The end-of-month risk recovery continued yesterday and has pulled Wall Street strongly higher for a second consecutive session. This risk recovery is evident across major asset classes, with the US dollar (USD) falling back to allow all major currencies to recover. We also see this even in precious metals where the USD fall has allowed gold and silver to rebound.

The Reserve Bank of Australia has been a mixed bag (ending QE but remaining cautious), whilst the manufacturing PMIs are always the focus on the first trading day of the month. 


Risk appetite continues to improve: Indices are higher; USD is the main underperformer on major forex; gold and silver are building from support

Yields are consolidating: The sharp moves in Treasury yields have been a key component in the elevated volatility and fear levels on markets recently. With yields settling down, this is allowing a more calm and positive appetite for risk [Slightly risk positive] 

Eurozone final manufacturing PMI revised slightly lower: The final reading was lower at 58.7 versus the 59.0 flash PMI. This was a slight miss of estimates. [Slightly EUR negative] 

Fed speakers not pushing the hawkish agenda: It was interesting to see Loretta Mester (hawkish and a 2022 voter) sounding a little cautious yesterday. She noted that “you always want to go gradually”. [mild USD negative]

RBA mixed meeting: The Reserve Bank of Australia has announced an end to its QE purchases. However, Governor Lowe has also caveated this by noting that such a move does not suggest any “near term increase in interest rates [AUD mixed to slightly positive] 

Economic Data:

  • UK Manufacturing PMI (at 0930GMT). The final data is expected to be unrevised from the flash at 56.9 (57.9 final December) 
  • Canada GDP (at 130GMT). Monthly GDP is expected to have grown by +0.4% in November (+0.8% in October)
  • US ISM Manufacturing (at 1500GMT). Consensus forecasts for January suggest a fall to 57.5 (from 58.7 in December)


Broad outlook: A recovery in risk appetite continues across asset classes. USD is the main casualty of this move, giving back recent gains. Indices recovering decisively. 

Forex: USD underperforming all major forex.

  • EUR/USD has formed a “Morning Star” reversal (a positive signal) on the daily chart. This comes with a move back above the key resistance at 1.1185/1.1220. The next resistance to overcome is at 1.1270/1.1300. Initial support is at 1.1220.


  • GBP/USD is also recovering and is above resistance at 1.3435. This now opens 1.3525 as the next key near-term test. Near-term momentum signals are positive and 1.3435 is initial support. 
  • AUD/USD has been choppy since the RBA but recovery is threatening. A decisive move above 0.7080 improves the outlook for 0.7125 and potentially the old pivot at 0.7170 again. Support at 0.7033 is a higher low above 0.6967. 

Commodities: Gold and silver building from support. Oil is beginning to consolidate ahead of OPEC+ meeting tomorrow.

  • Gold has formed an intraday base pattern on a move above $1800 which implies $1820. This allows a slightly more positive bias to develop but essentially we are still neutral on gold between $1780/$1810 with moves so uncertain. 
  • Silver is less developed in its recovery than gold is. A rebound needs to move decisively above $22.80 resistance to suggest a serious improvement forming. There are hints of higher low supports forming above $22.14, with $22.36 to be watched today.
  • Brent Crude oil is trading with a positive bias, but daily candlesticks are becoming increasingly indecisive. With the RSI still over 70, this is a warning signal for a potential correction. For now, Brent Crude is still finding buyers and forming support into intraday weakness around $88.50/$89.50, but the intraday charts show stalling momentum. The OPEC+ meeting could be the next key move.

Indices: A recovery on Wall Street is developing. European indices are also improving too.    

  • S&P 500 futures completed a base pattern above resistance at 4445 to imply c. 180 ticks of recovery towards 4625. Moving decisively above resistance at 4492/4520 is the next step. Initial support at 4479 and 4461.
  • DAX is now joining in the recovery in Wall Street with a sharp move above 15,585 resistance this morning. This move is also breaking a near four-week downtrend. The next resistance comes around 15,700/15,900. Support at 15,463/15,585 is growing.
  • FTSE 100 has picked up and is testing resistance around 7540 resistance again. Although there is a clear run of higher lows in the recovery, the FTSE 100 underperforms other major indices during the risk recoveries. A close above 7540 opens 7604. Initial support is at 7490 above 7456. 

Support and Resistance levels