AMERICAS OIL: WTI Crude Oil Crude is higher today

• RES 4: 159.45 High Jul 12  
• RES 3: 159.26 0.618 proj of the Sep 16 - Nov 15 - Dec 3 price swing
• RES 2: 158.08/87 High Jan 15 / 10 and the bull trigger 
• RES 1: 156.75 High Jan 23       
• PRICE: 155.61 @ 16:23 GMT Jan 28
• SUP 1: 153.72/34 Low Jan 27 / Low Dec 18  
• SUP 2: 152.55 61.8% retracement of the Dec 3 - Jan 10 bull leg
• SUP 3: 151.81 Low Dec 12   
• SUP 4: 151.06 76.4% retracement of the Dec 3 - Jan 10 bull leg   

The primary trend condition in USDJPY remains bullish, however, Monday’s move down highlights a stronger short-term bear cycle. The pair has breached two important support points; 155.12, the 50-day EMA, and 155.13, a trendline drawn from the Sep 16 ‘24 high. This opens 152.55, a Fibonacci retracement point. Initial firm resistance has been defined at 156.75, the Jan 23 high. Clearance of this level would be a bullish development.

That list of comments seems to encompass a wide variety of opinions, and the overall tone from speakers seems to be slightly more hawkish than the December minutes’ commentary (and implied by Powell’s press conference comment) that "a substantial majority" saw the policy stance as "still meaningfully restrictive".

• In a press conference that is likely to be thin on details, any shift in Powell’s tone on perceived neutral or how restrictive policy is will be closely eyed.
• Powell noted at the December press conference that the reason to slow down cuts is because having cut by 100bp, “we are significantly closer to neutral” though “at 4.3% and change, we believe policy is still meaningfully restrictive…we are closer to the neutral rate which is … reason to be cautious about further moves
• In December, the “longer-run” dot in the Dot Plot rose from 2.875% to 3.00% - the 4th consecutive quarterly rise. While this isn’t considered to be the short-run “neutral rate”, it is the clearest manifestation of Committee members’ view that rates aren’t going back to pandemic lows.
• Also eyed will be any more insight on how the Fed regards the backup in longer-end rates: at least one FOMC member (Bowman) has highlighted the increase in long-end market-implied inflation expectations as a reason to be cautious in cutting further, though a large part of the nominal increase has been in real yields and – overall – term premia.
• Last time, Powell noted longer-run rates “are affected to some extent by Fed policy, but they’re also affected by many other things”. 

• In the single main labour force survey since the last BoC decision, employment growth was far stronger than expected in December at 91k (cons 25k) to build on the surprisingly robust 51k in November that has subsequently been revised down to 44k in annual revisions.
• Those revisions point to a slightly softer jobs market through Sep-Nov (with downward revisions led by full-time positions) before the same booming Dec but the changes don’t look particularly significant to us considering the underlying volatility in the data.
• The rough trend remains one of a rising unemployment rate, in December at 6.71% having started 2024 at 5.7% (unrevised) and 2023 at 5.1% (previously 5.0%), albeit with a welcome patch of strong jobs growth in the final two months of the year that helped tilt the unemployment rate lower from 6.89% in November.
• This recent recovery in jobs growth starts to look more encouraging considering immigration curbs will increasingly limit labour force growth going ahead, but further strength would need to be seen to have more confidence here. Wage growth area remains an interesting area.
• The labour force survey average hourly measures finally stepping lower in the past two months, to 4.0% Y/Y in December (revised up from an initial 3.8% Y/Y) for some moderation after a steady 5.0% Y/Y average through Jun 2022-Oct 2024.
• The BoC has tended to not put much weight on them, preferring slower moving but more comprehensive measures. One alternative metric is the fixed weight series from the lagged payrolls survey, which accelerated to a particularly strong 6.4% Y/Y in latest data for back in October.