EURUSD
- The EUR/USD is recovering from recent lows below 1.0900 after a sharp sell-off to five-week lows of 1.0862 on Tuesday, highlighting the current bearish momentum.
- The US Dollar is taking a pause as investors assess the Federal Reserve's rate outlook amid ongoing geopolitical risks, contributing to mixed sentiment in the EUR/USD pair.
- Comments from ECB officials, while favoring rate cuts, have introduced a contrast in timing expectations, impacting investor sentiment. CME Group’s FedWatch Tool reflects a slight decrease in the probability of a March rate cut.
- CME Group’s FedWatch Tool now sees the probability of a rate cut by the Fed at around 70% in March, compared to nearly 80% the day before, indicating a nuanced shift in market expectations.
- Despite an improvement in Economic Sentiment in both Germany (15.2) and the broader Eurozone (22.7) for the current month, the positive data did not provide substantial support to the European currency.
| SMA (20) | Slightly Rising |
| |
| RSI (14) | Slightly Falling |
| |
| MACD (12, 26, 9) | Falling |
|
|
Closing statement: In summary, the EUR/USD is grappling with bearish momentum, nuanced expectations regarding ECB rate cuts, and ongoing geopolitical risks, with economic sentiment improvements offering limited support.
GBPUSD
- GBP/USD is experiencing a rebound, approaching 1.2650, supported by an unexpected increase in the headline UK annual CPI inflation data, which is bolstering the Pound Sterling.
- Both headline and core annual inflation in the UK showed an unexpected increase towards the end of the previous year, with UK December CPI at +4.0% vs. +3.8% y/y expected, keeping the Bank of England cautious in the new year.
- The robust inflation data dashes hopes of aggressive Bank of England (BoE) interest rate cuts in the coming year, contributing to the strength of the Pound Sterling.
- In the US, the NY Empire State Manufacturing Index considerably weakened to -43.7 in January, indicating challenges in the manufacturing sector.
- From a technical perspective, GBP/USD is holding below the 100-hour Exponential Moving Average (EMA) on the four-hour chart, suggesting a favorable outlook for further downside movement.
| SMA (20) | Slightly Rising |
|
| RSI (14) | Slightly Falling |
|
| MACD (12, 26, 9) | Slightly Falling |
|
Closing statement: In summary, GBP/USD is seeing a rebound fuelled by surprising UK inflation data, impacting BoE rate cut expectations, while challenges in the US manufacturing sector add to the currency pair's dynamics. .
GOLD
- Gold price is consolidating around $2,025 in Wednesday's Asian trading, recovering from heavy losses incurred on Tuesday. This correction comes amid unabated demand for the US Dollar, fueled by escalating Middle East geopolitical tensions and reduced expectations for aggressive US Fed rate cuts this year.
- Investors scaled back expectations for aggressive Fed rate cuts after Fed Governor Christopher Waller delivered a less dovish speech, contributing to the US Dollar's resurgence.
- In Wednesday's trading, risk aversion continues to dominate the market sentiment, providing support to the US Dollar near multi-week highs. This sentiment is keeping Gold vulnerable.
- Gold remains susceptible to persistent geopolitical tensions in the Red Sea, keeping investors cautious and supporting the US Dollar's safe-haven status.
- Looking ahead, market participants will closely watch the US Retail Sales data for fresh insights into the timing and pace of potential Fed rate cuts, influencing Gold's trajectory.
Closing statement: In summary, Gold is recovering amid a correction, influenced by geopolitical tensions, the US Dollar's safe-haven status, and changing expectations regarding Fed rate cuts, with upcoming US Retail Sales data holding significance.
CRUDE OIL
- West Texas Intermediate (WTI) price is hovering around $71.90 per barrel in Wednesday's Asian session, showing a degree of stability in the oil market.
- The WTI Crude oil price faced downward pressure due to a slight increase in net output from US Crude oil production facilities during the week. This increase in production is contributing to the broader supply dynamics.
- The completion and expansion of the Trans Mountain pipeline in Canada are noteworthy factors influencing Crude oil prices. This infrastructure improvement facilitates the transportation of Crude oil from production areas to refineries and export terminals, potentially ramping up North American crude oil output.
- Despite increased production, the ongoing supply disruption in the Red Sea is acting as a deterrent to more significant downward movement in Crude oil prices. Geopolitical tensions and supply concerns often impact oil prices.
- Shell's decision to sell its Nigerian onshore oil and gas subsidiary to a consortium of five primarily local companies for up to $2.4 billion is a significant development in the energy sector, potentially influencing market dynamics.
| SMA (20) | Neutral | |
| RSI (14) | Neutral | |
| MACD (12, 26, 9) | Slightly Rising |
|
Closing statement: In summary, WTI prices are relatively stable, influenced by factors like increased US production, pipeline expansions, geopolitical disruptions in the Red Sea, and strategic moves by major energy companies.
DAX
- Finalized German inflation numbers for December drew early investor interest on Tuesday. The annual inflation rate accelerated from 3.2% to 3.7%, in line with preliminary numbers, impacting early market sentiment.
- ZEW Economic indicators on Tuesday signaled an improvement in sentiment toward the German economy. The German ZEW Economic Sentiment Index increased from 12.8 to 15.2, reflecting positive perceptions among investors.
- On Wednesday, investor attention is turning to the finalized inflation numbers for the Eurozone. Upward revisions to preliminary figures could impact expectations regarding a potential ECB rate cut in the first half of 2024.
- Beyond economic indicators, investors must consider ECB commentary. ECB President Christine Lagarde is scheduled to speak on Wednesday, and her remarks could provide insights into the central bank's stance on monetary policy.
- Near-term trends in the DAX are contingent on Eurozone inflation figures, US retail sales data, and central bank commentary. Any reduction in expectations for ECB and Fed rate cuts could potentially result in further losses for the DAX.
| SMA (20) | Slightly Rising |
| |
| RSI (14) | Falling |
|
|
| MACD (12, 26, 9) | Falling |
|
|
Closing statement: In summary, recent data on German inflation and economic sentiment, coupled with upcoming Eurozone inflation numbers and ECB commentary, are key factors influencing the current trends and potential future movements in the DAX.