Daily Analysis 10/03/2025

• GBP/USD Price: GBP/USD is holding above 1.2900 in Monday's European session but lacks strong upward momentum. The pair remains range-bound as traders await fresh catalysts.
• BoE Rates: The British Pound remains supported by expectations that the Bank of England (BoE) will adopt a more cautious approach to rate cuts compared to the Federal Reserve. This divergence is providing underlying support for GBP.
• US NFP: Friday’s US Nonfarm Payrolls (NFP) report showed a gain of 151,000 jobs in February, missing expectations of 160,000. The softer data has reinforced concerns about slowing US economic growth.
• Fed’s Daly: San Francisco Fed President Mary Daly stated on Sunday that increased uncertainty among businesses could weaken US demand but does not justify a shift in the Fed’s interest rate policy for now.
• Quiet Economic Calendar: With no major UK or US data releases scheduled, market direction will likely be driven by US Dollar dynamics and broader risk sentiment. Traders may seek short-term opportunities based on intraday price action.

Closing statement: GBP/USD remains supported by BoE’s cautious stance but faces resistance amid lingering US growth uncertainty. Near-term direction will depend on USD movements and broader market sentiment.

• XAU/USD Price: Gold is consolidating above the $2,900 mark in Monday’s early European session, showing resilience despite mixed market signals.
• Technical Outlook: Gold has held above key support levels, with daily chart oscillators losing traction but still in positive territory, suggesting that upward momentum remains intact for now.
• US Jobs Report: Friday’s softer Nonfarm Payrolls (NFP) report reinforced market expectations that the Federal Reserve (Fed) will cut interest rates multiple times in 2025, supporting demand for the non-yielding yellow metal.
• Powell Cautions: Fed Chair Jerome Powell highlighted on Friday that uncertainty surrounding the Trump Administration's policies and their economic impact remains high, adding to market unease.
• Recession Risks: A Reuters poll showed that 70 out of 74 economists see a growing risk of recession in the US, Canada, and Mexico, increasing the appeal of gold as a safe-haven asset.

Closing statement: Gold remains supported by rate cut expectations and growing recession risks but needs to clear near-term resistance to maintain upward momentum. Further direction hinges on Fed policy signals and broader risk sentiment.

• WTI Oil Price: West Texas Intermediate (WTI) is trading around $66.90 in early European hours on Monday, struggling to find clear direction as global economic and political factors weigh on sentiment.
• Tarrif Exemptions: US President Donald Trump signed an executive order last week exempting Canadian and Mexican goods under the USMCA while increasing tariffs on Chinese imports, adding pressure to global trade flows.
• Chinese Data: China's Consumer Price Index (CPI) fell more than expected in February, marking the sharpest decline since January 2024, highlighting weak domestic demand and pressuring oil prices.
• Geopolitical Risks: Trump warned of increased sanctions on Russia unless it agrees to a ceasefire with Ukraine, adding a layer of geopolitical uncertainty that could support oil prices.
• Fed Rate Cut: Friday’s weaker US jobs report reinforced market expectations for multiple Fed rate cuts in 2025, which could help stabilize demand and limit downside pressure on oil.

Closing statement: WTI faces headwinds from weak Chinese data and trade tensions, but geopolitical risks and Fed policy support could cushion further losses. Focus shifts to updates on US-Russia relations and economic data from China.

• DAX Price: The DAX dropped by 1.75% on Friday, reversing Thursday’s 1.47% gain to close at 23,009. Despite the decline, the index finished the week up 2.03%, reflecting overall positive sentiment.
• Industrial Production Data: Data from Destatis showed that German Industrial Output rose by 2% MoM in January, surpassing market expectations and indicating strength in the industrial sector.
• Trade Balance: Germany’s Trade Balance for January came in at €16 billion, below expectations of €21 billion and down from €20.7 billion in the previous month, suggesting softening external demand.
• German Coalition Talks: Leaders of the CDU/CSU and SPD reached an agreement on key issues over the weekend, paving the way for formal coalition negotiations. The Bundestag will hold a special session on the economic stimulus package this Thursday.
• Corporate Earnings: Nine DAX companies are set to report earnings this week. On Monday, reports are expected from LEG (real estate), Hypoport (financial services), and Traton (truck manufacturer), which could drive market sentiment.

Closing statement: The DAX faces mixed signals from strong industrial data and weaker trade performance. Focus now shifts to corporate earnings and coalition progress for near-term direction.