EURUSD
- EUR/USD is consolidating gains below the 1.1000 level in early European trading on Thursday. The pair seems to be in a phase of consolidation, and the market is closely monitoring key levels, especially considering the psychological barrier at 1.1000.
- From a technical perspective, the positive outlook for the EUR/USD pair is expected to remain unchanged above the 200-day Simple Moving Average (SMA). This moving average is often considered significant in gauging the long-term trend direction.
- The publication of US inflation readings for the last month of 2023, scheduled for Thursday, is expected to be a key driver for the dollar’s price action. Inflation data is crucial for shaping expectations regarding the Federal Reserve's approach to interest rate adjustments in the second quarter.
- Comments from ECB’s De Guindos and Schnabel had limited impact on the Euro. They suggested that a soft landing in the Eurozone’s economy remains a feasible scenario, and the bank’s inflation target could be reached in 2025. Importantly, any suggestion of interest rate cuts was considered premature, despite some opinions suggesting multiple rate cuts by the ECB in the current year.
- The market sentiment for the EUR/USD is influenced by the interplay of economic indicators, central bank statements, and expectations regarding future policy directions. Traders are navigating through various factors to anticipate the trajectory of the currency pair.
| SMA (20) | Rising |
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| RSI (14) | Neutral | ||
| MACD (12, 26, 9) | Falling |
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Closing statement: EUR/USD is currently consolidating below the 1.1000 level, awaiting cues from the US inflation data. Technical factors, central bank commentary, and broader economic conditions continue to shape the sentiment for this currency pair. The market is particularly sensitive to hints about the future course of interest rates by the Federal Reserve and the ECB.
GBPUSD
- GBP/USD is extending gains toward the 1.2800 level in the early European trading hours on Thursday. The pair is displaying strength, and traders are closely monitoring its trajectory in the foreign exchange market.
- Late on Wednesday, New York Federal Reserve (Fed) President Williams commented on the 2024 economic outlook. Williams emphasized that US interest rates will need to remain high "for some time" until central bank authorities are confident that inflation will return to the 2% target. Such remarks contribute to the understanding of the Fed's stance on monetary policy.
- Bank of England (BoE) Governor Andrew Bailey, on Wednesday, expressed hope that the recent fall in the cost of mortgages would continue. However, Bailey did not provide explicit hints regarding the path of interest rates, reaffirming the central bank's commitment to bringing inflation down.
- Jonathan Hall, an external member of the BOE’s Financial Policy Committee, highlighted on Wednesday that exuberance as interest rates fall and growth recovers is one of the biggest risks to financial stability in the current year. This underscores the importance of balancing economic recovery with financial stability.
- GBP/USD's movement is influenced by a combination of factors including central bank communications, economic data, and broader market sentiment. Traders are navigating through various cues to understand the dynamics of the currency pair.
| 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: GBP/USD is seeing an extension of gains toward 1.2800, driven by comments from central bank officials and considerations of the economic outlook. The interplay of central bank policies, economic indicators, and risk factors continues to shape the sentiment for this currency pair.
GOLD
- Gold price is attempting a bounce in Asian trading early Thursday, finding fresh demand around the $2,020 region. The precious metal is showing resilience in the face of recent market dynamics.
- The focus is on the upcoming release of the US Consumer Price Index (CPI). Analysts expect the CPI to rise at an annual pace of 3.2% in December, a slight increase from the 3.1% recorded in November. Core CPI inflation is anticipated to decline to 3.8% YoY in the reported period, compared to 4.0% in November.
- The market is closely watching the CPI figures as they could influence expectations regarding Federal Reserve interest rate cuts. A higher-than-expected CPI might push back against expectations for Fed rate cuts in the first quarter of 2024, providing support to the US Dollar at the expense of non-interest-bearing assets like gold.
- Depending on the outcome of the CPI data, gold price could see different reactions. A hotter-than-expected CPI might lead to a temporary setback for Gold as it strengthens the US Dollar. Conversely, if the inflation data comes in softer-than-expected, it could reinforce dovish Fed expectations, potentially supporting Gold and contributing to expectations of a March Fed rate cut.
