EURUSD
- On Monday, the EUR/USD is trading on the defensive, staying below the 1.0850 level in European trading. This defensive stance is attributed to renewed demand for the US Dollar, driven by rising geopolitical tension in the Middle East. Geopolitical events can lead to a flight to safety, and the US Dollar, being a major reserve currency, tends to benefit in such scenarios.
- The European Central Bank (ECB) held its policy meeting in January, leaving key rates unchanged, as was widely expected. The lack of significant changes to the statement language during the meeting could contribute to the cautious tone in the currency market. Central bank decisions and statements often have a notable impact on currency pairs.
- ECB Governing Council member Klaas Knot's statement on Sunday added to the cautious sentiment. He mentioned that the central bank would need to see proof of slowing wage growth in the Eurozone before considering cutting interest rates. Such comments from influential ECB members provide insights into the central bank's stance on monetary policy and can influence the Euro.
- Despite the ECB event, the Euro showed resilience initially but failed to attract buyers. This suggests that market participants might be adopting a wait-and-see approach, monitoring developments in both monetary policy and geopolitical situations before committing to significant positions.
| SMA (20) | Falling |
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| RSI (14) | Slightly Falling |
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| MACD (12, 26, 9) | Falling |
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Closing statement: In summary, the cautious tone in EUR/USD below 1.0850 was driven by renewed US Dollar demand amid geopolitical tension. The outcome of the ECB meeting and comments from ECB members, particularly regarding the conditions for rate cuts, contributed to the overall sentiment.
GBPUSD
- GBP/USD was observed trading above the 1.2700 level, benefiting from fresh demand as the US Dollar recovery stalled in early European trading on Monday. Currency pairs often experience movements based on the relative strength or weakness of the two currencies involved, and in this case, the Pound found support against a temporarily weakened US Dollar.
- The focus remains on the outcome of the two-day Federal Open Market Committee (FOMC) monetary policy meeting scheduled to start on Tuesday. The uncertainty over the timing of the first interest rate cut by the Federal Reserve can lead to fluctuations in currency pairs involving the US Dollar, including GBP/USD.
- Data released last week showed that US inflation rose modestly in December, reinforcing expectations that the Federal Reserve might cut rates by the middle of 2024. The market often reacts to economic indicators as they shape expectations about central bank policies, influencing currency movements.
- The report mentioned stronger growth in Personal Incomes leading to increased spending, coupled with the upbeat US Q4 GDP print. These factors suggested that the US economy is still in good shape. Economic data releases can impact currency pairs by influencing perceptions of economic health and policy outlook.
- Expectations that a slight pickup in Britain's stagnant economy could delay the initiation of the Bank of England's (BoE) policy easing cycle were noted. Economic conditions and central bank policies in both the UK and the US can contribute to the overall dynamics of the GBP/USD pair.
| SMA (20) | Neutral | |
| RSI (14) | Neutral |
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| MACD (12, 26, 9) | Slightly Falling |
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Closing statement: GBP/USD traded above 1.2700, supported by a stalling US Dollar recovery, and the focus was on the upcoming FOMC meeting. US economic data and expectations for rate cuts, along with perceptions of the UK economy, played roles in influencing the pair.
GOLD
- Gold prices were noted to be drawing support from escalating geopolitical tensions in the Middle East. Gold is often considered a safe-haven asset, and its prices can be influenced by geopolitical uncertainties, with investors seeking refuge in precious metals during times of heightened geopolitical risks.
- The Federal Open Market Committee (FOMC) meeting scheduled from Tuesday to Wednesday was highlighted. While no change in interest rates is expected, the press conference associated with the meeting is deemed crucial. Traders are anticipated to closely watch for any dovish comments from Fed Chairman Jerome Powell, which could potentially weaken the US Dollar. The relationship between interest rates and gold prices is a key factor influencing the precious metal.
