EURUSD
- EUR/USD has experienced a third consecutive day of attracting buyers, reaching a fresh weekly high. The pair's upward movement indicates increased demand for the Euro against the US Dollar.
- Recent comments from influential Federal Reserve officials have tempered market expectations for early interest rate cuts in the United States. The USD bears (those betting against the US Dollar) are cautious and refraining from aggressive bets. They are waiting for more cues about the likely timing and pace of rate cuts in 2024.
- Expectations are mentioned that the European Central Bank (ECB) could start cutting interest rates by April. This expectation is tied to falling inflation in the Eurozone, suggesting that the ECB may take a more accommodative monetary policy stance.
- Despite the positive movement of EUR/USD, the gains might be capped due to the cautious stance of USD bears and the potential for ECB rate cuts.
- There is an awareness that the precise adjustment and implementation of monetary policy are crucial, indicating a delicate balance in managing potential ripple effects.
| 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: the EUR/USD pair is on an upward trajectory, but caution prevails among USD bears, awaiting clearer signals about the future path of interest rates in the US. The potential for ECB rate cuts and concerns about managing ripple effects in monetary policy decisions add complexity to the currency pair's movement.
GBPUSD
- GBP/USD is retracing its gains and approaching the 1.2600 level in European trading on Thursday. The pair's winning streak is stalling, and this retracement is attributed to the US Dollar finding strength amid mixed market sentiment.
- Chair Jerome Powell has signaled the Fed's commitment to maintaining a prudent approach to interest rate changes. Powell stressed the importance of increased confidence before considering any decreases in interest rates. This stance has likely contributed to the recent strength of the US Dollar.
- Minneapolis Fed President Neel Kashkari, on Wednesday, suggested that the Committee can take time to evaluate data before considering rate cuts. Kashkari's statement implies a cautious approach and hints at a more deliberate assessment of economic conditions before deciding on rate cuts. He also mentioned that 2-3 rate cuts this year seem appropriate.
- BoE Deputy Governor Sarah Breeden mentioned that she is less concerned about tightening the bank rate further. Her focus has shifted to considering how long rates need to remain at their current level. This perspective suggests a nuanced approach to monetary policy, considering both tightening and the duration of the current rate level.
- Market participants are keeping an eye on the risk perception surrounding the Middle East, indicating that geopolitical factors are influencing market sentiment. Geopolitical events in the Middle East can impact currency movements, and traders are monitoring the situation for potential implications on GBP/USD.
| 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 experiencing a retracement, influenced by the US Dollar's strength and mixed market sentiment. The Federal Reserve's cautious stance, views from Fed officials, and comments from the Bank of England Deputy Governor are contributing factors. Additionally, geopolitical factors in the Middle East are under scrutiny by market participants.
GOLD
- Gold is experiencing buying interest early on Thursday, attempting to surpass the $2,040 barrier. There has been a recent struggle for gold to sustain levels above $2,040 since last Friday, indicating a key resistance level.
- Market sentiment is positive on expectations that China may implement more policy support measures. The anticipation of additional stimulus measures is linked to China's efforts to combat deflation. This optimism is contributing to the positive outlook for gold.
- Gold price is capitalizing on China's stimulus optimism, emphasizing China's significance as the world's top consumer of gold. The demand from China, especially in the context of economic policies, plays a crucial role in influencing gold prices.
- Boston Fed President Susan Collins mentioned on Wednesday that "for the moment, policy remains well positioned." She highlighted the cautious approach of carefully assessing evolving data and outlook, suggesting a balanced stance. She also noted that it will be "appropriate to begin easing policy restraint later this year." Gold traders are preparing for more Fedspeak, with Barkin set to speak again.
- The US weekly Jobless Claims data is closely watched, especially after an increase in Initial Jobless Claims to 224,000 for the week ended January 27.
Closing statement: Gold is seeing renewed buying interest, attempting to surpass the $2,040 barrier. Positive market sentiment is driven by expectations of additional policy support measures from China. The impact of China, both as a consumer and through its economic policies, is influencing gold prices. Fedspeak, specifically comments from Boston Fed President Susan Collins, indicates a cautious and balanced policy approach. Traders are also focusing on upcoming events, including more Fedspeak and the US weekly Jobless Claims data.
CRUDE OIL
- West Texas Intermediate (WTI) oil price is hovering around $74.10 per barrel during the European session on Thursday. WTI prices are receiving upward support as an obstacle emerges in achieving a ceasefire in the Middle East conflict.
- Geopolitical tensions in the Middle East often influence oil prices, and any hurdles in achieving a ceasefire can contribute to upward pressure on prices.
- The American Petroleum Institute (API) Weekly Crude Oil Stock showed improvement, reporting an increase of 0.674 million barrels. This contrasts with the prior decrease of 2.5 million barrels, indicating a positive trend.
- However, the US Energy Information Administration (EIA) reported a higher-than-expected increase in Crude Oil stockpiles at 5.521 million barrels. This figure surpassed both the expected 1.895 million barrels and the previous figure of 1.234 million barrels. The higher-than-expected increase in stockpiles may have affected oil prices.
- The Permian shale basin, the largest US oilfield spanning Texas and New Mexico, is projected to experience its slowest annual growth since 2021. The outlook for slower growth in the Permian shale basin could be a factor influencing the oil market, as the basin has been a significant contributor to US oil production.
| SMA (20) | Slightly Rising |
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| RSI (14) | Slightly Rising |
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| MACD (12, 26, 9) | Slightly Falling |
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Closing statement: WTI oil prices are experiencing upward support due to geopolitical tensions in the Middle East. While the API report indicated an improvement in crude oil stocks, the EIA report showed a larger-than-expected increase, which may have limited the upward momentum. Additionally, the projection of slower growth in the Permian shale basin is another factor influencing the oil market.
DAX
- On Wednesday, German industrial production fell by 1.6% in December, which was larger than the expected decline of 0.4%. This unexpected contraction in industrial production contributed to early losses in the DAX.
- ECB Executive Board member Isabel Schnabel's remarks added to the losses. Schnabel suggested that the ECB should be patient about cutting rates, indicating a more cautious approach to monetary policy.
- Banking sector jitters may have been a contributing factor, though the details are not explicitly mentioned. Concerns about the banking sector can have a broad impact on the stock market.
- Later in the session, hawkish commentary from Federal Reserve (Fed) members, including Adriana Kugler and Susan Collins, favored a more patient approach to cutting interest rates. This contributed to the losses in the DAX.
- On Thursday, investor interest is expected to focus on corporate earnings. Major companies such as L’Oreal, Siemens AG, Siemens Energy AG, Unilever, Credit Agricole, and Société Generale are among the big names on the earnings calendar.
- The ECB Economic Bulletin is scheduled, which will draw investor interest. Views on the economic outlook, inflation, and monetary policy in the bulletin, as well as any additional commentary from ECB Chief Economist Philip Lane, could impact the market.
| 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: the DAX faced early losses due to the unexpected contraction in German industrial production. ECB chatter, particularly the suggestion to be patient about rate cuts, and concerns in the banking sector added to the negative sentiment. Hawkish commentary from Fed members further influenced the losses. The upcoming focus is on corporate earnings and ECB-related events, which could provide further direction to the market.