Market Update by Solidecn.com

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Swiss Franc Falls from 12-Year High

Solid ECN – The Swiss franc dropped to 0.85 against the US dollar, down from a 12-year peak of 0.841. The DXY's recovery influenced this change. Last year, the franc gained 8.5% versus the dollar, reflecting differing interest rate policies of the Swiss National Bank and the Federal Reserve. The Fed's latest meeting hinted at a cautious approach, further affected by US inflation slowing down.

Despite this, the Swiss National Bank sees reasons for higher rates due to potential inflation increases. Currently, inflation in Switzerland is at 1.4%, but predictions show it might reach the 2% goal in mid-2024. This has led investors to believe that the Swiss National Bank will cut rates later than the Fed. Additionally, the franc reached a new high against the Euro, reflecting ongoing high rate expectations from the Swiss National Bank.

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Canadian Dollar Falls Beyond 1.33 USD Mark

Solid ECN – The value of the Canadian dollar has recently dropped, surpassing 1.33 against the US dollar. This decline comes after it had reached a five-month peak at 1.32 on December 26th. Several factors contribute to this shift, including a strengthening US dollar, lackluster economic reports within Canada, and a decrease in foreign currency coming into the country. A notable point of concern is Canada's manufacturing sector, which has experienced its most significant downturn since the 2020 pandemic crash.

This downturn poses challenges for the central bank's efforts to control inflation through tighter policies. Additionally, the Canadian dollar's strength is further weakened by a global reduction in oil demand, which traditionally supports the currency through foreign exchange. Investors are now focusing on the upcoming labor market report, set to be released on Friday, to gain insights into the potential directions of future monetary policy.

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Crude Futures Steady Amidst Market Flux



On Friday, WTI crude futures maintained a steady position above $72 per barrel. This stability reflects a complex market situation where weakening demand in the United States contrasts with the impact of supply interruptions in Libya. Just the day before, oil prices experienced a notable drop of 2.3%, but later recovered slightly. This fluctuation was primarily influenced by recent US data revealing a surprising surge in gasoline reserves. Last week, gasoline stocks rose sharply by 10.9 million barrels, marking the most significant increase in over 30 years. Additionally, there was an unexpected rise in distillate inventories, which grew by 10.1 million barrels, far surpassing the anticipated increase of 400,000 barrels. Contrasting these increases, crude oil reserves saw a reduction of 5.5 million barrels.

At the same time, market attention remains focused on Libya, where ongoing protests have disrupted oil production at the Sharara and El-Feel fields. These fields are significant, contributing around 365,000 barrels of oil per day. In a separate development, Iran is grappling with a tragic event. Two explosions occurred during a ceremony honoring the late military leader Qassem Soleimani, resulting in almost 100 deaths and many injuries.

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NZX 50's Slight Dip Amid Global Uncertainty

Solid ECN – Heading into 2024, New Zealand's NZX 50 saw a slight decline, ending at 11,748.49 on the last day of the week. This minor fall of 0.1% encapsulated the market's tepid response to international economic signals. Notably, Wall Street's sluggish beginning to the new year played a role in this downturn.

Furthermore, speculation is rife regarding potential shifts in US Federal Reserve interest rates, adding to the air of uncertainty. This, coupled with the anticipation of December's job report, has prompted a cautious approach from investors.

In New Zealand, there's a mixed sentiment among economists about the Reserve Bank of New Zealand's (RBNZ) future moves. While some predict a possible change in the cash rate by August, confidence in this forecast remains moderate. Shifting focus to China, New Zealand's key trading ally, Goldman Sachs anticipates that the People's Bank of China might lower the reserve requirement ratio twice in 2024, aiming to bolster the nation's economic rebound.

Specific sectors like consumer durables, energy minerals, and technology services contributed to the NZX 50's decline. Leading the downward trend were companies such as Infratil Ltd., Gentrack Group Ltd., Briscoe Group, and Property for Industry, all experiencing notable drops in their stock values.

[Solid ECN]

Canadian Dollar Dips Beyond 1.33 USD



The value of the Canadian dollar has recently decreased, now exceeding 1.33 against the US dollar. This decline follows a notable peak at 1.32 on December 26th, which was the highest in five months. Several factors contribute to this shift: a strengthening US dollar, underwhelming economic data within Canada, and a decrease in foreign currency coming into the country.

Particularly impactful was the manufacturing PMI in Canada, which saw its most significant reduction since the 2020 pandemic-induced downturn. This situation constrains the Central Bank of Canada's ability to implement strict policies to combat inflation. Additionally, a global reduction in oil demand is affecting the foreign exchange inflows, further weakening the Canadian dollar. Investors are now keenly anticipating the upcoming labor market data, set to be released on Friday, hoping it will shed light on the potential direction of future monetary policy.

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Japanese Equities Dip: Nikkei 225 Hits Two-Week Low in Volatile Trade



Solid ECN – In Thursday's post-holiday trading session, the Nikkei 225 Index experienced a significant drop, initially plunging by 2.3% and finally closing 0.53% lower at 33,288. This marked a two-week low point for the index, as it aligned with the global market trend of substantial losses. The beginning of the new year brought with it a cautious approach from investors. Many opted to secure their gains and reduce their expectations regarding the magnitude of interest rate reductions by major central banks within the current year.


