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January 13th - Market analyst Jeremy Boulton stated that if US inflation data released on Tuesday pushes up the dollar, Japanese authorities may be forced to intervene to support the yen, as they believe the yen has fallen too much. Since last weeks US jobs report, market expectations for a Federal Reserve rate cut have weakened, now anticipated at only 25 basis points, and the potential terminal interest rate for this easing cycle has risen from 3.0% to 3.25%. If December inflation data exceeds economists forecasts of 2.7% year-on-year (with a range of 2.5% to 2.9%), this market expectation will be further strengthened. Ironically, there are currently almost no speculative positions in the market (net yen positions are approximately $200 million), and exchange rate volatility has decreased significantly over the past year. Japanese intervention at this time could create rather than suppress volatility. However, given Japans history of large-scale interventions in similar situations, any data that further strengthens the dollar could trigger a new round of intervention.On January 13th, Meta Platforms (META.O) announced over 1,000 layoffs at its Reality Labs division as part of the companys strategy to shift resources from virtual reality (VR) and metaverse products to artificial intelligence (AI) wearable devices and mobile phone features. According to an internal memo from Chief Technology Officer Andrew Bosworth, employees began receiving layoff notices Tuesday morning. Previous reports from foreign media indicated that the layoffs would affect approximately 10% of Reality Labs roughly 15,000 employees. A Meta spokesperson stated, "We mentioned last month that we would be shifting some investments from metaverse to wearables. This layoff is part of that strategy, and we plan to reinvest the saved resources to support the growth of our wearables business this year."Meta Platforms (META.O) has begun cutting more than 1,000 jobs in its Reality Labs division. Meta will begin notifying employees of the layoffs on Tuesday morning.Lufthansa will partner with Starlink.On January 13, it was reported that personnel from the Taipei Representative Office in South Korea made the absurd claim at a seminar hosted by a South Korean opposition party member that "the One China recognized by the South Korean government is not necessarily the Peoples Republic of China." This statement is pure ignorance, violates universally recognized norms of international relations, and challenges South Koreas commitment to the One China principle made in the Joint Communiqué on the Establishment of Diplomatic Relations between China and South Korea. Both China and South Korea find such seriously erroneous remarks intolerable and resolutely oppose them. China firmly opposes any country developing official relations with Taiwan or conducting politically significant activities in any form. South Korean members of the National Assembly, as members of the legislature and representatives of the people, possess official status and significant political influence. We explicitly oppose South Korean members of the National Assembly engaging with Taiwan or inviting personnel from Taiwanese institutions to participate in their activities. Any political force attempting to play the "China card" for political gain will not succeed. We believe that the people of both China and South Korea will not accept any attempt to interfere with or undermine China-South Korea relations under the guise of the Taiwan issue.

Gold Price Forecast: XAU / USD bears move in for the kill ahead of a key event, Fed's Powell

Alina Haynes

Mar 07, 2023 11:57

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Even though the US Dollar fell and yields increased advance of Jerome Powell's testimony before Congress, gold prices were slightly weaker during the US session. After breaking a streak of four consecutive weekly declines, the yellow metal was falling below $1,850. Initially, China's modest growth objective led to a strengthening of the US dollar, but Powell is expected to reiterate the view that rates will rise faster than predicted.

 

Recent statements by Fed officials have reaffirmed the need to continue raising interest rates until they reach at least 5%, and a plethora of data points in that general direction. "Several regional Fed presidents have signaled an openness to higher interest rates and larger increases if the data remain robust. It would mark a shift in the Fed’s guidance if Powell articulates similar sentiments at tomorrow’s testimony and a step back from the cautious policy around rates,'' analysts at ANZ Bank said.

 

Recent strength in Nonfarm Payrolls and Retail Sales data suggests that policy is not restrictive enough, and the Fed may have been caught off guard by weak fourth-quarter data. The analysts added that the Fed might benefit from highlighting the significance of short-term inflation expectations and current inflation in its estimates of restrictiveness.

 

In the meantime, the Nonfarm Payrolls data will be the focus, as many Fed members are anticipating a slowdown in job growth following January's surge of over 500,000 new positions. However, if the employment market doesn't cool sufficiently, the markets will likely see that the March FOMC meeting will likely see a 50bp hike, which is anticipated to impact heavily on the Gold price. ''A return to CTA selling could be in the cards as prices still tantalize with a break below the 200dma and key $1,800/oz mark,'' analysts at TD Securities argued.

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