EURUSD
- EUR/USD has edged higher to near 1.0760 during the Asian session on Wednesday, extending gains for the second consecutive session.
- The timing of potential interest rate cuts by the Federal Reserve (Fed) remains a central topic of debate among investors. Speculation for a March rate cut is losing traction in favor of a May or even June cut.
- The recent increase in the pair’s downward trend is attributed to remarks from Chair Jerome Powell, indicating the Fed's intention to maintain a cautious stance on interest rate adjustments.
- European Central Bank (ECB) Board member De Cos expressed confidence that inflation is heading back to the bank’s goal.
- His colleague Vujcic emphasized the importance of accuracy in the ECB's credibility regarding rate cuts. He suggested refraining from hastening the initiation of the rate-cutting cycle. Notably, he mentioned significant resilience in services inflation and wages.
| SMA (20) | Falling |
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| RSI (14) | Slightly Falling |
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| MACD (12, 26, 9) | Falling |
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Closing statement: EUR/USD is experiencing upward movement, and the debate among investors centres around the timing of potential interest rate cuts by the Federal Reserve. The recent trend in the pair is linked to Chair Jerome Powell's cautious remarks on interest rates. Statements from ECB officials, including confidence in inflation reaching goals and the importance of credibility in rate-cut decisions, are also highlighted.
GBPUSD
- The GBP/USD pair is trading on a stronger note during the early Asian trading hours on Wednesday. The strength in the GBP/USD pair is attributed to the weakness of the US Dollar (USD).
- Expectations of interest rate cuts from the Federal Reserve (Fed) have diminished due to better-than-expected US economic data. Fed Chair Jerome Powell, on Sunday, mentioned that it would not be appropriate to cut rates until there is greater confidence that inflation is moving to 2%.
- On the Pound Sterling (GBP) front, there is a risk of a technical recession, which could prompt Bank of England officials to shift to a dovish interest rate stance.
- On Wednesday, the UK Halifax House Prices for January and the US Goods Trade Balance for December are expected. These events are likely to impact market sentiment.
- Market players are keeping an eye on Fed speeches (Fedspeaks) scheduled for the week, which could provide fresh impetus.
| SMA (20) | Neutral | |
| RSI (14) | Slightly Rising |
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| MACD (12, 26, 9) | Slightly Falling |
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Closing statement: GBP/USD is trading stronger, influenced by the weakness of the US Dollar. Expectations of Fed rate cuts have diminished due to positive US economic data, and Powell's remarks emphasize the need for confidence in inflation before considering rate cuts. Concerns about a potential technical recession in the UK may impact the Bank of England's interest rate stance. The upcoming economic data and Fed speeches are crucial factors for market players.
GOLD
- Gold price is consolidating after a solid rebound from the weekly low of $2,015 early Wednesday.
- Markets are currently paying limited attention to reduced expectations for aggressive rate cuts from the US Federal Reserve (Fed). The reduced interest in rate cuts is attributed to strong US economic data and hawkish statements from Fed officials.
- Philadelphia Fed President Patrick Harker stated that the "economy is on track for a soft landing." This statement could influence market perceptions of the economic outlook.
- With a lack of top-tier economic data releases from the United States (US), the focus continues to be on Fedspeak, sentiment on Wall Street, and developments in the Chinese markets. Traders are anticipating Chinese inflation data scheduled for Thursday as it could provide fresh insights into the state of the economy.
- Fed policymakers Barkin, Bowman, and Kugler are expected to speak in the latter part of the day. Their remarks could influence market sentiment.
Closing statement: gold prices are consolidating after a rebound, and market sentiment is less focused on aggressive rate cuts by the Fed due to positive economic data and hawkish comments from officials. The attention is on Fedspeak, Wall Street sentiment, and upcoming Chinese inflation data. The remarks of Fed policymakers later in the day are also anticipated to impact trading dynamics.
CRUDE OIL
- West Texas Intermediate (WTI) oil price is in a consolidation phase after recording gains over the previous two sessions. The current price is hovering around $73.50 during the Asian session on Wednesday.
- The American Petroleum Institute (API) Weekly Crude Oil Stock showed improvement, recording a figure of 0.674 million barrels. This is in contrast to the previous decline of 2.5 million barrels.
- Investors are now awaiting the release of the US Energy Information Administration (EIA) Crude Oil stockpiles report on Wednesday for further insights into the market. This report is likely to provide additional information on the inventory levels, which can impact oil prices.
- The increase in Crude oil prices is attributed to the United States (US) Energy Information Administration revising its forecast for growth in domestic oil production in 2024. Positive revisions in production forecasts can influence market sentiment.
- The potential for a ceasefire in the Middle East conflict has tempered the upward momentum of Crude oil prices. Geopolitical events, especially in oil-producing regions, can significantly impact oil prices.
| SMA (20) | Slightly Rising |
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| RSI (14) | Slightly Falling |
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| MACD (12, 26, 9) | Slightly Falling |
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Closing statement: WTI oil prices are consolidating, and market attention is on inventory data with the API report showing improvement. The upcoming EIA Crude Oil stockpiles report is awaited for further insights. The revision in the forecast for US oil production and the potential for a ceasefire in the Middle East are contributing factors to the current dynamics of Crude oil prices.
DAX
- On Tuesday, German factory orders surged unexpectedly by 8.9% in December. This was a significant rebound after stalling in November, contrary to economists' forecasts. The unexpected surge in factory orders is a positive economic indicator, suggesting strength in Germany's manufacturing sector.
- The ECB Consumer Expectations Survey showed consumers expecting a softer inflation outlook. This supports bets on an April ECB rate cut. Consumer expectations regarding inflation can influence central bank decisions, and a softer outlook may lead to monetary policy adjustments.
- Despite the positive factory orders data, it's mentioned that Germany's industrial sector downturn stretched into December. Industrial output in the Eurozone's top economy declined by 1.6% MoM, according to data from Destatis. This suggests some challenges persist in the industrial sector.
- Corporate earnings remain a focal point for investors. Deutsche Boerse and Siemens Energy AG are highlighted as significant names to release earnings results. Earnings reports can impact investor sentiment and provide insights into the financial health of companies.
- Investors are advised to consider ECB commentary, especially regarding expectations for an April ECB rate cut. Support for an April ECB rate cut could influence market sentiment, impacting the appetite for riskier assets.
| SMA (20) | Slightly Rising |
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| RSI (14) | Slightly Rising |
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| MACD (12, 26, 9) | Slightly Rising |
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Closing statement: In summary, while there is a positive surprise in German factory orders, indicating strength in manufacturing, challenges in the industrial sector persist. The ECB Consumer Expectations Survey and the focus on corporate earnings, especially in the context of potential ECB rate cuts, are key factors influencing the DAX. ECB commentary will also be closely watched for indications of future monetary policy decisions.