast, the retail sales control group exceeded expectations with a 0.7% rise, compared to the projected 0.4%.
This metric, crucial for GDP calculations, contributed to a slight increase in the Atlanta Fed’s GDPNow estimate, which ticked up from 2.7% to 3.0% for Q4. On the employment front, initial jobless claims were higher than expected at 217K versus the 210K forecast. However, the four-week moving average declined to 212.75K, and continuing claims came in lower than anticipated at 1.859 million, reflecting a stable labor market.
Tech stocks faced challenges, particularly Apple, which analysts attribute to its slower rollout of AI technologies compared to competitors like Huawei. Huawei’s focus on 5G and advanced AI features has helped it gain market share in China. Apple (AAPL) shares dropped 10 points (-4%), Tesla (TSLA) lost 14 points (-3.5%), and NVIDIA (NVDA) declined by 2.5 points (-2%).
In contrast, European stocks rallied, with France’s CAC 40 leading gains at +2%. Gold extended its recovery, rising $18 (+0.68%) to reach $2,714. This marks the third consecutive day of gains, recovering $51 since Monday’s sharp $27 drop. Bitcoin ended yesterday at $100,512 but has since fallen below the $100K mark, hitting a low of $97,319.
Today’s Market Expectations
The main forex events are already released today, with the Chinese and UK data. China’s Q4 GDP grew by 1.6% quarter-on-quarter, aligning with expectations and improving from the previous quarter’s 0.9% growth. Year-on-year, Q4 GDP increased by 5.4%, bringing the overall growth for 2024 to 5.0%. Industrial production showed robust growth, rising 6.2% year-on-year, exceeding the expected 5.4% and reflecting the manufacturing sector’s gains from stimulus measures and boosted exports. However, oversupply amid weak domestic demand raises concerns about potential deflationary pressures. Retail sales in China also outperformed expectations, increasing by 3.7% year-on-year compared to the forecasted 3.5%, while fixed asset investment grew by 3.2% year-to-date.
In the UK, December retail sales were disappointing, falling 0.3% month-on-month compared to the anticipated 0.4% rise. This follows a flat revision for November (0.0% from an initial 0.1%). Excluding automobiles and gasoline, retail sales dropped 0.6% month-on-month, falling short of the 0.1% growth forecast. Year-on-year, sales excluding vehicles and petrol increased by 2.9%, below the predicted 3.6%. The December figures highlight a softer-than-expected holiday season for UK retail, with volumes still 2.5% below February 2020 levels, underscoring ongoing weakness in household demand.
Yesterday markets were quiet, with most forex pairs trading in a tight range, apart from USD/JPY which made a decent bearish move. As a result, we only had four trading signals closed at the end of the day, three of which were winning fore signals and a losing trades, with several trades continuing into today.
Gold Faces Resistance After Bouncing Off the 100 Weekly SMA
Gold has resumed its upward momentum this month after finding solid support at the 20-week SMA, though it faces resistance above $2,720. Last month, XAU/USD dropped $100 after failing to breach the key $2,725 resistance level but found a foothold near the 20-week SMA, where a doji candlestick signaled a potential bullish reversal. This was followed by three bullish weekly candles, with the price climbing above $2,700 yesterday. However, to break higher, buyers must push past $2,730.
XAU/USD – Daily Chart
Missed the Chance to Buy the Rebound in USD/CAD
Last month, gold faced challenges breaking past the key $2,725 resistance, resulting in a $100 decline. Initially, the 50-day SMA acted as resistance, while the 100-day SMA provided support. Midweek, buyers managed to push prices above the 50-day SMA, but renewed selling pressure wiped out $30, sending gold back to the 50-day SMA. However, strong support held firm, driving prices back toward the $2,700 level.
USD/CAD – Daily Chart
Cryptocurrency Update
Bitcoin Holds Above $100K
Bitcoin has displayed significant volatility recently. Starting the week near $108,000, it plunged below $100,000 and into the low $90,000s following a 25-basis-point rate cut. After briefly recovering to $95,000 but facing resistance near the 20-day SMA, Bitcoin dropped again before finding support in the current zone. Early this week, BTC/USD rebounded by 10%, reclaiming the $100K level and yesterday it closed the day above this level after falling $3,000 lower initially.
BTC/USD – Daily chart
Ethereum Can’t Keep Up the Bullish Momentum
Ethereum has also seen dramatic price fluctuations. Initially supported near its 50-day SMA, it succumbed to bearish pressure, falling below $3,500 and eventually to $3,200. A sell-off on Monday briefly pushed it under $3,000, but renewed buying sparked a recovery. Ethereum temporarily reached $4,000 midweek before retreating below $3,000. Over the last two weeks, however, the cryptocurrency market has rallied significantly, lifting Ethereum near $3,500.
ETH/USD – Weekly Chart
ABOUT THE AUTHOR
See More
Join 350 000+ traders receiving Free Trading Signals
Alerts
Rates
Calendar
Signals
Top Broker