EURUSD
- The EUR/USD is going towards 1.0900, marking its fourth consecutive day of decline early on Tuesday. The pair's movement is crucially influenced by various factors, including monetary policy expectations and economic developments.
- European Central Bank (ECB) policymaker Joachim Nagel's recent comments pushed back against market expectations of early rate cuts. Nagel emphasized that it is too early to discuss rate cuts, especially as inflation remains too high.
- Additionally, ECB policymaker Robert Holzmann opposed rate cuts for the entire year, citing upside risks to energy prices due to conflicts over commercial shipments from the Red Sea.
- The German economy faced challenges in 2023, including inflationary pressures and global headwinds. Economic development faltered, leading to a 0.3% contraction in the German economy in 2023. The impact of higher interest rates by the ECB contributed to unfavorable financial conditions.
- Investors are eagerly awaiting the release of United States monthly Retail Sales data for December. This data will provide crucial insights into consumer spending trends, which can, in turn, influence expectations about the Federal Reserve's monetary policy, including the possibility of early rate cuts.
| SMA (20) | Rising |
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| RSI (14) | Neutral | ||
| MACD (12, 26, 9) | Falling |
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Closing statement: EUR/USD is under pressure as ECB officials push back against early rate cut expectations. The performance of the German economy and upcoming U.S. Retail Sales data will be significant drivers for the pair in the near term. Investors are carefully monitoring central bank communications and economic indicators for clues about future policy directions.
GBPUSD
- GBP/USD is holding above the lower limit of the ascending regression channel, signaling a bullish bias in the near term. The Relative Strength Index (RSI) indicator is moving sideways above 50, further supporting the notion of a positive outlook.
- The United Kingdom’s ILO Unemployment Rate remained steady at 4.2% for the three months to November, according to data published by the Office for National Statistics (ONS) on Tuesday. This data reflects the employment situation in the UK during that period.
- Additional details from the ONS report revealed that the number of people claiming jobless benefits increased by 11.7K in December. This contrasts with the smaller increase of 0.6K observed in November. The jobless claims data provides insights into the recent trends in the labor market.
- The scheduled testimony of Bank of England (BoE) Governor Andrew Bailey before the Lords' Economic Affairs Committee in London has been canceled. Traders are now looking for any potential remarks from Governor Bailey at the World Economic Forum in Davos, Switzerland.
- Atlanta Federal Reserve (Fed) President Raphael Bostic has expressed the view that interest rates should remain unchanged until at least the summer. This perspective aims to prevent a resurgence in prices, emphasizing a cautious approach to monetary policy.
| SMA (20) | Rising |
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| RSI (14) | Slightly Falling |
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| MACD (12, 26, 9) | Slightly Falling |
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Closing statement: GBP/USD maintains a bullish bias within the ascending regression channel. Economic indicators such as the UK Unemployment Rate and jobless claims provide insights into the labour market, while attention is also focused on central bank communications and global economic events for further cues on the currency pair's trajectory.
GOLD
- Gold price experienced a decline, ending a three-day winning streak. It is currently trading lower, near $2,050 per troy ounce during the early European session on Tuesday.
- Risk sentiment took a hit following reports that Iran’s Islamic Revolutionary Guard Corps (IRGC) fired missiles at targets near the US Consulate in Erbil, Iraq.
- Market concerns are revolving around China’s economic outlook. Upcoming Gross Domestic Product (GDP) and activity data for China is anticipated.
- A speech by US Federal Reserve (Fed) Governor Christopher Waller is highly anticipated. The speech will focus on the economic outlook and monetary policy. The event is scheduled for 16:00 GMT at the Brookings Institution in Washington DC.
- Currently, there is an estimation in the market that the Fed will lower interest rates in March. The odds for a rate cut in March are approximately 70%, as per market sentiment.
Closing statement: Please note that the dynamics of the gold market can be influenced by various factors, including economic data, geopolitical events, and central bank policies. Traders and investors closely monitor these factors to make informed decisions.
CRUDE OIL
- WTI crude oil is currently trading near $72.70 per barrel, indicating an attempt to recover from recent losses.
- Supply disruptions in the Red Sea are influencing oil markets, with maritime vessels altering routes due to attacks by Yemen's Houthi movement.
- Reports indicate that the Islamic Revolutionary Guard Corps (IRGC) launched missiles targeting northern Iraq near the US Consulate in Erbil, adding geopolitical tension.
- The situation coincides with concerns over Israel's offensive in the Gaza Strip, contributing to heightened geopolitical risks in the region.
- Course diversions in the Red Sea are causing elevated shipping costs and extended transit times for crude oil transportation.
| SMA (20) | Neutral | |
| RSI (14) | Neutral | |
| MACD (12, 26, 9) | Slightly Rising |
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Closing statement: In summary, the Crude oil market is reacting to a complex geopolitical landscape, marked by supply disruptions in the Red Sea, missile launches, and regional tensions, impacting oil prices and shipping logistics.
DAX
- German wholesale prices fell more than expected, and Germany's GDP contracted by 0.3% in Q4 2023.
- The Eurozone's industrial production in November met expectations with a 0.3% decline, while the trade surplus widened.
- ECB Governing Council member Robert Holzmann cautioned against speculations of a 2024 ECB rate cut, adding a layer of uncertainty to monetary policy expectations.
- Consumer prices in Germany rose by 3.7% in December compared to the same month the previous year, meeting preliminary estimates. On a monthly basis, there was a 0.1% increase.
- ZEW Economic Sentiment figures for Germany and the Eurozone are upcoming, and larger-than-expected declines in these numbers could impact buyer demand for DAX-listed stocks.
| SMA (20) | Slightly Rising |
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| RSI (14) | Slightly Falling |
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| MACD (12, 26, 9) | Falling |
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Closing statement: In summary, DAX is navigating a mixed economic landscape with contractions in GDP, cautionary notes on ECB rate cuts, and attention to upcoming ZEW Economic Sentiment figures, all influencing investor sentiment and demand for DAX stocks.