EURUSD
- Extended Gains: EUR/USD is extending gains above 1.0800 in the European morning on Thursday, marking a continuation of the recent positive momentum.
- Fed Member Perspective: Voter member T. Barkin (Richmond) from the Federal Reserve highlighted the notably positive overall perspective of US data concerning inflation and employment. This adds context to the ongoing discussion about the trajectory of the US economy.
- Concerns on Inflation and CPI: Despite the positive outlook, recent figures on the Producer Price Index (PPI) and Consumer Price Index (CPI) have been less favorable, suggesting a reliance on goods for disinflation. This may impact the Federal Reserve's considerations about future policy moves.
- FOMC Minutes Insights: Insights from the Federal Open Market Committee (FOMC) Minutes indicate caution among staff members about achieving further inflation reductions. The economic forecast is slightly more optimistic than the December projection, providing context for the Fed's current stance.
- ECB Interest Rate Cut: Regarding the European Central Bank (ECB), there are suggestions that an interest rate cut could come as early as in the summer. This is based on the latest comments from ECB President C. Lagarde and other officials, signaling potential policy adjustments.
| SMA (20) | Falling |
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| RSI (14) | Rising |
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| MACD (12, 26, 9) | Slightly Rising |
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Closing statement: EUR/USD's extended gains, coupled with insights from the Federal Reserve and the European Central Bank, paint a nuanced picture. While there is optimism in US data, concerns about inflation and discussions on potential ECB rate cuts add layers to the currency pair's dynamics. As the market digests these factors, investors are likely to closely monitor upcoming economic indicators for further clarity.
GBPUSD
- Mild Gains: GBP/USD posts mild gains, trading near the mid-1.2600s in early Europe on Thursday, benefitting from a weaker US Dollar and an improved risk appetite in the market.
- BoE Governor Testimony: During the testimony before the UK Treasury Select Committee on Tuesday, Bank of England (BoE) Governor Andrew Bailey reiterated the central bank's focus on sustained progress in reducing persistent elements of inflation.
- Market Expectations for Rate Cuts: Governor Bailey acknowledged market expectations for rate cuts this year, emphasizing that while the BoE does not endorse the market curve, it is not unreasonable for the market to anticipate policy adjustments.
- Warning on Delaying Rate Cuts: BoE member Swati Dhingra expressed concerns that delaying interest rate cuts could lead to increased living costs and potentially result in a harsh economic downturn for the United Kingdom (UK).
- Upcoming Economic Indicators: Traders are set to monitor the UK S&P Global/CIPS PMI and the US S&P Global PMI for February. Additionally, attention will be on the weekly Initial Jobless Claims, Existing Home Sales, and the Chicago Fed National Activity Index scheduled for Thursday.
| SMA (20) | Slightly Falling |
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| RSI (14) | Rising |
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| MACD (12, 26, 9) | Slightly Falling |
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Closing statement: GBP/USD's mild gains amid a weaker US Dollar are influenced by the Bank of England's focus on inflation reduction. Governor Bailey's acknowledgment of market expectations and warnings about delaying rate cuts add layers to the pair's dynamics. With upcoming economic indicators on the horizon, market participants will scrutinize data for insights into the potential trajectory of GBP/USD.
GOLD
- Bullish Momentum Resumes: Gold price exhibits renewed bullish momentum, hovering near $2,030 early Thursday, indicating a continuation of its upward trajectory after a brief pause in the recovery rally on Wednesday.
- Hawkish Fed Minutes: Despite the Fed Minutes being perceived as hawkish, the US Dollar did not sustain lasting positive gains. The Minutes contributed to a shift in market expectations, with a reduced probability of a rate cut in May.
- Changing Rate Cut Probabilities: Markets now price in approximately a 30% chance of the Fed initiating rate cuts in May, significantly lower than the over 80% probability observed a month ago. For the June meeting, the probability of a rate cut stands at 70%, down from 77% seen a day ago.
