Positive Signals The information presented in this publication is provided purely for informational purposes and does not constitute investment advice, a sales offer, or a solicitation to buy, and should in no case be used as a basis or considered as an incentive to engage in any investment. The macro point European statistics published last week all confirmed that the economic situation in the eurozone is quite good (which we have been repeating for weeks). The wholesale gas price continues to collapse. It reached a sixteen-month low due to an unexpected increase in supply. As in Europe, the winter is less severe than expected in China, which automatically leads to a decrease in demand. Liquefied natural gas that was normally intended for China is being resold on the market at a discount, pushing all prices down. This is rather good news. It also leads to a decrease in electricity prices on the wholesale market (in Europe, gas and electricity markets are interconnected). Last September, the electricity price peaked around 600 euros per MWh. Now, the price is hovering around 117 euros for France. It's still a lot. Before the crisis, the highs were around 60 euros. But it remains reasonable compared to what we have experienced. Unsurprisingly, the drop in energy affects inflation. Last week, Eurostat published the details of the consumer price index in December in the eurozone. The decline in inflation is exclusively the result of a drop in energy that should last at least for the coming months. In other segments (such as food), upward pressures on prices persist. This means that the European Central Bank (ECB) cannot let its guard down for the moment. Many members of the ECB Governing Council spoke during recent sessions. One must sort between the doves and the hawks. But overall, the message is clear: next February, the ECB will raise its key rate by 50 basis points, as the market has expected. The extent of the rate hike in March is debated, however. More and more analysts predict a smaller increase (25 basis points). This will closely depend on the latest economic figures (especially inflation).On the other side of the Atlantic, the economy shows signs of weakness (e.g., sluggish retail sales). However, this is normal after such a long expansion cycle. Even if the risk of recession in the United States has certainly increased compared to a month ago, it's not at all certain that the U.S. economy will have to go through this phase in the short term. The growth figure for the fourth quarter of 2022, to be published this week, should prove the strong resilience of the U.S. economy. In terms of monetary policy, several members of the FOMC (which oversees the setting of interest rates by the U.S. central bank) have advocated for a 50 basis point rate hike on February 1. This is particularly the case for James Bullard, president of the St. Louis Federal Reserve. Thus, he hopes to send a clear message to the market and ensure, at the same time, that inflation continues to decline (which has been the case for several months). There is a debate among forex market analysts about the rate hike pace in the United States after February's meeting. However, everyone agrees that the terminal rate should be around 5% or even 5.25%.On the other side of the planet, China announced a disappointing growth of 3% in 2022. Considering that official Chinese figures are certainly embellished, the real growth was likely much lower. The main reason: the zero-Covid policy that put pressure on the economic structure. Exiting was undoubtedly a good decision economically. From a health perspective, there's a debate. In rural areas, it seems that Covid is causing many deaths. The consensus forecasts a restart of the Chinese economy in 2023 (with a growth target of 5%). At Mondial Change, we anticipate the announcement of massive economic support measures starting in March (both fiscal measures and monetary measures such as lowering banks' reserve requirement ratio). We cannot exclude that China may also seek to weaken its currency, which would have the advantage of stimulating the export sector (still as crucial for the Chinese economy). If the Chinese rebound is as significant as we hope, it would be great news for Europe (and especially for Germany) due to the significant interconnections on an economic level. But this remains to be confirmed.On the currency market, the euro was significantly up against all its counterparts last week (except the Japanese yen). The most significant increase occurred against the U.S. dollar (+1.75%). Traders now anticipate that the European Central Bank (ECB) will probably be more hawkish than the U.S. Federal Reserve (Fed) in the coming months. This should logically support the euro. The latest U.S. CFTC report (Commodity Futures Trading Commission – an independent federal agency responsible for market regulation) confirms that institutional investors (such as banks) are still largely positioned on buying the euro. From a technical analysis perspective, breaking through the 1.08 zone is also an important buy signal. The euro's rise could continue to the 1.10 area (which will nevertheless be a difficult level to exceed, according to us).The supports and resistances displayed below indicate respectively the low and high points within which prices should evolve during the week.SUPPORTSWEEKLYRESISTANCESWEEKLYS2S1R1R2EUR/USD1.0581.07071.09501.1070EUR/GBP0.84640.86280.8950.9140EUR/CHF0.97010.98731.01291.0330EUR/CAD1.43201.44561.47781.503EUR/JPY136.21138.28142.05143.75On the currency market, there was a lot of activity last week. The EUR/CAD reached an eleven-month high at 1.4640. The underlying trend remains bullish. The euro is supported by the return of optimism on this side of the Atlantic. The EUR/USD pair still seems well-oriented, even if the weekly performance is mediocre (up 0.10%). The market seems to be catching its breath. The euro also regained ground against the Japanese yen (up 1.27% in one week). This isn't so much due to a return of confidence in the euro as to traders' disappointment with the Bank of Japan meeting. Everyone expected the central bank to adjust its monetary policy. Usually reliable press reports had circulated ahead of the meeting. No luck. The central bank hasn't budged an inch (negative key rate at -0.1% and maintaining targets on short and long rates). It can't be ruled out that the central bank will have to intervene in an emergency before its next meeting scheduled for March 9 and 10. But, for now, the wisest move is to reduce long exposure to the Japanese yen. Many institutional investors have done so in recent sessions, hence the strengthening of the EUR/JPY pair. This episode reminds us that press leaks should never be taken at face value.Below you will find the publications and events that are expected to have a major impact on currency trends.DAYTIMECOUNTRYINDICATORWHAT TO EXPECT?24/0109:30First estimate of the manufacturing PMI index (January)There is no major surprise expected, the index should remain in contraction (below the 50 threshold).25/0110:00IFO Business Climate Index (January)This publication sometimes causes volatility on the euro. The consensus forecasts a figure of 87.4 (down).26/0114:30GDP in Q4 2022Consensus at 2.8% - which is quite a respectable figure.