Daily Analysis 16/04/2025

• GBP/USD Price: The British Pound continues to gain ground, with GBP/USD trading near 1.3270 during the European session on Wednesday. This marks a sustained rally since April 8, largely supported by softening US Dollar sentiment.
• UK Inflation: The UK’s March CPI came in at 2.6% y/y, down from 2.8% in February, slightly easing inflationary pressures. While this provides some relief, inflation remains above the BoE’s 2% target, keeping policy decisions in focus.
• Labour Market: UK job market data show falling job vacancies to pre-pandemic levels, prompting debate within the Bank of England's Monetary Policy Committee (MPC). Some economists anticipate a potential policy adjustment in response to cooling labor demand.
• US Tariff Probe: President Trump’s new probe into tariffs on critical minerals adds another layer of uncertainty to US-UK and global trade dynamics, though the direct impact on GBP/USD remains modest for now.
• Key Fed Speakers: Traders will closely monitor remarks from Fed Chair Jerome Powell and other Fed officials later today. Their guidance on the US economic outlook and rate path will be pivotal in shaping short-term USD direction and, by extension, GBP/USD movement.

Closing statement: GBP/USD stays supported by waning Fed rate hike expectations and resilient UK macro data, though labour market softness and trade concerns introduce uncertainty. Fed commentary later today could set the tone for the next directional move.

• XAU/USD Price: Gold (XAU/USD) continues its historic surge, trading near $3,300 per ounce in the Asian session. Safe-haven demand remains elevated amid escalating trade tensions and regulatory shocks in the tech sector.
• Nvidia Ban: The US government's indefinite ban on Nvidia’s H20 chip sales to China and the company’s $5.5 billion expected charge sent shockwaves through tech markets. Gold benefits from mounting fears of broader retaliation and market volatility.
• Tariff Threats: Trump’s vow to unveil tariffs on semiconductors within a week, and hints at future levies on pharmaceutical imports, are intensifying uncertainty and further reinforcing the bid for gold.
• Chinese Data: China’s Q1 GDP beat expectations at +5.4% y/y, and industrial output jumped to +7.7% y/y in March. However, concerns persist that geopolitical tensions may overshadow improving fundamentals, maintaining demand for defensive assets.
• Powell's Comments: Markets now turn to Fed Chair Jerome Powell's speech, with traders seeking clarity on the future rate path. His stance will be critical in shaping US Dollar direction and gold’s momentum.

Closing statement: Gold remains in strong bullish territory, fueled by tech export restrictions, looming tariffs, and investor uncertainty. While positive Chinese data offers a counterweight, sentiment is firmly anchored by geopolitical risks and upcoming Fed cues.

• Crude Oil Price: West Texas Intermediate is currently trading at $60.60 in early European trading. This reflects a subdued market tone, with traders cautious amid broader macroeconomic and policy uncertainties.
• OPEC Demand Forecast: OPEC revised its demand outlook downward, citing the unpredictability of US trade policy as a key factor. This introduces a bearish sentiment, as reduced demand projections typically pressure prices.
• IEA Projections: The IEA echoed concerns, projecting slower global oil demand growth in 2025—the slowest in five years. The trade tariffs imposed by Trump are seen as a major drag on economic and energy consumption growth.
• Price Drop: WTI has declined over 14% since the announcement of tariffs on April 2. In addition, OPEC+ plans to increase output in May, exacerbating the downward pressure on prices due to a looming supply glut.
• US Crude Stockpiles: The latest API report shows an inventory build of 2.4 million barrels, reversing last week’s drawdown. Rising stockpiles reflect weaker demand or oversupply—both bearish indicators for crude oil.

Closing statement: Crude oil (WTI) is currently under significant downward pressure due to a combination of weaker demand projections, increased supply expectations, and geopolitical trade tensions. If these trends persist, further price depreciation is likely, though any reversal in trade policy or supply cuts by OPEC+ could offer temporary support.

• DAX Price: The DAX rose by 1.43%, extending its strong momentum from Monday's 2.85% rally, closing at 21,254. However, the lack of meaningful progress in US-EU trade negotiations limited further upside, reflecting lingering uncertainty.
• Tariff Impact: German-listed stocks, especially in automotive, tech, and banking sectors, gained from recent tariff-driven optimism. Investors responded to improved sentiment that tariffs may ultimately benefit German exports, at least in the short term.
• Wholesale Inflation: Wholesale prices increased by 1.3% in March, a deceleration from February’s 1.6%. This points to weaker demand, as wholesalers pass cost reductions to customers—contributing to a milder inflation outlook.
• Eurozone Inflation: Preliminary Eurozone inflation for March came in at 2.2%, slightly down from 2.3%, with final data pending on April 16. This moderating inflation trend will play a key role in ECB’s upcoming policy decision, potentially favoring a dovish stance.
• US Retail Sales: Markets are watching April 16’s US retail sales release, with expectations of a 1.3% rise in March vs. 0.2% in February. Given US private consumption’s significant GDP share, strong retail data may signal resilience in the global demand outlook, indirectly supporting export-driven indices like DAX.

Closing statement: The DAX is benefiting from sector-specific strength and improved sentiment, but upside is constrained by ongoing trade negotiation uncertainties and inflation data in both the Eurozone and US. Continued momentum will depend on ECB policy tone and US economic indicators, with upside potential if global demand appears to firm.