South Korea's Acting President Faces Impeachment As Yoon Set For Trial

Political

Economic

Summary:

South Korea's acting president faces an impeachment vote on Friday, intensifying a political crisis as the Constitutional Court meets for its first hearing on suspended President Yoon Suk Yeol's short-lived martial law.

SEOUL (Dec 27): South Korea's acting president faces an impeachment vote on Friday, intensifying a political crisis as the Constitutional Court meets for its first hearing on suspended President Yoon Suk Yeol's short-lived martial law.

The push to impeach Prime Minister Han Duck-soo, who has been acting president since Yoon was impeached on Dec 14, has thrown South Korea's once-vibrant democratic success story into uncharted territory and watched with concern by allies.

The plan for a vote to impeach Han was unveiled on Thursday by the main opposition Democratic Party after he declined to immediately appoint three justices to fill vacancies at the Constitutional Court, saying it would exceed his acting role.

It remained unclear how many votes are needed to impeach Han as acting leader. The threshold for a prime minister is a simple majority, while a two-thirds majority is needed for a president. It is also unclear whether Han and the ruling party would accept any outcome.

If Han is suspended, Finance Minister Choi Sang-mok will assume the acting presidency by law.

Choi said on Friday impeaching the country's acting president would seriously damage the country's economic credibility and asked political parties to withdraw the plan. Choi spoke for the country's cabinet, flanked by ministers.

Early on Friday, the South Korean won weakened to its lowest since March 2009, as analysts said there was little to reverse the negative sentiment stemming from the political uncertainty.

The vote to determine Han's fate comes around the time the Constitutional Court on Friday will hold its first hearing in a case reviewing whether to reinstate Yoon or remove him permanently from office, after parliament's impeachment vote. It has 180 days to reach a decision.

After weeks of defiance ignoring requests by the court to submit documents as well as summons by investigators in a separate criminal case over his martial law declaration on Dec 3, a lawyer for Yoon said his legal representatives would attend Friday's hearing.

Seok Dong-hyeon, a lawyer advising Yoon, named two lawyers for Yoon's legal team, one a former prosecutor and the other a former spokesman for the Constitutional Court. The two could not be immediately reached for comment.

Yoon is not required to attend the hearing. If he is removed from office, a new presidential election would be held within 60 days.

Worst political crisis in decades

The events following the Dec 3 martial law declaration have plunged the country into its gravest political crisis since 1987, when widespread protests forced the ruling party of former military generals into accepting a constitutional amendment bringing in direct, popular vote to elect the president.

The turmoil has also spilled over into financial markets. Yoon shocked the country and the world with a late-night announcement on Dec 3 that he was imposing martial law to overcome political deadlock and root out "anti-state forces".

The military deployed special forces to the national assembly, the election commission, and the office of a liberal YouTube commentator.

It also issued orders banning activity by parliament and political parties, as well as calling for government control of the media.

But within hours 190 lawmakers had defied the cordons of troops and police and voted against Yoon's order. About six hours after his initial decree, the president rescinded the order.

Yoon and senior members of his administration also face criminal investigations for insurrection over their decision to impose martial law.

Source: Theedgemarkets

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Economic

Forex

2025 EUR/USD Technical Outlook Preview_1

Euro continues to trade within the confines of an ascending pitchfork formation extending off the 2022 low with the April advance faltering just ahead of resistance at 1.1275 into the close of Q2. The subsequent reversal was poised to close a third-consecutive monthly loss as of late December with EUR/USD attempting to mark a close below support around the 2015 low at 1.0463- looking for clear inflection off this mark into the yearly cross.

Note that monthly momentum readings have reached the lowest levels in over a year and an RSI reading sub-forty into the close would suggest a larger shift in the momentum profile favoring the bears. Critical support rests with Parity while key resistance (bearish invalidation) for the broader downtrend is eyed with the 2020 low-month close (LMC) / the objective 2024 yearly open at 1.1032/38.

