EURUSD
- EUR/USD is trading lower near 1.0880 during the early European session on Thursday as the US Dollar attempts to retrace recent losses. This suggests a period of strength for the USD against the Euro.
- EUR/USD is trading lower near 1.0880 during the early European session on Thursday as the US Dollar attempts to retrace recent losses. This suggests a period of strength for the USD against the Euro.
- Contributing to the resurgence of buying interest in the pair, advanced Purchasing Managers' Index (PMI) figures in Germany and the Eurozone came in stronger than expected for the month of January. This signals a potential reactivation of economic activity in the region and hints at the idea of a soft landing for the Eurozone economy.
- It's essential to note that market participants have already factored in approximately 120 basis points in rate cuts for the current year. This reflects expectations of potential monetary policy easing by the European Central Bank (ECB).
- ECB President Lagarde has hinted at the possibility of a potential move during the summer. This forward guidance from the ECB can influence market sentiment and impact the Euro.
| SMA (20) | Slightly Falling |
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| RSI (14) | Slightly Falling |
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| MACD (12, 26, 9) | Falling |
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Closing statement: EUR/USD is under pressure as the US Dollar shows signs of strength. Strong PMI figures provide some support, but the overall market sentiment is influenced by expectations of ECB rate cuts, as indicated by both market pricing and hints from ECB officials.
GBPUSD
- GBP/USD is currently experiencing a downward trend, following a pullback from a recent two-week high at 1.2774 on Wednesday. This indicates a shift towards selling pressure on the Pound Sterling against the US Dollar.
- The Pound Sterling (GBP) has received support following positive Purchasing Managers Index (PMI) data from the United Kingdom (UK). Positive economic data can typically lead to currency strength.
- This upward momentum could not be sustained after the release of upbeat PMI data from the United States (US). The positive US PMI figures suggest strength in the US economy, impacting the relative strength of GBP/USD.
- The positive UK PMI data may suggest that the Bank of England (BoE) may choose to refrain from implementing monetary policy loosening measures in the upcoming February meeting. Central bank decisions and policy stances can significantly impact currency pairs.
- The positive S&P Global Purchasing Managers Index (PMI) data from the United States (US) on Wednesday could reduce the probability of rate cuts by the Federal Reserve (Fed) in March. Changes in expectations regarding central bank actions often influence currency pairs.
| SMA (20) | Neutral | |
| RSI (14) | Slightly Rising |
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| MACD (12, 26, 9) | Slightly Falling |
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Closing statement: GBP/USD is in a downward trend, influenced by a combination of factors including initial UK PMI support, the impact of strong US PMI data, and the potential influence on central bank policy decisions by both the Bank of England (BoE) and the Federal Reserve (Fed).
GOLD
- In the American session, the US Dollar surged, driving XAU/USD down to around $2,011, marking a fresh weekly low. Changes in the US Dollar often have an inverse relationship with gold prices.
- Upbeat United States (US) data contributed to the strength of the local currency (USD). S&P Global published the preliminary estimate of the January Producer Manager Indexes (PMIs), indicating an improvement in manufacturing output to 50.3 from 47.9 previously. The Services PMI also surpassed expectations, coming in at 52.9.
- Market participants appear reluctant and are opting to wait for the fourth-quarter US GDP growth figures, due later in the North American session. This hesitation is likely influenced by the potential impact of significant economic indicators on the US Dollar and, consequently, on gold prices.
- The fourth-quarter US GDP growth figures will be accompanied by the release of Durable Goods Orders and the usual Weekly Initial Jobless Claims data. These data points are crucial indicators of the health of the US economy and can influence currency and commodity markets.
- Traders are looking ahead to the US Personal Consumption Expenditures (PCE) Price Index on Friday. This is a key inflation measure closely monitored by the Federal Reserve. The data release might provide further impetus to the USD and impact short-term trading opportunities around the gold price.
Closing statement: XAU/USD experienced downward pressure due to a surge in the US Dollar, influenced by upbeat US data. Market participants are cautious and awaiting key economic indicators, including US GDP growth figures and the PCE Price Index, which could provide further direction for gold prices.
CRUDE OIL
- The WTI oil price is showing an upward trend, nearing $75.50 per barrel during the Asian session on Thursday. This indicates positive momentum in the oil market.
- The recent strength in Crude oil prices is attributed to the People's Bank of China (PBoC) considering a Medium-term Lending Facility (MLF) rate cut. Central bank decisions and economic developments in major economies, such as China, can significantly impact oil prices.
- According to the Energy Information Administration's (EIA) weekly report released on Wednesday, there was a substantial decline of 9.233 million barrels in Crude Oil Stocks Change for the week ending on January 19. This reduction in inventory often contributes to upward pressure on oil prices.
- Severe weather conditions, including storms and cold snaps, have disrupted Crude oil production and transportation, especially in North Dakota. These disruptions have led to fluctuations in inventory levels, affecting the overall supply and demand dynamics in the oil market.
- US oilfield technology firm Baker Hughes has stated that it anticipates a decline in spending on drilling and well completion in North America in 2024. This outlook is attributed to ongoing volatility in commodity prices, emphasizing the influence of market conditions on investment decisions in the oil sector.
| SMA (20) | Neutral | ||
| RSI (14) | Slightly Rising |
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| MACD (12, 26, 9) | Rising |
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Closing statement: In summary, the recent increase in WTI oil prices is driven by a combination of factors, including considerations of a rate cut by the PBoC, a notable decline in Crude oil stocks according to the EIA report, and disruptions in production due to severe weather conditions. Additionally, the anticipation of reduced spending in the oil sector by Baker Hughes indicates market concerns about volatility in commodity prices.
DAX
- Prior to the European session, news of the People's Bank of China (PBoC) announcing a 0.5 percentage point cut to the Reserve Requirement Ratio (RRR) set a positive tone for the market. Additionally, Beijing signaled the likelihood of more stimulus measures, contributing to a favorable environment for riskier assets.
- Positive developments in the manufacturing sector across Germany and the Eurozone further supported the appetite for riskier assets. The German Manufacturing Purchasing Managers' Index (PMI) increased from 43.3 to 45.5, while the Eurozone Manufacturing PMI rose from 44.4 to 46.6 in January. These improvements in economic indicators are conducive to investor confidence.
- Strong corporate earnings results from German companies, including Siemens Energy AG and SAP, fueled investor appetite for DAX-listed stocks. Positive earnings reports can have a significant impact on market sentiment and stock prices.
- On Thursday, the German Ifo Business Climate Index will be a focal point early in the European session. Economists forecast an increase in the index from 86.4 to 86.7 in January. The Ifo Index is a key indicator of business sentiment in Germany and can influence market perceptions.
- Economists expect the European Central Bank (ECB) to leave interest rates at 4.5%. However, there is market uncertainty regarding the ECB's plans for interest rates, particularly the potential for rate cuts. The ECB press conference will be closely watched for insights into the central bank's monetary policy stance.
| SMA (20) | Neutral | ||
| RSI (14) | Slightly Rising |
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| MACD (12, 26, 9) | Falling |
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Closing statement: In summary, the positive news from the PBoC, improved manufacturing sector conditions, strong German corporate earnings, and upcoming economic indicators, including the Ifo Business Climate Index, are shaping the positive sentiment in the DAX. However, the market is cautious about potential ECB actions, making the press conference a key event for investors.