EURUSD
- The EUR/USD is consolidating its recent uptick but remains below the key level of 1.1000 early on Friday. The currency pair is navigating various factors that influence its direction, including economic data, central bank statements, and geopolitical developments.
- The US dollar received support from a firmer-than-estimated Consumer Price Index (CPI) in the last month of 2023. This led investors to trim their expectations regarding the Federal Reserve's timeline for potential interest rate cuts in the second quarter (Q2). Economic data, particularly inflation figures, plays a crucial role in shaping market sentiment.
- The US Labor Department reported that Initial Jobless Claims for the week ending January 6 reached the lowest level since mid-October, declining by 1,000 to 202,000. This positive labor market data contributes to the broader economic narrative and can influence perceptions about the need for monetary policy adjustments.
- European Central Bank (ECB) President Christine Lagarde stated on Thursday that the "hardest part was likely over," indicating a potential easing of economic challenges. She also mentioned that interest rates would be cut if the ECB had certainty that inflation had fallen to the 2% level. Central bank communication is closely watched for insights into future policy actions.
- On Friday, the market will pay attention to the release of Consumer Price Index (CPI) data from France and Spain. Additionally, ECB Chief Economist Philip Lane is scheduled to speak, and his remarks could provide additional clarity on the ECB's stance. On the US docket, the Producer Price Index (PPI) will be released, with a forecasted increase of 1.3% YoY in December.
| SMA (20) | Rising |
|
|
| RSI (14) | Neutral | ||
| MACD (12, 26, 9) | Falling |
|
|
Closing statement: EUR/USD is in a consolidation phase below 1.1000, influenced by factors such as US economic data, central bank communications, and upcoming releases like CPI and PPI figures. The currency pair remains sensitive to shifts in market expectations regarding monetary policy, making economic indicators and central bank statements critical for determining its near-term direction.
GBPUSD
- GBP/USD entered a consolidation phase, trading above 1.2750 early on Thursday, following a positive close in the previous session. The currency pair is influenced by a combination of domestic economic data, central bank communications, and broader market dynamics.
- Data from the UK indicated that monthly real GDP expanded by 0.3% in November. However, Industrial Production contracted by 0.1% on a yearly basis. Economic indicators provide insights into the health of the UK economy, impacting the outlook for monetary policy.
- Bank of England (BOE) Governor Andrew Bailey forecasted a challenging battle to bring inflation back to the 2% target. His comments suggested a cautious approach to rate cuts, pushing back against speculation about reducing interest rates. Central bank communication is closely monitored for signals on future policy actions.
- The recent US inflation reports may challenge the plans of the Federal Reserve (Fed) to cut interest rates in the coming year. Economic data, especially inflation figures, plays a pivotal role in shaping expectations about the trajectory of monetary policy.
- On the US docket, the Producer Price Index (PPI) for December is scheduled for release. PPI data provides insights into inflationary pressures at the producer level and can influence expectations about consumer price trends. Additionally, Fed's Neel Kashkari is set to speak, and his remarks could offer insights into the central bank's perspective.
| SMA (20) | Rising |
|
|
| RSI (14) | Slightly Rising |
| |
| MACD (12, 26, 9) | Slightly Falling |
|
Closing statement: GBP/USD is in a consolidation phase above 1.2750, influenced by domestic economic data, central bank communications, and broader market sentiment. The currency pair is responsive to developments in the UK and the US, particularly regarding inflation and interest rate expectations. Traders will closely monitor upcoming events for potential catalysts shaping GBP/USD's near-term direction.
GOLD
- Gold price is extending its rebound from a one-month low, benefiting from a softer US Dollar. Precious metals, including gold, are often inversely correlated with the US Dollar, and their prices can be influenced by currency movements.
- The US Dollar is in negative territory again, reversing a brief spike that followed higher-than-expected US Consumer Price Index (CPI) data. The CPI showed a 0.3% increase last month, with an annual gain of 3.4%, exceeding expectations. Despite this, the US Dollar is facing downward pressure.
- Market sentiment still reflects around 70% odds for a March Federal Reserve (Fed) interest rate cut. Investors believe that challenges such as a slowing Chinese economic recovery and growing geopolitical risks may increase the likelihood of a US recession. Consequently, there is an expectation that the Fed will maintain a dovish stance.