2025 EUR/USD Technical Outlook Preview_2

A closer look at the weekly chart shows the November rebound off the lower parallel of a descending pitchfork we have been tracking off the September highs. Initial weekly support rests with the 2016 swing low at 1.0352. Ultimately, a break below the lower parallel would threaten the next major leg of the decline towards the 61.8% retracement of the 2022 advance at 1.02 and parity- both levels of interest for possible downside exhaustion / price inflection IF reached.

Weekly resistance stands with the November high-week close (HWC) / February low-week close (LWC) at 1.0719/77- a breach / close above this threshold would be needed to suggest a more significant low is in place / a larger trend reversal is underway. Subsequent resistance eyed at the March HWC a 1.0939 and the December HWC / 2024 yearly open at 1.1038- both levels of interest for possible topside exhaustion / price inflection IF reached.

Bottom Line: Euro remains vulnerable to further losses heading into the 2025 open and the focus is on an exhaustion low in the first half of the year. From a trading standpoint, the threat remains weighted to the downside while below 1.0777 – look for a larger reaction on stretch towards the lower parallel for guidance with a closer below 1.02 needed to fuel the next major leg of the decline. The onus is on the bulls to try to secure a low ahead of parity IF the 2022 advance is to remain viable in the coming year. The EUR/USD battle lines are drawn heading into 2025.

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Justin

Economic

Bond

(Dec 27): Chinese government bonds are primed for their best year in a decade, with local fund managers and strategists predicting more gains for 2025.

They are set to reap a 9% total return in 2024, the highest since 2014, as measured by a Bloomberg Index which excludes currency moves. The nation’s 10-year yields have plummeted 84 basis points since January, dropping to 1.71% on Thursday.

Chinese bonds have beaten major global peers this year as prolonged economic weakness and a slowdown in consumer spending drive bets for more monetary easing. Tianfeng Securities, Zheshang Securities and Standard Chartered Bank forecast 10-year yields to drop to as low as 1.5%-1.6% by the end of 2025.

“There are a lot of uncertainties for the economy next year, with much pending on the development of trade conflicts and the dollar’s strength,” said Zhang Liling, a fixed-income investment director at Bosera Fund Management Co. that oversees 29.7 billion yuan (US$4.1 billion or RM18.22 billion) of assets.

The rally lost a bit of steam this week on worries over a surge in debt issuance. China’s policymakers plan to sell a record three trillion yuan of special treasury bonds in 2025, up from one trillion yuan this year, according to a Reuters report. Additionally, the finance ministry also reaffirmed its pledge to expand the fiscal deficit ratio and boost spending.

Still, history shows that the local bond market will likely absorb the increased supply, particularly if the People’s Bank of China maintains its accommodative stance and economic growth remains subdued.

“We are still positive about bonds next year” given the prospect for rate cuts, said Zhu Zhengxing, who manages 74.5 billion yuan at Fullgoal Fund Management Co. Initial fears of larger supply this quarter have hardly made a dent in market sentiment as demand kept increasing, he added.

The impact of increased debt supply may have a more pronounced impact on the yield curve’s shape rather than the overall direction of yields. Bosera Fund’s Zhang said he favours shorter- and medium-dated notes for next year, adding that the downside for long-term yields is limited due to heavier issuance.

Despite lower yields, Chinese bonds still offer value as a safe-haven asset, he said. “Very few assets offer certainty of not losing money in a deflationary environment.”

Source: Theedgemarkets

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Economic

Forex

The RBA, Fed and converging rate differentials

The Federal Reserve’s easing cycle has seen the RBA-Fed interest rate differential narrow to just -15bp, as suggested in the 2024 outlook reports. Usually, this would be a bullish signal for AUD/USD, but the game has since changed. And quite considerably.

