*1 . Market Recap (3 February 2025 – 9 February 2025)* A. Overview This past week was marked by pivotal economic data releases from major economies, notable corporate earnings reports, and continued speculation about central bank rate paths. Investor sentiment generally leaned cautiously optimistic, as signs of stable—though slowing—economic growth emerged. However, lingering inflation concerns and geopolitical uncertainties kept markets on edge, producing occasional bouts of volatility across asset classes. B. Key Drivers and Developments Global Economic Data US Employment Report: The Non-Farm Payrolls (NFP) figure for January slightly exceeded forecasts, underscoring the resilience of the labor market. Wage growth remained steady, though not strong enough to stoke fresh inflation worries. Eurozone GDP & Inflation: Preliminary GDP figures showed modest growth. Meanwhile, flash inflation data revealed persistent core price pressures, suggesting that the European Central Bank (ECB) may maintain its hawkish bias for longer. UK Services and Manufacturing: Mixed Purchasing Managers’ Index (PMI) data indicated ongoing struggles in manufacturing but resilience in services, reflecting the diverging fortunes of various sectors under higher interest rates. Central Bank Commentary Federal Reserve: While no meeting took place this week, several Fed officials spoke at public forums, indicating a “wait-and-see” approach. With inflation moderating gradually, the Fed signaled it remains open to additional rate hikes if necessary but is equally prepared to pause if disinflation trends hold. ECB Statements: ECB policymakers reiterated their commitment to taming inflation, hinting that further rate hikes are likely if core inflation does not subside. This provided support for the euro but also raised concerns about growth in some Eurozone economies. Corporate Earnings Technology: Ongoing Q4 2024 earnings reports in the tech sector were mixed but leaned positive. Strong results in cloud computing and enterprise services offset softer demand for consumer electronics. Energy & Commodities: Several oil majors and mining companies reported Q4 earnings that reflected the benefit of earlier high commodity prices, though executives warned of potential margin pressures if global demand slows in 2025. China’s Economic Signals Trade Data & Consumer Demand: Chinese trade figures for January came in slightly below expectations, raising questions about the robustness of the global demand recovery. Nonetheless, consumer demand for travel and leisure within China remained relatively strong, propping up sentiment in some regional markets. Commodity Impact: Industrial metals saw mid-week pullbacks on the tepid trade numbers, while oil prices were range-bound, partly supported by hopes of ongoing Chinese domestic travel demand. Geopolitical Developments Trade negotiations among major economic blocs yielded minimal progress, with some technical disagreements persisting. No major disruptions emerged, but the overhang of potential tariff escalations or supply chain issues remained a background risk factor. C. Asset Class Performance Forex USD Majors: The US Dollar Index (DXY) initially strengthened on better-than-expected NFP data but retreated later as Fed speakers struck a balanced tone. EUR/USD: Ended the week modestly higher, aided by firm ECB rhetoric and stable Eurozone GDP. GBP/USD: Traded sideways; sterling was caught between cautious Bank of England commentary and fluctuating risk sentiment tied to the global growth outlook. Commodity Currencies (AUD, NZD, CAD): Saw choppy price action. Early-week weakness from lower Chinese trade data was partly offset by overall risk-on sentiment in equity markets and stable commodity prices late in the week. Indices S&P 500: Posted a small gain, supported by tech and consumer discretionary sectors. Markets appear to be pricing in a mild but not severe economic slowdown. NASDAQ 100: Outperformed other US benchmarks, driven by upbeat cloud computing and software earnings. DAX (Germany): Closed moderately higher, with cyclical stocks rebounding despite the prospect of further ECB tightening. FTSE 100 (UK): Near-flat performance, as gains in consumer staples were offset by weaker energy names and concerns about UK manufacturing stagnation. Stocks Financials: Maintained relative stability. US banks continued to benefit from higher net interest margins, though loan demand and credit risks remain points to watch. Consumer & Retail: Investors favored staple retailers over discretionary ones, reflecting lingering caution over household spending patterns. Energy: Price swings in oil and gas stocks were subdued, with the market awaiting more data on global demand trends and potential OPEC+ production signals. Commodities Gold: After dipping on strong US job figures, gold recovered as Fed officials emphasized a patient approach to further rate hikes. Prices finished the week slightly higher. Crude Oil (WTI): Traded within a tight range, caught between China’s mixed trade signals and OPEC+ supply discipline. A smaller-than-expected inventory draw in the US