This article was written by Paul Reid, a financial journalist at Exness.
This week we saw reports and headlines that will likely influence multiple charts and consequently trading strategies for the rest of the month. 2025 is starting with growing economic optimism with bullish outbreaks across several markets, but it’s not all sunshine and rainbows.
The recent release of the December Consumer Price Index (CPI) data showed a 0.4% increase in overall prices, which was higher than anticipated. However, the core CPI, excluding food and energy, only rose 0.2%. This divergence suggests that while inflationary pressures remain, they may be stabilizing.
Traders would be wise to keep an eye on upcoming inflation reports, as they could heavily influence USD. A slower pace of rate cuts may support USD in the short term, as higher relative rates make it more attractive compared to other currencies.
Stocks, particularly growth-oriented sectors like technology, could experience subdued gains if rate cuts are delayed. However, easing inflation might still provide some optimism for long-term equity valuations.
Gold (XAUUSD) prices look to remain stable or rise modestly if inflation fears subside and rate cuts are postponed. Consider $2700 at the range bottom and set Stop Loss accordingly. If you are planning to buy, you might have a long wait to yield results, so make sure your equity is sufficient if you are locking gold in for the long-term.
Then there’s the initial jobless claims that have seen a slight uptick, indicating potential caution among employers about new hires. Assess employment dynamics and their implications for consumer spending and overall economic growth to gauge future USD strength, but remember that sentiment often overrides economic reports, so be cautious.
The earnings season has kicked off with major banks reporting robust profits that exceeded analyst expectations. For instance, JPMorgan Chase (JPM) achieved record profits driven by increased trading revenues and investment banking fees, but with a stock price already trending bullish at a historic high, the time to buy might have already passed. Consider setting pending orders in the hopes of a future dip.
As tech giants like Netflix (NFLX) prepare to announce their earnings soon, traders should closely monitor these results, as they can significantly impact market direction and investor sentiment. The optimism was already factored into the markets on January 14, which means you might have to wait for the next reversal to see significant trading potential. Be patient.
President Donald Trump recently unveiled the Stargate program, a groundbreaking initiative aimed at establishing a robust artificial intelligence (AI) infrastructure in the United States. Announced on January 22, 2025, the program is backed by major tech firms including OpenAI, SoftBank, and Oracle, with an ambitious investment of up to $500 billion planned over the next four years.
The Stargate initiative seeks to create over 100,000 jobs and construct multiple data centers across the country, starting with a significant project in Texas. Despite its grand vision, the program has faced skepticism, particularly regarding its funding commitments. Critics, including Elon Musk, have questioned whether the promised financial backing is genuinely secured. Nevertheless, Trump has positioned Stargate as a pivotal step in maintaining US leadership in AI technology amidst global competition.
There is no specific index that includes all three companies (OpenAI, SoftBank, and Oracle), however, traders interested in exposure to AI and technology advancements can consider indices that include Oracle and other tech firms, such as the Nasdaq (USTEC) or the S&P500 (US500). We all saw AI hype the markets last year , and it seems 2025 is ready for more. Ride the trend, but be ready to get out quick as soon as project roadblocks start surfacing.
Investor sentiment has also been positively affected by discussions between US President Trump and Chinese President Xi Jinping regarding easing trade tensions. Such developments can create volatility in markets; thus, traders should remain vigilant for any updates that could impact market stability and risk appetite. For now, take a back seat and enjoy the show as the two economic giants wrestle for dominance and ultimately equilibrium. Be wary of mainstream media reports on this topic.
The S&P 500 index (US500) recently reached new heights above $6,100 (USD), reflecting strong bullish momentum. Traders might consider using technical indicators such as moving averages or support levels to identify potential entry points for long positions in equities. The ongoing trend suggests that investors are optimistic about economic growth prospects.
With oil prices expected to remain stable, traders should analyze supply-demand dynamics and geopolitical factors that could influence crude oil (USOIL & UKOIL) prices in the short term. Monitoring these developments will be crucial for those involved in energy trading.
Combining insights from economic indicators, earnings reports, and geopolitical developments will be essential next week. Follow the optimistic sentiment while it lasts, but be ready for disruptive events that will trigger dips, reversals, and retraces. Watch out for the coming US Federal Open Market Committee (FOMC) Meeting, China’s Manufacturing and Services PMI, the Australian Consumer Price Index (CPI), and US Trade Balance and Retail Inventories. They will surely throw volatility into the markets next week.
This year is shaping up to be a bullish bumpy ride, so protect your equity with Stop Loss, aim for modest gains, and keep your finger on the pulse of the markets with the Exness blog throughout 2025.