Renewed expectations of RBA cuts

Weak Q3 growth figures for Australia revived bets of RBA cuts in 2025. The RBA cash rate futures curve has fully priced in 25bp to land in April, June and November. The anticipated -75bp of cuts would then see the RBA’s cash rate lowered from 4.35% to 3.6%. Incoming data for January will likely decide whether markets will bring forward that first cut to Q1,most notable of which will be the quarterly CPI figures in late January followed by incoming employment figures.

2025 AUD/USD Fundamental Outlook Preview_1

Fewer cuts expected from the Fed

The Federal reserve have been in an easing cycle in 2024, yet they announced their pace of easing will slow significantly in 2025. They also upwardly revised their outlook for growth and inflation to justify the slower pace of easing. While the Fed still expect their interest rate to be below the RBA’s at the end of 2026, the differential has shrunk to a mere -10 basis points (bp), down from -60bp. And it is the narrowing of this spread which helps partially explain why AUD/USD plunged to a 2-year low after the Fed’s December meeting.

2025 AUD/USD Fundamental Outlook Preview_2

Trump, tariffs and China

Interest rate differentials are a key driver, but we also need to factor in the threat of Trump’s tariffs and how they tie in with China and their impact on the Australian economy. The previous Trump administration did not directly impose tariffs on Australian exports, and there’s no immediate threat of the new Trump administration doing so this time around. But any actions against China can indirectly hurt Australia.

Trump has already been playing hardball with Canada, Mexico and China with threats of high tariffs on their exports. Beijing is already letting the yuan slide to offset said tariffs via boosted exports. That tends to see their Asian trade partners follow suit amid a ‘race to the bottom’, and AUD/USD tends to get dragged lower for the ride. In recent months, we have seen a very high correlation between a weaker yuan and a weaker Australian dollar. Add into the mix a strong US economy and US dollar, it is not looking too great for AUD/USD bulls next year. At least initially.

As a weaker currency is inherently inflationary (via higher import costs), there will surely come a point where a weak Australian dollar becomes a political talking point and the RBA may become less dovish to support the currency. We may not be there yet, but the topic becomes more important the lower the currency falls. 2025 AUD/USD Fundamental Outlook Preview_3

2025 AUD/USD Fundamental Outlook Preview_3

What a load of politics

Australia’s Prime Minister’s term ends on 2025, but due to procedural factors around the Senate half term it is estimated the latest the next election can be is May 17th. In theory, it could come as early as March. But as both major parties want lower interest rates, I suspect they’ll hold it as late as possible in hope that the RBA may have already cut by then.

However, current Treasurer Jim Chalmers has been busy doing his bit to make sure that cuts arrive by installing allegedly dovish RBA board members. There is some debate as to whether they are more dovish than current board members, but if they have been hand-picked by the government, my bet is that they are. And as the two latest board members come from banking backgrounds, it breaks the mould of the RBA’s ‘steady as she goes’ approach. Therefore, the pressure to cut sooner may already be in play. But as mentioned above, a weak Australian dollar could be the next political hot potato if the downtrend persists for AUD/USD.

It is also not unreasonable to think that Trump will want a weaker US dollar if its current trend continues, later in the year.

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Forex

Fundamental Analysis

In recent weeks, the USD has been favored by shifts in politics and monetary policy, a trend we anticipate continuing into the first half of 2025. Following Trump's victory, the US economy has shown positive surprises, contrasting with the European economy's unexpected downturn. Consequently, the ECB has accelerated rate cuts, while the Fed announced a deceleration in its rate cut pace. Additionally, euro has been under pressure due to European political instability. We foresee the eventual passing of a 2025 budget by the new French prime minister and anticipate greater stability in the upcoming German government. However, until then, the euro is likely to suffer from uncertainty. Post his inauguration on January 20, we predict Trump will enact some key priorities through executive orders, providing short-term support for the USD. These factors lead us to believe that the USD's overvaluation will persist longer in the first half of 2025.

