EURUSD
- EUR/USD is trading on the front foot below 1.0800 in the European morning on Monday. This suggests some strength in the Euro against the US Dollar, positioning itself in the lower range of 1.08.
- The US Dollar is posting small gains. It's important to note that the trading environment is described as holiday-thinned, implying lower liquidity due to reduced market participation during holidays.
- The US PPI, a measure of prices received by producers, climbed 0.3% MoM in January, marking the most substantial move since August. This indicates an increase in the prices of goods and services at the producer level, which can have implications for consumer prices in the future.
- Fed Chair Jerome Powell stated that the central bank needs greater confidence in the downward trajectory of inflation before considering rate cuts. This suggests a cautious approach, emphasizing the importance of being sure about the sustainability of any decision to cut rates.
- ECB President Christine Lagarde mentioned that the disinflation process would need to advance further for the central bank to be confident that it is sustainable. This indicates a similar cautious stance from the European Central Bank regarding inflation.
- The Euro seems to be holding ground against the US Dollar, and comments from both the Fed and ECB suggest a cautious approach to monetary policy, with a focus on inflation dynamics.
| SMA (20) | Falling |
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| RSI (14) | Slightly Rising |
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| MACD (12, 26, 9) | Falling |
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Closing statement: EUR/USD is influenced by a mix of factors, including US Dollar performance, PPI data, and central bank comments. The cautious stance of both the Fed and ECB is a notable aspect, and traders are preparing for potential market moves based on the upcoming release of the Fed Minutes.
GBPUSD
- GBP/USD is trending upwards. The British Pound is gaining strength against the US Dollar. The US Dollar is experiencing downward pressure. This downward pressure is attributed to market sentiment anticipating a Federal Reserve rate cut in the upcoming March meeting.
- Former Fed official James Bullard suggested at the National Association for Business Economics (NABE) conference that the Fed should consider lowering interest rates to prevent hindering economic activity due to higher rates. This indicates a dovish stance and supports the idea of potential rate cuts.
- Early Friday, the UK's Office for National Statistics reported that Retail Sales rose 3.4% on a monthly basis in January. This figure exceeded market expectations for an increase of 1.5%. Despite the positive data, there was no significant market reaction, suggesting that other factors are influencing the currency pair.
- The United Kingdom has officially entered a technical recession, characterized by two consecutive quarters of negative GDP growth. This economic backdrop could influence the Bank of England's monetary policy decisions.
- BoE policymaker Catharine L. Mann mentioned that the central bank needs at least one more set of inflation data before determining its next course of action. This indicates a cautious approach, with a focus on economic data, particularly inflation.
| SMA (20) | Slightly Falling |
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| RSI (14) | Slightly Rising |
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| MACD (12, 26, 9) | Slightly Falling |
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Closing statement: GBP/USD is influenced by a combination of factors, including the UK's economic data, the dovish stance from former Fed official James Bullard, and the anticipation of a Federal Reserve rate cut. The technical recession in the UK and the cautious approach of the Bank of England also play roles in shaping the currency pair's dynamics.
GOLD
- Gold price is starting the new week on a positive note, and buyers are extending the recovery seen in the previous week. This suggests a bullish sentiment for gold.
- Investors are reassessing their expectations for a US Federal Reserve (Fed) interest rate cut. This reassessment comes in the wake of hotter-than-expected US Consumer Price Index (CPI) and Producer Price Index (PPI) data. The strong economic data has pushed back expectations of a Fed rate cut from March to June.
- The US Dollar remains on the defensive at the start of the new week. Traders are repositioning their positions ahead of Wednesday’s Minutes of the February Fed meeting. A defensive stance on the Dollar typically supports gold prices.
- Last week, Gross Domestic Product (GDP) data from the UK and Japan indicated that both economies slipped into a technical recession. This is defined by two consecutive quarters of negative growth. Economic uncertainties and recessionary concerns often boost the demand for safe-haven assets like gold.
- The key focus for the week includes Wednesday’s Fed Minutes, where investors will scrutinize the details of the meeting for insights into the central bank's stance. Additionally, US S&P Global business PMI data on Thursday will be closely watched.
Closing statement: Gold is benefiting from a supportive environment, marked by economic uncertainties, reassessment of Fed expectations, and a defensive Dollar. The focus on upcoming economic events, especially the Fed Minutes, will likely guide gold's trajectory in the near term.
CRUDE OIL
- The West Texas Intermediate (WTI) oil price is retracing its recent gains, indicating a potential technical correction. This retracement could be influenced by subdued trading activity due to the Presidents' Day holiday in the United States.
- Market participants are expected to closely monitor demand conditions in China as they return from the week-long holiday. China is a major consumer of oil, and any insights into its demand trends can impact global oil prices.
- Crude oil prices are encountering challenges amid expectations that the Federal Reserve (Fed) will maintain its current interest rate. The previous week saw complex data influencing market dynamics. Oil prices are often sensitive to changes in interest rate expectations as they can impact economic growth and demand.
- The International Energy Agency (IEA) revised its global oil demand growth forecast for 2024 downwards in its latest monthly oil market report. This downward revision suggests concerns about the pace of future oil demand, which can affect oil prices.
- Despite ongoing production cuts by OPEC+ nations, the IEA anticipates a modest increase in inventories in the first quarter of the year. This indicates that, despite efforts to limit supply, there are factors contributing to inventory growth, which could impact oil prices.
- The overall sentiment for crude oil appears influenced by a combination of technical factors, global demand conditions (especially in China), expectations regarding the Fed's interest rate policy, and insights from the IEA's report.
| SMA (20) | Slightly Rising |
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| RSI (14) | Rising |
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| MACD (12, 26, 9) | Slightly Rising |
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Closing statement: Crude oil is experiencing a retracement in prices, influenced by various factors including global demand conditions, expectations around Fed interest rates, and insights from the IEA's report. Ongoing monitoring of these factors will be crucial for assessing the future trajectory of oil prices.
DAX
- German wholesale prices, which declined by 2.7% year-over-year in January, supported market bets on an April ECB rate cut. This decline may have implications for inflation expectations and the ECB's monetary policy stance.
- The ECB commentary played a significant role in shaping market expectations. While Bank of France Governor Francois Villeroy de Galhau supported bets on an April rate cut, ECB President Lagarde and others warned against cutting rates too early. The conflicting messages from ECB officials add an element of uncertainty to market sentiment.
- On Monday, investors are advised to closely track ECB commentary. Any indications of increasing support for an April ECB rate cut could influence buyer demand for DAX-listed stocks. Investors will likely be sensitive to signals regarding the economic outlook, inflation, and the ECB's monetary policy stance.
- The influence of corporate earnings on investor sentiment cannot be understated. Positive or negative surprises in corporate performance can impact stock prices. Additionally, the German Buba Monthly Report and press conference could provide insights into economic trends, inflation, and monetary policy, further influencing investor appetite for DAX-listed stocks.
| SMA (20) | Rising |
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| RSI (14) | Slightly Rising |
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| MACD (12, 26, 9) | Slightly Rising |
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Closing statement: The DAX's performance is closely tied to monetary policy expectations, particularly regarding the ECB's rate decisions. Conflicting signals from ECB officials create an environment of uncertainty. Monitoring upcoming ECB commentary, corporate earnings, and economic reports will be crucial for investors gauging the direction of the DAX.