- Despite recent weakness in the US Dollar, market prudence is expected to keep the gold price within a familiar range. The interplay between economic data, inflation expectations, and central bank policy outlooks continues to shape the movement of gold in the financial markets.
Closing statement: Gold price is in focus as it attempts a bounce in Asian trading. The impending release of the US CPI figures is a key factor, and the reaction of gold will depend on whether the data aligns with or deviates from market expectations.
CRUDE OIL
- West Texas Intermediate (WTI) price retraces recent losses, trading higher near $72.00 per barrel during the Asian session on Thursday. The market is witnessing a rebound in Crude oil prices after recent declines.
- Crude oil prices are gaining upward momentum, primarily driven by concerns about potential supply disruptions. Recent developments include criticism from Yemen's Houthis regarding the United Nations (UN) resolution on Red Sea navigation. The resolution implicitly supported a United States (US)-led task force defending vessels, while also urging caution to prevent an escalation of tensions.
- The criticism of the UN resolution by Yemen's Houthis has raised concerns in the market, contributing to the upward movement in Crude oil prices. Geopolitical factors and potential supply disruptions often play a significant role in influencing oil prices.
- On Wednesday, the Energy Information Administration (EIA) released updated data on US Crude Oil Stocks Change for the week ending on January 5. The report revealed a notable increase in Crude oil stock, which initially exerted downward pressure on the WTI price.
- While the EIA report showed an increase in Crude oil stock, Crude oil prices experienced an uptick following the release of US crude stock API data on Tuesday, which indicated a reduction. The mixed signals from inventory data contribute to the overall market dynamics.
| SMA (20) | Neutral | |
| RSI (14) | Neutral | |
| MACD (12, 26, 9) | Slightly Rising |
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Closing statement: WTI Crude oil prices are retracing recent losses and trading higher amid concerns about potential supply disruptions. Geopolitical factors, particularly developments in the Red Sea region, are influencing market sentiment. Traders are closely monitoring inventory data and geopolitical developments for insights into the future direction of Crude oil prices.
DAX
- On Wednesday, economic indicators from France and Italy provided favorable signals for the DAX. French industrial production increased by 0.5% in November, reversing a 0.3% decline in October. Similarly, retail sales in Italy rose by 0.4% in November after a 0.4% increase in October. These positive figures contributed to market optimism.
- Commentary from the European Central Bank (ECB) played a role in the DAX's modest gain on Wednesday. ECB Vice-President Luis de Guindos expressed concerns about the economic outlook, stating, "Soft indicators point to an economic contraction in December too, confirming the possibility of a technical recession in the second half of 2023 and weak prospects for the near-term." ECB Executive Board member Isabel Schnabel also raised concerns about the near term.
- On Thursday, industrial production numbers from Italy will be a key focus for investors. A larger-than-expected fall in industrial production could potentially exert pressure on the DAX. Industrial production data provides insights into the manufacturing sector, which is crucial for overall economic health.
- The ECB Economic Bulletin, scheduled for release, may have a significant impact on the DAX. Investors will closely analyze the bulletin for information on inflation, the economic outlook, and hints about potential changes in interest rates. ECB commentary continues to be a crucial factor influencing market sentiment.
- Beyond economic data, investors must monitor ECB commentary for any additional insights into the central bank's stance on monetary policy. Views on inflation, the economic recovery, and potential policy adjustments will be closely watched for their implications on the DAX.
| SMA (20) | Slightly Rising |
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| RSI (14) | Slightly Rising |
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| MACD (12, 26, 9) | Falling |
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Closing statement: The DAX benefited from positive economic signals from France and Italy on Wednesday. However, concerns raised by ECB officials about the economic outlook introduce an element of caution. Investors are closely watching Italy's industrial production data and the ECB Economic Bulletin for further guidance on market direction. ECB commentary remains a key driver of sentiment for the DAX.