However, many of the negative factors that have kept the euro subdued are already priced in and likely to fade as the year progresses. Initially, the political uncertainty in Europe is anticipated to diminish. Consequently, by the close of the first quarter, the existing challenges may transition into favorable conditions. Secondly, although the European Central Bank (ECB) is expected to continue reducing interest rates at each meeting until summer, discussions regarding a slower rate of easing should commence in the second quarter. This change in stance could serve as a beneficial trigger for the Euro, particularly given our prediction that the Federal Reserve will temporarily halt its activities in January before resuming easing later in the first and second quarters. Lastly, the markets have only taken into account the positive elements of the Trump administration's trade policies in relation to the US Dollar. The actual implementation and impact of his proposed policies on the USD remain uncertain until his return to office. Consequently, We expect EURUSD to move gradually higher, starting in 2Q or 3Q.

Technical Analysis

EURUSD is exactly capped by a 100-month average.

Chart 1: EURUSD Monthly Chart

From an Elliott wave perspective, the upside from 0.9535 to 1.1275 is a classic 5-wave up. A long-term low is already confirmed at 0.9535.

Chart 2: EURUSD Weekly Elliott Wave Analysis

The current downtrend is a textbook ABC correction. A sustained weekly close below 1.0386 will target at least 1.0070, and potential 0.9970. However, as long as 0.9535 is not touched, we still expect the trend will gradually turn higher again. Below 0.9535 will negative the current long-term bullish view. Above 1.0629 is the first sign of a potential base formation.

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Cohen

Economic

You’ve probably heard rumblings of agents already. Companies ranging from Nvidia (NVDA) and Google (GOOG, GOOGL) to Microsoft (MSFT) and Salesforce (CRM) are increasingly talking up agentic AI, a fancy way of referring to AI agents, claiming that it will change the way both enterprises and consumers think of AI technologies.

The goal is to cut down on often bothersome, time-consuming tasks like filing expense reports — the bane of my professional existence. Not only will we see more AI agents, we’ll see more major tech companies developing them.

Companies using them say they’re seeing changes based on their own internal metrics. According to Charles Lamanna, corporate vice president of business and industry Copilot at Microsoft, the Windows maker has already seen improvements in both responsiveness to IT issues and sales outcomes.

According to Lamanna, Microsoft employee IT self-help success increased by 36%, while revenue per seller has increased by 9.4%. The company has also experienced improved HR case resolution times.

As with any new technology, using AI agents will take some getting used to. But if they live up to the lofty expectations tech companies are laying out, they could win over plenty of users as an impressive new use case for generative AI.

“If … you immediately get very rapid and very accurate and very meaningful and helpful responses, then that can start to change people's habits,” TECHnalysis Research president and chief analyst Bob O’Donnell told Yahoo Finance. “But changing people's habits takes a while.”

You’ll find AI agents at the office and on your phone

The AI chatbot/AI copilot/AI agent discussion can be a bit confusing. After all, generative AI chatbots still feel like a new technology, and now we’re already being shuffled on to the next big thing. But those three capabilities are all part of the same overall system.

Ray Smith, Microsoft’s vice president of AI agents, says you can think of an AI copilot as your main interface for interacting with your chatbot or assistant. Kind of like a home screen for your different AI needs.

When you ask your chatbot or assistant to complete various tasks for you, it will reach out to the AI agents with the appropriate capabilities.

If that sounds complex, here’s an easy example: Say you want to book a flight. You could tell your chatbot to see what flights are available for you, and it will use different AI agents to check your flight preferences, your calendar and availability, and potentially even your financial apps to make sure you’re getting a flight in your budget range and then come back with a handful of suggested flights.

Earlier this month, Google debuted its experimental prototype, Project Mariner, which is capable of navigating the web and performing tasks via Google’s Chrome browser. In a video demo, Google shows an example of a user who needs to look up the contact information for a number of companies listed in a Google Sheets document. The user tells Mariner to memorize the list of companies, go to their websites, and find their contact emails.

The agent then actively navigates to each website, grabs the email information, and provides it for each company. Google significantly sped up the process in the demo video, explaining that Mariner is still in its early stages and that it takes time for it to complete requests. But the company says accuracy and speed will improve quickly, though it doesn’t have a set release date.

