Daily Analysis 13/03/2025

• GBP/USD Price: GBP/USD is attempting to extend gains for the third consecutive day, trading near 1.2960 during the European session on Thursday. A softer US Dollar, weighed down by tariff uncertainty and recession concerns, supports the pair's strength.
• UK Housing Market: The latest Residential Market Survey from RICS showed that the Housing Price Balance dropped to 11% in February (vs. 20% expected), marking its second consecutive decline and down from 21% in January. This signals weakening momentum in the UK housing sector.
• UK PM Statement: UK Prime Minister Keir Starmer expressed confidence that Britain could sidestep potential US tariffs on steel and aluminum. He emphasized a "pragmatic approach" in ongoing negotiations while keeping all options open.
• US Tariff Fears: The US Dollar remains under pressure amid uncertainty over Trump’s tariff policy and growing recession fears, creating a supportive environment for the British Pound.
• UK GDP Data: Traders now await Friday’s UK monthly GDP data for January, which could offer further clarity on the UK’s economic performance and influence the Bank of England’s policy outlook.

Closing statement: GBP/USD maintains upward momentum as a weak US Dollar and cautious optimism over UK trade policy support the pair. However, disappointing UK GDP data could cap further gains.

• XAU/USD Price: Gold price climbed to the $2,947 region during the European session on Thursday, approaching the all-time peak reached on February 24. This marks the third consecutive day of gains for the precious metal.
• US Dollar Support: The US Dollar Index remains near its lowest level since October 16, reinforcing the bullish momentum in gold as investors shift towards safe-haven assets.
• US Inflation Data: US headline inflation for February slowed to 0.2% (from 0.5% in January), while core inflation eased to 0.2% (below the forecast of 0.3%). On an annual basis, headline inflation fell to 2.8% (from 3.0%) and core inflation to 3.1% (from 3.3%), fueling market bets on potential Fed rate cuts.
• Global Trade War: Investors remain cautious about a potential global trade war as Canada, China, and the EU implement retaliatory tariffs on the US. This uncertainty supports increased demand for gold.
• US PPI Data: Attention now shifts to the upcoming US Producer Price Index (PPI) data. A softer-than-expected reading could further weaken the US Dollar and provide additional support to gold prices.

Closing statement: Gold remains well-supported by easing US inflation, a weaker Dollar, and trade tensions. A downside surprise in PPI data could fuel another leg higher toward new record levels.

• WTI Oil Price: West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $67.30 during the early European session on Thursday.
• US Oil Production: While the White House pushes the message of "drill, baby, drill", leading US oil producers—Continental Resources, Occidental Petroleum, and Pioneer—warn that the era of easy oil extraction is over, signaling tougher production conditions ahead.
• US Crude Inventories: The EIA reported a rise in US crude oil stockpiles by 1.448 million barrels for the week ending March 7. The increase reflects weaker demand signals and could pressure oil prices in the short term.
• Russian Oil Sanctions Waiver: The US Treasury’s General License 8L, which permits specific energy-related transactions involving sanctioned Russian financial institutions, expired on March 12, 2025. The market is watching closely for any policy shifts that could affect global oil flows.
• Oil Market Projections: The IEA reduced its 2025 oil surplus forecast, citing expected declines in Iranian and Venezuelan output. The EIA also projects a drop in global oil inventories in Q2 2025, suggesting tightening market conditions.

Closing statement: WTI remains stable despite rising inventories, with mixed signals from US producers and tightening supply forecasts. Expiry of the Russian sanctions waiver and production challenges could keep prices volatile in the coming months.

• DAX Price: After a strong rebound on Wednesday, the DAX gained over 2% but failed to surpass Tuesday's high. The weekly balance remains negative, with the index likely to face renewed pressure as sentiment weakens.
• Stocks Performance: Rheinmetall surged nearly 10% on strong Q4 results and a positive outlook. Other notable gainers included Siemens Energy (+9%), Sartorius AG (+5.1%), MTU Aero Engines (+3.9%), and Heidelberg Materials (+3.9%), lifting the broader index.
• US Inflation: The US annual inflation rate eased to 2.8% in February (from 3% in January), while core inflation dropped from 3.3% to 3.1%. Lower inflation eased some pressure on the market, but Trump's latest tariffs on steel and aluminum could reverse the trend.
• Trade Tensions: The European Union and Canada announced retaliatory tariffs in response to the US metals duties, heightening trade conflict risks and raising uncertainty for European exporters.
• Recession Warning: Bundesbank President Joachim Nagel warned that escalating US trade tariffs on the EU could push Germany into recession this year, adding to market concerns over the economic outlook.

Closing statement: The DAX faces renewed downside risks from weak market momentum and rising trade tensions. Strong earnings from key stocks offer some support, but US-EU trade conflicts and slowing inflation could weigh on future gains.