EURUSD
- EUR/USD experienced a retracement to the mid-1.0700s after briefly testing levels above 1.0800. This retracement was attributed to a tepid bounce in the dollar, indicating a slight shift in risk-associated market sentiment.
- The resurgence of buying interest in the US Dollar was noted. This was linked to the continuous upward movement in US yields across different timeframes. Investors are evaluating the possibility of the Federal Reserve (Fed) beginning its easing cycle, with expectations leaning towards potential cuts in May or June.
- Recent statements from Fed Chair Jerome Powell reinforced the perception of a cautious approach by the central bank regarding interest rate adjustments. Powell emphasized the need for increased confidence before considering any rate cuts, aligning with the market's assessment of a potential easing cycle.
- Minneapolis Fed President Neel Kashkari's suggestion that the Committee should carefully assess data before deciding on rate cuts adds weight to the cautious stance. Kashkari indicated that 2-3 rate cuts this year might be appropriate, providing insights into the potential timing and extent of rate adjustments.
- Thomas Barkin, the President of the Richmond Fed, suggested that upcoming inflation data are expected to be favorable. This statement indicates that certain members of the Fed anticipate positive inflation data, which might influence future policy decisions.
| 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's retracement was influenced by a modest rebound in the US Dollar, driven by the ongoing rise in US yields and market expectations of a potential easing cycle by the Federal Reserve. Powell's emphasis on a cautious approach and insights from other Fed officials contribute to the overall analysis of EUR/USD dynamics. Additionally, the expectation of favourable inflation data adds another dimension to the market outlook.
GBPUSD
- GBP/USD is observed to be moving higher, approaching the 1.2650 level during the European morning on Tuesday. This suggests some positive momentum for the British Pound against the US Dollar.
- Data from the UK indicates that the ILO Unemployment Rate declined to 3.8% in December. This signals an improvement in the labor market, with a lower unemployment rate, which is generally positive for the economic outlook. However, the annual wage inflation softened to 6.2% from 6.7%. While still indicating wage growth, moderation might be seen as a factor for the Bank of England (BoE) to consider in its monetary policy decisions.
- The number of people claiming jobless benefits rose by 14.1K in January, a notable increase compared to the gain of 5.5K in December. This could be an area of concern, and it's essential to monitor if this trend persists.
- There is an expectation in the market that the BoE might slash rates by 80 basis points through 2024. This is a reduction from the initial expectation of 110 bps at the beginning of last week. The adjustment in expectations suggests some shifts in the outlook for monetary policy.
- Market participants are keeping an eye on an inflation report in the United States (US). This report is anticipated to fuel speculations for rate cuts by the US Federal Reserve (Fed). The expectations around Fed policy can influence the strength of the US Dollar and, consequently, GBP/USD.
| SMA (20) | Slightly Falling |
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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 showing an upward movement, influenced by positive developments in the UK labour market, although with a note of caution due to the increase in jobless benefit claims. Expectations regarding the Bank of England's monetary policy and the impact of the US inflation report are additional factors contributing to the dynamics of GBP/USD.
GOLD
- Gold experienced a decline throughout the first half of the day, followed by a brief rebound ahead of Wall Street's opening. However, it resumed its slump afterward. This suggests a period of weakness for gold prices.
- In the absence of relevant macroeconomic data, market attention was directed toward statements from Federal Reserve (Fed) officials. Their remarks have been downplaying the likelihood of a near-term rate hike, emphasizing the need for inflation to move closer to the 2% goal and the requirement for more data before considering rate adjustments.
- Market participants are eagerly awaiting a United States (US) inflation update, specifically the January Consumer Price Index (CPI). The anticipated figures are 0.2% MoM and 3% YoY. This indicates an expectation of moderate inflation, which could influence gold prices.
- Thomas Barkin and Neel Kashkari are scheduled to speak at different events in the American afternoon. While no surprises are expected, the statements from Fed officials can have an impact on market sentiment, especially concerning monetary policy and interest rates.
Closing statement: the recent trend for gold has been a decline, influenced by the absence of significant macroeconomic data. The focus on Fed officials' comments, especially their cautious stance on rate hikes, is influencing gold prices. The anticipation of the US inflation update and speeches by Fed officials further contribute to the dynamics of the gold market.
CRUDE OIL
- West Texas Intermediate (WTI) oil price has been on an upward trajectory since February 5. The primary driver for this winning streak is heightened geopolitical tension in the Middle East. Geopolitical factors often play a significant role in influencing oil prices.
- There is a note of caution regarding the rise in Crude oil prices due to higher interest rates. Elevated interest rates can introduce uncertainty about demand, which may limit the extent to which oil prices can rise. The Federal Reserve (Fed) is expected to hold off on cutting interest rates at the March meeting, citing concerns about inflationary pressures.
- Concerns about turbulence in the Chinese economy are mentioned as a potential factor influencing oil prices. China is the largest oil importer globally, so any economic turbulence in the country can have significant implications for oil demand.
- The US Energy Information Administration (EIA) projects an increase in oil output from the top shale-producing regions in the United States. The expected rise to 9.7 million barrels per day (bpd) in March, the highest level in four months, indicates potential growth in US oil production.
- Traders are anticipated to closely monitor the OPEC Monthly Oil Market Report (MOMR), scheduled for publication on Tuesday. This report is expected to address significant issues affecting the global oil market and provide insights into developments in the crude oil market. OPEC's assessments and reports often influence oil market sentiment.
| 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 recent rise in WTI oil prices is attributed to geopolitical tensions in the Middle East. However, caution is advised due to concerns about the impact of higher interest rates on demand. The projection of increased US shale oil output and the upcoming OPEC report are additional factors that traders will be monitoring for potential impacts on oil prices.
DAX
- On Monday, investors reacted to comments from Bank of Italy Governor Fabio Panetta. Governor Panetta indicated that inflation had eased quickly, and he suggested that the time was nearing for the European Central Bank (ECB) to begin cutting interest rates. Such comments from central bank officials can significantly impact market sentiment.
- The DAX received late support from US consumer inflation expectations. A January survey showed that consumers expect inflation to remain steady at 3%. Consumer sentiment and expectations for inflation can influence market dynamics, and in this case, it provided support to the DAX.
- On Tuesday, investor interest is expected to focus on the ZEW Economic Sentiment numbers for Germany and the Eurozone. The ZEW Indicator of Economic Sentiment reflects the expectations of financial market experts regarding economic development over the next six months. Positive sentiment in these indicators could potentially support the DAX.
- Later in the Tuesday session, the US Consumer Price Index (CPI) Report will be a key point of interest for investors. Economists forecast a softening of the US annual inflation rate from 3.4% to 2.9% in January. Changes in inflation rates can impact investor expectations and market movements.
- Beyond economic indicators, commentary from ECB Executive Board members Claudia Buch and Anneli Tuominen is scheduled. ECB commentary provides insights into the central bank's perspectives on economic conditions, inflation, and the potential for interest rate adjustments.
| 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, recent market movements in the DAX have been influenced by comments from Bank of Italy Governor Fabio Panetta and late support from US consumer inflation expectations. Investor attention is now turning to upcoming economic sentiment numbers, particularly the ZEW Economic Sentiment, and the US CPI Report. Additionally, ECB commentary will be closely monitored for insights into the central bank's stance on interest rates and economic conditions.