Apple’s (AAPL) Apple Intelligence will eventually offer AI agent-style functionality as well. In upcoming updates, the company says you’ll be able to do things like ask Siri when you should pick up your husband or wife from the airport. The assistant will then check your email to see when the flight is expected to land, check traffic via Apple Maps, and provide you with a suggested time to hit the road.

According to Futurum Group CEO Daniel Newman, agents will also be able to do things like help workers find potential business opportunities then help them set up and book meetings with prospective clients.

Don’t expect high-powered, multistep AI agents to go mainstream as soon as the clock strikes midnight on New Year's Day. We’ll start to see a few next year, but it’ll likely take a bit of work to iron out all of the kinks. Instead, expect companies to lean into more basic enterprise use cases.

“There's going to be also what I’ll call more boring agents that do productive things, things that automate IT processes, things that automate other tedious tasks,” O’Donnell said. “Those, I think, are going to become really important next year.”

Source: yahoo finance

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LinoCapital

Commodity

Fundamental Analysis

Since the end of the Bretton Woods system in 1971 and the start of free gold trading, there have been a total of 4 gold breakouts in history: occurring in February 1972, August 1978, February 2008, and March 2024.

Gold prices rose by over 26% in 2024, marking the strongest annual increase in over a decade, once again proving gold's value as a tool for hedging market volatility and geopolitical uncertainties.

However, the upward momentum of gold weakened in the fourth quarter: Trump's victory in the US presidential election led to a decrease in speculative and ETF flows, despite the potential for many of Trump's policies to exacerbate inflation and cause widespread concern among major trading partners, which prevented gold from rising.

Following Federal Reserve Chairman Jerome Powell's more hawkish speech and adjustments to his economic forecasts: higher economic growth, higher inflation rates, and lower unemployment, we have revised our interest rate cut expectations for 2025 from 100 basis points to 50 basis points and expect the US dollar to remain strong in the first quarter of 2025.

However, we anticipate that gold prices will continue to rise in the coming years and maintain a long-term uptrend. Heightened geopolitical risks, uncertainty in US monetary policy, market inadequacy regarding Fed interest rate cut expectations, steady demand from central banks worldwide, increasing US federal deficits, and deteriorating debt conditions will all enhance the attractiveness of gold relative to the US dollar.

Elliott Wave Analysis

We use the Gold Futures chart to access more historical data. From an Elliott wave perspective, the ABC advanced pattern from 101.5 will target 2867.6 initially and potentially extend to 3060.8 and 3307.2.

Chart 1: Gold Futures Monthly Elliott Wave Analysis

On the intraday H8 timeframe, we see an impulsive 5-wave decline from 2801.8 followed by an abc correction and finally ended at 2761.3, which is a typical short-term top formation.

Gold: A Major Top Formation? Fundamental and Elliott Wave Analysis_2

Chart 2: Gold Futures Elliott Wave Analysis on H8 Timeframe

After the breakout from the previous double top at 2089.2, the advance from 1618.3 is a classic 5-wave upward movement.

Gold: A Major Top Formation? Fundamental and Elliott Wave Analysis_3

Chart 3: Gold Futures Weekly Elliott Wave Analysis

After the new all-time high at 2801.8 was posted, strong RSI divergence was flagged on the daily chart. A weekly exhausted bar was posted as well. After some consolidation, weekly MACD is also trending lower.

Gold: A Major Top Formation? Fundamental and Elliott Wave Analysis_4

Chart 4: Gold Futures Daily and Weekly Chart

As long as the previous high at 2801.8 is not taken, the risk of a deeper correction toward 2349.7 can not be ruled out. If seen, we expect it can floor the market and turn the trend higher again. Below which, the next support lies in 2210.1.

However, considering both technical and fundamental factors, we expect 2867.6, the initial target of the ABC uptrend from August 1976, will be one touched in 2025.

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