Good morning, traders! As we enter the final trading day of the first week of 2025, markets are seeing a mix of recovery attempts and continued caution across various asset classes. Let’s take a closer look at what happened yesterday and what’s unfolding today.
Thursday Recap
Yesterday brought modest optimism as U.S. unemployment claims came in slightly lower than expected, signaling resilience in the labor market. The final manufacturing PMI for December surprised on the upside at 49.4, though it remained below the critical 50 threshold, indicating a contraction in the sector. This data briefly supported equities, but the sentiment remained tentative.
On the indices front, major U.S. benchmarks like the S&P 500 and NASDAQ struggled to sustain momentum. The S&P 500 hovered around the neckline of its looming head-and-shoulders pattern, a pivotal area for market sentiment. European markets showed more resilience, ending the day marginally higher.
In the currency space, the Australian Dollar and Swiss Franc gained ground, while the Euro and British Pound struggled. The U.S. Dollar remained steady, reflecting cautious optimism ahead of today’s ISM Manufacturing PMI.
Commodity markets had an eventful day. Oil prices extended their rally, driven by expectations of tightening supply, while natural gas also showed strength. Precious metals like silver and gold saw mild pullbacks, although the mid-term sentiment for metals remains bullish.
What’s Happening Today
Today, the spotlight will be on the ISM Manufacturing PMI from the U.S., expected to come in at 48.2. A stronger-than-expected reading could provide further support to the Dollar and potentially weigh on metals and energy. Conversely, a miss could reinforce concerns about the U.S. economic outlook and support risk-off assets like gold.
On the indices, Friday morning sees U.S. futures attempting a rebound after a challenging week, while European markets are slightly mixed. The S&P 500’s critical neckline remains under scrutiny—any significant move above or below could dictate the next trend.
In the forex market, we see renewed strength in the Swiss Franc and a modest recovery in the Euro. The British Pound remains under pressure, while antipodean currencies like the Australian and New Zealand Dollars are stabilizing after recent gains.
Commodities are showing mixed performance this morning. Oil continues to climb higher, extending its bullish start to the year, while metals are attempting to recover from yesterday’s slight bearish correction.
Key Focus for Today
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ISM Manufacturing PMI (expected at 48.2): This will be the main driver for the Dollar and sentiment across risk assets.
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S&P 500 Neckline Watch: Traders are closely monitoring the head-and-shoulders pattern as the index flirts with a decisive breakout or breakdown.
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Commodities: Oil’s rally and metals’ resilience will remain areas of interest as the week closes.
As we close out the first trading week of the year, traders should brace for potential volatility as markets adjust to evolving trends and key technical levels. Let’s see if the week ends on a positive note or if caution persists into Monday. Happy trading!