EURUSD
- The EUR/USD is edging higher, nearing 1.0890 during the early European session on Tuesday. This reflects a certain level of positive sentiment in the euro, but the extent of the gain remains limited.
- The pair is consolidating due to uncertainty over the timing of a potential interest rate cut by the European Central Bank (ECB). Market participants have already factored in approximately 120 basis points in rate cuts for the current year, but the precise timing remains a point of debate.
- There's a growing debate between market participants and the ECB's rate-setters regarding when the central bank might start reducing the region's policy rate. This uncertainty is contributing to the consolidation of the EUR/USD pair.
- Despite inflation running well above the bank's target, European policymakers seem inclined to maintain a restrictive stance. This apparent contradiction between inflation levels and policy decisions could influence the euro's performance.
- In the US, investors are assigning just over a 40% probability to a reduction in the Fed's Federal Funds Target Rate (FFTR) at the March 20 meeting, according to the FedWatch Tool tracked by CME Group. This indicates expectations in the market regarding the Fed's stance.
| SMA (20) | Neutral | ||
| RSI (14) | Slightly Falling |
| |
| MACD (12, 26, 9) | Falling |
|
|
Closing statement: In summary, the EUR/USD is experiencing a modest uptick, but uncertainty over the ECB's rate decisions, despite high inflation, is creating a consolidation pattern. The debate between market participants and policymakers adds an additional layer of complexity to the euro's performance.
GBPUSD
- GBP/USD is on an upward trajectory for the second successive session on Tuesday, inching higher to nearly 1.2740. This reflects the positive performance of the Pound Sterling.
- The expectations of a status quo in the Bank of England's (BoE) monetary policy contribute to the positive performance of the Pound Sterling. The anticipation of stability in the BoE's policy is supporting the pair.
- Investors remain indecisive about the timing of the Federal Reserve (Fed) policy pivot. There's uncertainty in the market regarding when the Fed might make changes to its policy, and this is influencing the dynamics of GBP/USD.
- Investors will be closely monitoring the preliminary UK S&P Global PMI data for January, set to be released on Wednesday. This economic data release is expected to provide insights into the economic activity in the UK.
- The release of the Richmond Fed Manufacturing Index for January today will provide further insights into the state of the US economy. This can impact the broader market sentiment and influence GBP/USD
| SMA (20) | Slightly Rising |
|
| RSI (14) | Slightly Rising |
|
| MACD (12, 26, 9) | Slightly Falling |
|
Closing statement: GBP/USD is moving higher, supported by expectations of a stable BoE policy. Investor indecisiveness regarding the Fed's policy pivot and upcoming economic data releases from both the UK and the US are contributing to the pair's dynamics.
GOLD
- Gold price attracts some dip-buying on Tuesday, recovering a major part of the overnight modest losses. This indicates resilience in the demand for gold despite recent fluctuations.
- There is a certain quotient of caution among market participants as investors await critical first-tier data spread throughout the week. The uncertainty in the market is influencing the trading behavior around gold.
- The United States (US) has quite a busy calendar, with the release of the preliminary estimate of the Q4 Gross Domestic Product (GDP). The annualized figure is expected to be 2%, down from 4.9% in Q3. This data release can impact the valuation of gold.
- Later this week, the US will offer the December Core Personal Consumption Expenditures (PCE) Price Index, the Federal Reserve’s (Fed) favorite inflation gauge. The PCE Price Index is foreseen to be up 0.2% MoM and 3.0% YoY, slightly below November figures. This will be crucial for gauging inflationary pressures.
- In the middle of the week, several central banks will report their monetary policy decisions. The broader market sentiment influenced by these decisions, along with the anticipation of the Federal Reserve's meeting scheduled for the next week, can impact gold prices.
Closing statement: In summary, gold is experiencing a recovery, and caution is prevailing among investors. The upcoming US economic data, especially GDP and the Core PCE Price Index, will likely play a significant role in determining gold's direction. Additionally, central bank decisions will be closely watched.
CRUDE OIL
- West Texas Intermediate (WTI) price extends its gains for the second successive session, reaching near $74.90 per barrel during the Asian session on Tuesday. This signals a continued upward trend in crude oil prices.
- The rise in crude oil prices is attributed to concerns over global energy supplies, sparked by a drone strike on Russia's Novatek by Ukraine. Geopolitical events often have a significant impact on oil markets, influencing sentiment and prices.
- Disruptions in Crude production from the United States (US) due to extreme cold weather have contributed to the upward pressure on oil prices. Weather-related disturbances can impact both production and transportation of oil.
- In Libya, the state-run National Oil Corporation has reported that the Sharara oilfield resumed operations on Sunday. This development brings back the supply of 270,000 barrels per day (bpd), contributing to 1 million bpd for the OPEC country. Changes in production levels from major oil-producing nations can influence the global supply-demand balance.
- Market participants will likely watch the upcoming Crude Oil Stock data closely, with the American Petroleum Institute (API) set to release its report for the week ending on January 19 on Tuesday. Inventory data provides insights into the balance between supply and demand in the oil market.
| SMA (20) | Neutral | ||
| RSI (14) | Slightly Rising |
| |
| MACD (12, 26, 9) | Rising |
|
|
Closing statement: In summary, geopolitical concerns, weather-related disruptions, and developments in major oil-producing regions are contributing to the recent gains in crude oil prices. The upcoming Crude Oil Stock data will be closely monitored for further market insights.
DAX
- On Monday, investors looked ahead to key economic indicators and the European Central Bank (ECB) monetary policy decision. The DAX is influenced by the economic outlook and central bank decisions.
- A higher-for-longer ECB rate path remains a headwind for the DAX. The rate environment set by the central bank has implications for borrowing costs and investment decisions in the Eurozone.
- Softer inflationary pressures across the Euro area could allow the ECB to begin discussions about rate cuts. An increasing threat of a Eurozone recession could also incentivize the ECB to consider rate cuts. Changes in interest rates can impact equity markets.
- On Tuesday, Eurozone consumer confidence will garner investor interest. A pickup in consumer confidence could support buyer demand for DAX-listed stocks, reflecting positively on the overall market sentiment.
- Beyond the numbers, investors must track ECB commentary. Speculation about more stimulus measures from Beijing to bolster the Chinese economy also needs consideration. Global economic dynamics and policy decisions have a ripple effect on the DAX.
| SMA (20) | Slightly Falling |
| |
| RSI (14) | Slightly Falling |
| |
| MACD (12, 26, 9) | Falling |
|
|
Closing statement: the DAX's performance is influenced by economic indicators, the ECB's rate path, potential rate cuts, consumer confidence, and global stimulus measures. Investors are closely monitoring these factors for insights into the near-term trends in the DAX.