- Market dynamics were noted with markets currently pricing in about a 48% probability that the Federal Reserve would deliver a rate cut in March. This probability had decreased from the 60% seen a week ago. Expectations about future interest rates can influence the attractiveness of non-interest-bearing assets like gold.
- Optimism about more stimulus from China faded as concerns about the country's property market resurfaced. The mention of a Hong Kong court ordering Evergrande, a highly indebted property developer, to liquidate, was noted. Such events can impact investor confidence and influence market sentiment.
- Investors were observed exercising caution, potentially waiting on the sidelines ahead of key central bank events and important US macroeconomic data scheduled for the beginning of the month. Events such as the Nonfarm Payrolls report, which provides insights into the US labor market, can impact the US Dollar, and consequently influence gold prices.
Closing statement: Gold prices were supported by geopolitical tensions, with a focus on the FOMC meeting and potential USD movements. Market expectations for a Fed rate cut, fading optimism about Chinese stimulus, and investor caution ahead of key events were key factors influencing the dynamics of XAU/USD.
CRUDE OIL
- West Texas Intermediate (WTI) oil prices were noted to be on an upward trajectory for the fourth consecutive session, trading around $78.30 per barrel on Monday.
- The surge in oil prices was attributed to concerns about potential supply disruptions following a missile attack on a fuel tanker in the Red Sea. Geopolitical events, especially those affecting key oil transportation routes, can lead to supply concerns and impact oil prices.
- The Organization of the Petroleum Exporting Countries and its allies (OPEC+) are scheduled to hold an online conference on February 1. Such meetings are closely watched by the market as they may result in decisions regarding output policies that can influence the global oil supply. The decisions made during these meetings can have a significant impact on oil prices.
- Gazprom Neft, a major Russian oil producer, was mentioned as holding the view that there is no necessity for additional cuts in oil supply by OPEC+ members. Differing views within OPEC+ about supply policies can contribute to uncertainties in the oil market.
- Crude oil prices were suggested to have received upward support, partially fueled by better-than-expected Gross Domestic Product (GDP) Annualized (Q4) data released from the United States the previous week. Economic indicators, including GDP, can impact oil prices as they provide insights into the economic health of major oil-consuming nations.
| SMA (20) | Slightly Rising |
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| RSI (14) | Rising |
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| MACD (12, 26, 9) | Rising |
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Closing statement: The upward movement in WTI oil prices was attributed to geopolitical concerns, anticipation of the upcoming OPEC+ meeting, differing views on oil supply cuts, and potential influences from economic data, such as the US GDP Annualized (Q4) figures.
DAX
- On Friday, the DAX experienced a decline to a session low at 16,849, following the release of German consumer confidence numbers for February. The German GfK Consumer Climate Indicator for February fell from -25.4 to -29.7. Consumer sentiment indicators are closely watched as they provide insights into the economic outlook from the perspective of consumers.
- On Friday, the DAX experienced a decline to a session low at 16,849, following the release of German consumer confidence numbers for February. The German GfK Consumer Climate Indicator for February fell from -25.4 to -29.7. Consumer sentiment indicators are closely watched as they provide insights into the economic outlook from the perspective of consumers.
- Remy Martin and LVMH, prominent names, reported better-than-expected earnings results. Positive earnings reports can fuel investor confidence and drive demand for equities. Corporate earnings announcements are significant events during earnings seasons and can have a notable impact on stock markets.
- On Monday, investors are advised to closely monitor ECB commentary throughout the session, with ECB Vice President Luis de Guindos scheduled to speak. The central bank's communication and policymakers' views can significantly influence market sentiment.
- Additionally, corporate earnings are expected to continue influencing the market mood after the positive results observed in the previous week.
| SMA (20) | Neutral | ||
| RSI (14) | Rising |
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| MACD (12, 26, 9) | Slightly Rising |
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Closing statement: The DAX faced downward pressure due to weaker German consumer confidence, with additional influences coming from the ECB Survey of Professional Forecasters, positive earnings reports, and the anticipation of upcoming ECB commentary and corporate earnings.