Japan faced additional internal turmoil. The country was struck by a devastating earthquake, resulting in the tragic loss of at least 65 lives. Further adding to the chaos was an incident at Tokyo's Haneda airport, involving a collision with Japan Airlines. This series of events put additional pressure on the stock market.


Technology sectors bore the brunt of the downturn, with notable companies like Tokyo Electron, SoftBank Group, Disco Corp, Lasertec, and Advantest witnessing steep declines in their stock values. These companies saw their shares fall by 5%, 3.9%, 3.9%, 5.3%, and 3.8% respectively. Other prominent companies in the index, such as Fast Retailing, Sony Group, and Shin-Etsu Chemical, also experienced notable drops in their share prices.





Technical Analysis

The JP225 Index, also known as the Nikkei, has recently experienced a rebound from the 32,689 mark. This particular point is in close proximity to the 38.2% Fibonacci retracement level.

At present, the index is undergoing a test of the lower band of what was previously a bullish flag pattern. The pivot point in this scenario is at the 33,423 mark. For the continuation of the bullish bias, it is imperative that buyers achieve a close above this pivot point. Should there be a failure to surpass the pivot, it would likely result in a decline in the index's price.


Under such circumstances, the initial target would be set at the 38.2% Fibonacci retracement level. Following this, the next level of support would be at the 50% Fibonacci retracement level.

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[Solid ECN]

NZX 50’s Comeback: A Detailed Analysis

Solid ECN – On Thursday, the NZX 50 index made a comeback. It rose by 28.98 points or 0.25%, ending at 11,759.11. This was after a slow start with minor losses. The turnaround happened when a private report showed that service activities in China, a major trade partner, reached a five-month high in December.

Market players were optimistic. They hoped that Chinese authorities would shift from yuan stabilization to monetary easing. This came after the People’s Bank of China (PBoC) significantly weakened the currency fixing, the most in over six months. US futures also saw a slight increase, boosting market sentiment. Investors were still processing the latest Federal Reserve minutes, which hinted at potential rate cuts in 2024.

In company news, PaySauce, a fintech firm, reported a 23% annual increase in its recurring revenue for the fiscal quarter ending on December 31st. The day’s top performers included industrial services, consumer durables, and utilities sectors. In terms of individual stocks, Scales Corp. led the pack with a 3.0% jump. It was followed by Meridian Energy Ltd. (2.8%), Comvita NPV (2.6%), and Hallenstein Glassons Holdings (1.3%).

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The Balance of Gold in a Shifting Economic Landscape



Solid ECN – On Wednesday, gold prices stabilized above $2,060 an ounce, recovering from the previous session's fluctuating trends. This stability comes as investors eagerly await insights from the upcoming Federal Reserve policy meeting minutes, which are expected to shed light on future monetary policies. Despite reaching intraday highs, gold experienced a slight decline of 0.2% on Tuesday. This was attributed to a resurgence in the dollar's value and an increase in Treasury yields, leading investors to reconsider their expectations for interest rate reductions by major central banks within the year.

Currently, market predictions indicate about a 70% likelihood of the US central bank implementing a quarter-point rate cut in March, a decrease from the almost 90% probability previously anticipated. In addition, gold's value has found some support due to a combination of factors, including the sell-off in riskier assets and escalating geopolitical tensions in the Middle East.

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WTI Futures Drop Below $69.5, Market Weighs Supply and Risk



On Wednesday, WTI crude futures experienced a notable decline, dropping over 1.5% to reach a three-week low, falling below $69.5 per barrel. This downturn came on the heels of a 1.8% loss in the previous session, influenced by a broad selloff in risk assets. This selloff occurred despite rising tensions in the Middle East, which might typically bolster oil prices. As the new year began, the market's mood was cautious, with stocks and other risky assets facing downward pressure. This sentiment was further influenced by a rebound in the dollar and Treasury yields, as investors recalibrated their expectations for significant rate cuts from major central banks.

Contributing to the oil price drop is the increase in global supplies, especially from non-OPEC countries, combined with a shaky demand forecast. Additionally, traders are keeping a watchful eye on geopolitical events, particularly Iran's recent deployment of a warship in the Red Sea, seen as a challenge to US forces in this crucial trade corridor. Over the weekend, there was a confrontation when US Navy helicopters intercepted three Houthi boats that were attempting to hijack a container ship in the Red Sea, leading to casualties.

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Canadian Dollar Weakens, Awaits Key Labor Market Data



The Canadian dollar recently fell beyond 1.33 against the USD, moving away from its five-month high of 1.32 achieved on December 26th. This decline is largely due to a resurgence of the US dollar, disappointing domestic economic indicators, and a decrease in foreign currency inflows.

Canada's manufacturing sector experienced its most significant contraction since the 2020 pandemic downturn, posing challenges for the central bank's efforts to control inflation through tighter monetary policy. Additionally, the easing concerns over global oil demand have impacted foreign exchange inflows, negatively affecting the Canadian dollar's strength. Investors are now looking forward to the upcoming labor market data, expected on Friday, to gain insights into potential future directions for monetary policy.