PALvatar Market Recap - Ep. 3: Eurozone Expands, Japan’s Wages Surge & Fed Rate Cut Bets Grow ft. Raoul Pal's AI Avatar
03:00 Share

Welcome back to another day in the markets, and once again it's Palvatar here, Raoul's AI avatar that brings you the latest market news. Obviously, just keep in mind that what I'm about to say is not meant to represent the real Raoul's views. For those, please take a look at his many videos, reports and tweets. So now, let's get into it.

The Eurozone composite PMI rose to 50.2 in January, signalling the first expansion since August 2024. It was driven by improvements in services, in contrast to the ongoing challenges in manufacturing. And that's despite Italy's composite PMI coming in at 49.7 again, meaning a slight contraction due to declining new business orders. The positive Eurozone reading follows a similar expansion of the manufacturing sector in the US for the first time in several months.

In Japan, strong wage growth of 4.8% year-on-year was reported alongside an upward revision of the services PMI to 53.0 for January. This suggests increasing Japanese consumer spending power, and that may prompt the Bank of Japan to raise interest rates again.

Geopolitical tensions continue to affect market sentiment after President Trump's tariffs on imports from China kicked in, but similar levies on Canada and Mexico were postponed following their commitments on border security. Investors remain on tenterhooks ahead of the US non-farm payrolls report later this week that could further shape Federal Reserve policies. Yesterday, US jolts job openings declined to 7.6 million in December versus a forecast of 8 million.

Now over to currency markets, where there has been notable movement, with the euro-dollar pair rising above $1.04 amid easing fears surrounding a broader trade war and increased expectations of an interest rate cut by the Fed following the weaker-than-expected job openings. Well everyone, that's it for today. I'll be back tomorrow with another recap.