capped any robust rally. *2. Forecast (10 February 2025 – 16 February 2025)* A. Key Events and Potential Market Impact US CPI & PPI Releases Inflation data in the US will be the focal point. A hotter-than-expected Consumer Price Index (CPI) could reignite hawkish Fed bets, strengthening the USD and potentially hitting equities. Softer data might spur a relief rally. ECB Economic Bulletin & Eurozone Industrial Production Additional insights from the ECB’s bulletin and industrial production figures will signal how the region’s economy is faring under tighter monetary conditions. Positive surprises could lift the euro and European equities. UK GDP & Labor Market Data With the UK economy walking a tightrope amid persistent inflation and subdued growth, any sign of improvement in GDP or employment may support the pound and possibly the FTSE 100. China Inflation & Credit Data Traders will watch for signs that Beijing’s policy support is taking hold. A jump in credit growth or inflation could boost commodity-linked currencies but also spark inflationary concerns globally if Chinese demand heats up significantly. Corporate Earnings Continuation More mid-cap and select large-cap companies from diverse sectors (including retail, transport, and materials) will report. Pay close attention to forward guidance on consumer spending, supply chain costs, and regional growth patterns. B. Market Outlook by Asset Class Forex USD Majors: US inflation data is likely to drive the dollar’s direction. A strong reading might fuel rate-hike speculation, while weaker inflation could depress USD in the short term. EUR/USD: May continue its upward bias if Eurozone production data and the ECB bulletin point to sustained economic resilience and hawkish policy. GBP/USD: UK GDP and labor figures will drive sentiment. Positive data could boost GBP; however, any signs of stagnation may see sterling slip, especially if the US data is more upbeat. Commodity Currencies: Chinese credit growth and inflation data will play a significant role. A healthy Chinese economy usually benefits the Australian dollar, New Zealand dollar, and Canadian dollar. Indices US Indices (S&P 500, NASDAQ 100): Inflation data will be key. Surprising to the upside might weigh on tech, while an in-line or softer reading could further support risk appetite. European Indices (DAX, FTSE 100): Sensitive to domestic data (Eurozone industrial production, UK GDP) and the ECB’s economic bulletin. Watch for sector rotation if growth data disappoints or inflation remains stubborn. Stocks Tech Sector: Remains a favorite among investors seeking growth. However, it remains vulnerable to any resurgence in rate-hike fears. Consumer & Retail: Retail earnings due this week could offer a clearer picture of post-holiday spending trends, influencing both consumer discretionary and staples. Industrials & Materials: Companies with exposure to Europe and China could move more if industrial production figures or Chinese policy signals surprise in either direction. Commodities Gold: Likely to remain sensitive to shifts in US rate expectations. A dovish interpretation of inflation data could send gold higher; stronger inflation signals may cap gains. Crude Oil (WTI & Brent): Watch for Chinese economic reports, as an uptick in credit growth could bolster demand expectations. Conversely, any disappointing data or OPEC+ policy hints might pressure prices. 3. Strategy Tips for Retail Day Traders Time Trades Around Key Data Releases With multiple high-impact economic reports (US CPI, UK GDP, Eurozone Production), be mindful of release times. Significant price swings often occur minutes after these announcements. Correlate Forex & Commodities If Chinese data surprises positively, commodity currencies (AUD, NZD, CAD) may strengthen. This often correlates with moves in oil and industrial metal prices. Monitor Technical Levels Identify key support/resistance zones in major FX pairs (like EUR/USD at psychological round numbers) and equity indices (like 4,500 on the S&P 500) to better time entry and exit points. Stay Nimble Ongoing volatility means short-term trades could be more prudent than longer holds, especially around major announcements. Consider tighter stops or trading smaller sizes to protect against whipsaws. 4. Final Thoughts The week of 3 February to 9 February 2025 was largely defined by strong US job data, hawkish-leaning commentary from central banks, and tepid but steady corporate earnings. Looking ahead to 10 February to 16 February 2025, markets will focus on inflation indicators, GDP updates, and further corporate guidance. Retail day traders should maintain a flexible approach, closely monitor economic calendars, and be prepared for swift market reactions to any surprises in inflation or growth metrics. Trade cautiously, stay informed, and manage risk prudently during this data-heavy period. Disclaimer: This newsletter is for informational purposes only and does not constitute financial or investment advice. Always perform your own due diligence and consider consulting a licensed financial advisor before making any trading decisions.