EURUSD
- The EUR/USD pair has found support at the crucial 200-day Simple Moving Average (SMA) near the 1.0845 region, marking a bounce for the second consecutive day on Thursday.
- The positive momentum in the EUR/USD follows the better-than-expected release of US Retail Sales figures on Wednesday. The data suggests resilient consumer spending, indicating a robust economy and influencing expectations regarding the Federal Reserve's interest rate decisions.
- The strong US Retail Sales figures provide the Federal Reserve (Fed) with greater flexibility to maintain higher interest rates. This has led investors to scale back their expectations for a March rate cut, impacting the probability, which is now just above 50% according to CME Group’s FedWatch Tool, down from nearly 80% earlier in the week.
- The noticeable rebound in the US Dollar also contributes to the positive traction in EUR/USD. The Dollar's strength is influenced by the recalibration of expectations regarding Fed rate cuts.
- Returning to the European Central Bank (ECB), officials, including Knot, have emphasized that markets are anticipating rate cuts. They stress the importance of aligning factors for achieving the 2% inflation target by 2025.
| 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: the EUR/USD pair is experiencing a bounce from the 200-day SMA support, influenced by US economic data, evolving expectations regarding Fed rate cuts, and ECB officials' commentary.
GBPUSD
- The GBP/USD pair is witnessing increased buying interest for the second consecutive day on Wednesday, aiming to extend the rebound from levels below 1.2600, marking a one-month low.
- On Wednesday, the UK Office for National Statistics (ONS) reported that the Consumer Price Index (CPI) in the UK rose for the first time in 10 months, reaching 4.0% in December from the previous month's more-than-two-year low of 3.9%. This data has had a significant impact on market expectations and the Pound's value.
- The market quickly reacted to the CPI data, resulting in a shift in expectations. The probability of the Bank of England (BoE) initiating rate cuts by mid-May has decreased to around 60%, down from just over 80% late on Tuesday. This change is providing support to the British Pound (GBP).
- Speculations that the Federal Reserve (Fed) will maintain higher rates for an extended period, geopolitical risks, and concerns about China's economic situation are continuing to influence investor sentiment. These factors are contributing to the broader market dynamics.
- During the early North American session, traders are expected to take cues from the US economic docket, which includes Weekly Initial Jobless Claims, the Philly Fed Manufacturing Index, Building Permits, and Housing Starts.
| SMA (20) | Slightly 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 is rebounding from recent lows, driven by UK CPI data influencing BoE rate cut probabilities. Global factors, including Fed rate expectations and economic data, are contributing to the overall sentiment in the pair.
GOLD
- Gold prices are navigating a challenging market sentiment characterized by a lack of significant stimulus from China, geopolitical tensions in the Red Sea, and diminishing expectations for aggressive Federal Reserve (Fed) rate cuts. These factors collectively contribute to a weakened risk sentiment.
- The recent strong US Retail Sales data has played a role in supporting Fed policymakers' resistance against aggressive rate cut expectations. Retail sales in the US showed a 0.6% increase last month, driven by higher sales in clothing and accessory stores as well as online nonstore businesses.
- The trajectory of gold prices is expected to be closely tied to developments in Fed expectations. Investors are closely monitoring mid-tier US Jobless Claims and housing data for insights into potential shifts in monetary policy.
- As the Fed enters its 'blackout period' starting Saturday, speeches by Fed officials before this period will be crucial. These speeches can provide additional clarity on the central bank's stance and potential policy moves.
- Geopolitical developments, particularly tensions in the Red Sea, will continue to play a pivotal role in shaping broader market sentiment. This sentiment, in turn, influences the direction of the US Dollar and, consequently, the price of Gold.
Closing statement: In summary, gold prices are influenced by a mix of weak risk sentiment, recent US economic data, ongoing Fed expectations, speeches by Fed officials, and geopolitical developments. These factors collectively contribute to the dynamics of the gold market.
CRUDE OIL
- West Texas Intermediate (WTI) crude oil is maintaining stability, trading near $73.00 per barrel during the Asian session on Thursday. This suggests a certain level of equilibrium in the short-term price movements.
- Crude oil prices are on an upward trajectory, buoyed by the positive outlook presented in the Organization of the Petroleum Exporting Countries (OPEC) monthly report. OPEC anticipates robust growth in oil demand for both 2024 and 2025, with expectations of 2.25 million barrels per day (bpd) growth in 2024 and 1.85 million bpd in 2025.
- The persistent supply disruption in the Red Sea is acting as a mitigating factor against a significant decline in crude oil prices. Geopolitical tensions and disruptions can often contribute to the maintenance of higher price levels.
- The American Petroleum Institute (API) reported an unexpected increase in Weekly Crude Oil Stock by 0.483 million barrels for the week ending January 12. This contradicts the anticipated decline of 2.4 million barrels.
- The Energy Information Administration (EIA) is expected to release the Crude Oil Stocks Change report later in the North American session, providing further insights into the inventory situation.
| SMA (20) | Neutral | ||
| RSI (14) | Neutral | ||
| MACD (12, 26, 9) | Rising |
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Closing statement: In summary, the crude oil market is influenced by a combination of steady price movement, positive sentiments from OPEC's report, geopolitical considerations in the Red Sea, and data from the API and EIA reports, all of which collectively shape the current dynamics in the crude oil sector.
DAX
- Economic indicators from China on Wednesday had a significant impact on the DAX session. China's Q4 economic growth came in at 5.2%, slightly below the forecast of 5.3%. This data set the tone for market sentiment during the session.
- Losses in the DAX were exacerbated by commentary from the European Central Bank (ECB), as investors adjusted their expectations for a Q1 ECB rate cut. ECB President Christine Lagarde reiterated concerns about inflation, emphasizing that the battle against it is ongoing.
- Klaas Knot, the governor of the Dutch central bank, added to the cautious sentiment by stating, “Markets are getting ahead of themselves.” He expressed optimism about a credible return of inflation to 2% by 2025 but emphasized that challenges still need to be overcome.
- The upcoming session will place the ECB in the spotlight, with investors closely examining the ECB monetary policy meeting minutes from December. Insights from these minutes will be crucial in understanding the central bank's stance and potential future actions.
- ECB commentary remains a key factor. ECB President Christine Lagarde is scheduled to speak again on Thursday. Her remarks will be closely monitored for any nuances that could influence market perceptions.
| SMA (20) | Slightly Rising |
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| RSI (14) | Falling |
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| MACD (12, 26, 9) | Falling |
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Closing statement: In summary, the DAX experienced losses influenced by Chinese economic indicators, ECB commentary, and a cautious tone from the Dutch central bank governor. As the focus turns to ECB meeting minutes and continued commentary from Christine Lagarde, investors are keenly watching for signals about future monetary policy decisions.