- L. Mester, President of the Federal Reserve Bank of Cleveland, conveyed that the Fed has not reached the point of considering rate cuts. She emphasized the importance of additional evidence indicating the economy's progress as anticipated. Central bank officials' comments are closely monitored for insights into future monetary policy.
- The next focal points for gold price include the release of US Producer Price Index (PPI) data. Additionally, speeches from Fed officials will be closely watched. Geopolitical developments are expected to be a central focus as traders head into the extended weekend.
Closing statement: Gold price is rebounding from a one-month low, driven by a weaker US Dollar. Despite higher-than-expected US CPI data, market expectations for a March Fed interest rate cut persist. The upcoming US PPI data and speeches from Fed officials will be key determinants of gold's short-term trajectory, with geopolitical developments also in focus.
CRUDE OIL
- West Texas Intermediate (WTI) price is on the rise for the second consecutive day, propelled by growing concerns about potential disruptions in oil supply in the Red Sea. Geopolitical events often impact oil prices due to the potential for disruptions in major oil-producing regions.
- Air strikes conducted by the United States (US) and United Kingdom (UK) targeted Iran-backed Houthis in Yemen. This development has heightened fears that the situation could escalate the Israel-Gaza conflict into a broader regional conflict. Geopolitical tensions in the Middle East have historically contributed to concerns about potential disruptions in oil supply, leading to volatility in oil markets.
- US President Biden emphasized his readiness to take further actions without hesitation following the airstrikes on Houthi targets in Yemen. Political events and statements from key leaders, especially those related to geopolitical tensions in oil-producing regions, can significantly influence oil prices.
- Crude oil prices gained momentum after Iran announced the capture of a civilian oil tanker, the "Marshall Islands-flagged St Nikolas," carrying Iraqi Crude destined for Turkey in the Gulf of Oman. Such events can contribute to uncertainties in oil markets, impacting supply and demand dynamics.
- Better-than-expected Chinese trade data for December has been released, potentially providing additional support for Crude oil prices. China is the largest oil importer globally, and its economic indicators can have a notable impact on global oil demand and prices.
| SMA (20) | Neutral | |
| RSI (14) | Slightly Rising |
|
| MACD (12, 26, 9) | Slightly Rising |
|
Closing statement: WTI price is experiencing upward momentum for the second consecutive day due to heightened concerns over potential oil supply disruptions in the Red Sea. Geopolitical events, including air strikes and announcements regarding oil tankers, are influencing market sentiment. Additionally, better-than-expected Chinese trade data is contributing to positive momentum in Crude oil prices. Traders will closely monitor geopolitical developments for further insights into oil market dynamics.
DAX
- On Thursday, industrial production numbers from Italy raised concerns about a potential euro area recession. Industrial production declined by 1.5% in November, following a 0.2% fall in October. Economic indicators from individual Eurozone member states, especially major economies like Italy and Germany, significantly impact market sentiment regarding the overall health of the Eurozone.
- The industrial production numbers aligned with comments from the ECB Economic Bulletin. The European Central Bank (ECB) highlighted that monetary policy had a more significant impact on the manufacturing sector than the services sector. Understanding the differential impact on sectors is crucial for investors assessing the broader economic landscape.
- On Thursday, the focus shifted to the US Consumer Price Index (CPI) Report, a key indicator of inflation. Hotter-than-expected inflation numbers initially eased bets on a March Federal Reserve (Fed) rate cut. This impact was observed in the market with changes in buyer demand for riskier assets.
- On Friday, finalized inflation numbers for France will draw investor interest. Upward revisions to preliminary numbers could test buyer demand for stocks listed on the DAX. Inflation figures are crucial for assessing economic conditions and potential central bank actions.
- Beyond economic indicators, ECB commentary remains a crucial factor. ECB Chief Economist Philip Lane is scheduled to speak on Friday. Investors will closely analyze his remarks for insights into the ECB's views on inflation, economic conditions, and potential policy actions.
| SMA (20) | Slightly Rising |
| |
| RSI (14) | Slightly Rising |
| |
| MACD (12, 26, 9) | Falling |
|
|
Closing statement: DAX performance is influenced by economic indicators, both domestic and international. Concerns about a potential euro area recession were raised by the decline in Italian industrial production. The impact of monetary policy on different sectors is a notable consideration. The US CPI Report's influence on market sentiment was observed, and investors are anticipating finalized inflation numbers for France on Friday. Additionally, ECB Chief Economist Philip Lane's speech will provide insights into the central bank's perspective on economic conditions.