- Upcoming Business PMIs: Attention shifts towards preliminary readings of business Purchasing Managers' Index (PMI) figures for the Eurozone, UK, and US later in the day, providing insights into the economic sentiment and activity in these regions.
- FOMC Speakers: Notable speakers from the Federal Open Market Committee (FOMC), including Cook, Kashkari, Jefferson, and Harker, are scheduled to speak, potentially offering further insights into the central bank's stance.
Closing statement: Gold's resurgence above $2,030 is underscored by changing market expectations following the hawkish Fed Minutes. The shift in rate cut probabilities and the upcoming business PMIs will be pivotal in shaping the near-term dynamics of XAU/USD. Additionally, insights from FOMC speakers may add nuances to the prevailing market sentiment.
CRUDE OIL
- WTI Crude Oil Rebound: West Texas Intermediate (WTI) US Crude Oil witnessed a rebound on Wednesday, propelled by ongoing concerns about possible supply lane constraints amid geopolitical tensions in the Middle East.
- Supply Lane Constraints: Traders are pricing in potential disruptions in supply lanes, contributing to the higher prices of crude oil. The geopolitical turmoil in the Middle East is a key factor influencing market sentiment.
- Hopes of Increased Refinery Activity: Expectations of expanded US refinery activity, seen as a factor that could mitigate the buildup of US Crude Oil supplies, are providing support to barrel prices.
- Unexpected Rise in Crude Oil Stocks: The American Petroleum Institute (API) reported an unexpected increase in US Crude Oil supply stocks for the week ending February 16, with an additional 7.168 million barrels added to the US supply.
- Refineries Coming Back Online: US Crude Oil refineries, which experienced disruptions in 2022 due to overhauls, upgrades, and security concerns, are gradually resuming operations. The recovery in refined petroleum product output contributes to the overall positive sentiment.
| SMA (20) | Rising |
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| RSI (14) | Rising |
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| MACD (12, 26, 9) | Rising |
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Closing statement: WTI Crude Oil's rebound is fueled by concerns over potential supply disruptions in the Middle East and hopes of increased refinery activity. The unexpected rise in Crude Oil stocks, along with the ongoing geopolitical dynamics, will be closely watched. Traders are awaiting the US S&P Global Services Purchasing Managers Index (PMI) for February and the Energy Information Administration (EIA) Crude Oil stockpiles report for further market direction.
DAX
- Eurozone Consumer Confidence Boost: A surge in Eurozone consumer confidence on Wednesday contributed to increased demand for DAX-listed stocks, with the Eurozone Consumer Confidence Index rising from -16.1 to -15.5 in February.
- Continued Support for ECB Rate Cut: Market sentiments favoring an April ECB rate cut persist, driving the appetite for riskier assets. Despite recent ECB warnings about early interest rate cuts, investors anticipate a move to stimulate the economy.
- FOMC Meeting Minutes Insights: The FOMC Meeting Minutes, released after the European closing bell, aligned with recent statements from Fed speakers. The focus remains on gaining confidence in sustainable inflation before considering rate cuts.
- Private Sector PMI Numbers Awaited: Thursday brings attention to private sector PMI numbers, where a more pronounced contraction across the Eurozone private sector could fuel expectations for a March ECB rate cut.
- ECB Executive Board Commentary: ECB Executive Board Members Edouard Fernandez-Bollo and Anneli Tuominen are scheduled to speak, and their remarks will be closely monitored. Supportive comments for an earlier ECB rate cut might influence buyer demand for DAX-listed stocks.
| SMA (20) | Rising |
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| RSI (14) | Rising |
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| MACD (12, 26, 9) | Slightly Rising |
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Closing statement: DAX's recent performance benefited from improved Eurozone consumer confidence, ongoing expectations of an ECB rate cut, and insights from the FOMC Meeting Minutes. Attention now turns to Eurozone private sector PMI numbers and ECB executive commentary, which could shape investor sentiment and demand for DAX-listed stocks.