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EUR/USD Drops Toward 1.1700 as US Dollar Strengthens

EUR/USD Drops Toward 1.1700 as US Dollar Strengthens; FOMC Minutes in Spotlight

The EUR/USD pair slid to around 1.1705 during Wednesday’s Asian session, weighed down by renewed strength in the US Dollar. The Euro came under pressure following fresh tariff threats from former US President Donald Trump, which unsettled global markets and added to investor caution. 

Trump reignited global trade concerns by proposing a 50% tariff on copper imports and hinted at possible duties on semiconductors and pharmaceuticals. While he mentioned that negotiations with both the European Union and China are progressing well, he also warned that a tariff notice to the EU could be issued within days. This uncertainty has dented risk sentiment, putting the Euro under additional stress. 

Attention now turns to the Federal Reserve’s meeting minutes, due later today. Market participants are hoping for more clarity on the Fed’s rate path, especially amid growing expectations of monetary easing. 

At its June meeting, the Fed held interest rates steady, maintaining the federal funds rate between 4.25% and 4.50%—a level unchanged since December. However, markets are now pricing in a total of 50 basis points in rate cuts by year-end, potentially beginning as early as October. 

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Australian Dollar Gains as Risk Sentiment Improves, RBA Decision in Focus

Australian Dollar Rises Amid Risk-On Sentiment, Focus Shifts to RBA Rate Decision

The Australian Dollar (AUD) continues its third straight session of gains against the US Dollar (USD) on Monday, following US President Donald Trump’s move to postpone the imposition of reciprocal tariffs. A weaker USD following disappointing US retail sales data has further supported the AUD/USD pair, reigniting speculation that the Federal Reserve (Fed) may cut interest rates later this year despite persistent inflation concerns.

Yet, the AUD’s gains could be capped before the Reserve Bank of Australia’s (RBA) policy announcement on Tuesday, as mounting speculation of a cut in interest rates deters sentiment. The RBA is widely expected to lower its Official Cash Rate (OCR) by 25 basis points (bps) to 4.10%, marking the first rate reduction in four years.

US Dollar Under Pressure Amid Lower Treasury Yields

The US Dollar Index (DXY) is down for the third consecutive session, bogged down by weaker US Treasury yields. At the time of writing, the DXY is trading around 106.70, with 2-year and 10-year Treasury bond yields at 4.26% and 4.47%, respectively.

Statistics released by the US Census Bureau on Friday indicated that US Retail Sales decreased 0.9% in January, a reversal from a revised 0.7% rise in December (earlier reported as 0.4%). The decrease was deeper than the market expectation of a 0.1% decline.

Conversely, Core PPI inflation in the US increased to 3.6% YoY in January, above expectations of 3.3%, though marginally less than the revised 3.7% (initially published as 3.5%). This has consolidated expectations that the Fed will push rate cuts until the second part of the year.

The US Consumer Price Index (CPI) rose 3.0% YoY in January, beating expectations of 2.9%, and core CPI (excluding food and energy) went up to 3.3% from 3.2%, beating expectations of 3.1%. On a month-on-month basis, headline inflation rose 0.5% in January compared to 0.4% in December, with core CPI rising to 0.4% from 0.2% in the same period.

Fed Officials Signal a Cautious Approach to Rate Cuts

In his semi-annual report to Congress, Fed Chair Jerome Powell stated that policymakers “do not need to be in a hurry” to cut interest rates, citing a strong labor market and robust economic growth. Powell also warned that Trump’s tariff policies could exert upward pressure on inflation, making it harder for the central bank to lower rates.

A Reuters poll of economists now indicates the Fed will wait until next quarter to cut rates, citing ongoing inflationary concerns. Although previously, some analysts anticipated a March rate cut; the majority now sees at least one rate cut by June, but opinions remain divided.

Federal Reserve Bank of Cleveland President Beth Hammack echoed this sentiment, saying that maintaining rates at current levels for a long time is probably the right thing to do. Hammack added that a patient strategy will enable the Fed to evaluate economic conditions before altering policy.

Australian Dollar Targets Upper Range Near 0.6400

The AUD/USD currency pair quotes at 0.6360 on Monday, with an uptrend in a rising channel formation. This is indicative of a bullish market inclination, which is also complemented by the 14-day Relative Strength Index (RSI) remaining above 50.

On the upside, the pair could test the upper boundary of the ascending channel at 0.6380, followed by the psychological level of 0.6400.

Major levels of support are the nine-day EMA at 0.6310, followed by the 14-day EMA at 0.6294. A fall below these levels may erode short-term momentum, possibly pulling the pair down to the lower boundary of the rising channel at 0.6270.

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Australian Dollar Declines as US Dollar Strengthens Ahead of Jobless Claims

Australian Dollar Declines as US Dollar Holds Gains Ahead of Jobless Claims

The Australian Dollar (AUD) fell against the US Dollar (USD) on Thursday as trade balance data came in below average than expected. Furthermore, risk-off sentiment, fueled by rising US-China trade tensions, weighs on the AUD/USD.

In December, Australia’s trade surplus fell to $5,085 million, falling short of the 7,000 million anticipated and down from $6,792 million the previous year. While exports increased by 1.1% month on month, this was a decrease from November’s 4.2% increase, while imports increased by 5.9% month on month, much more than the previous 1.4% gain.

US-China Trade Tensions Weigh on Australian Dollar

Investors are still focused on the current trade stagnation between the United States and China, Australia’s top trading partner. China replied to the United States’ new 10% tax, which went into force on Tuesday, causing global market concern. Regarding the situation, President Trump announced on Monday that he intends to engage with China within the next 24 hours. However, he cautioned that failure to achieve an agreement might result in “very, very substantial” tariffs.

Meanwhile, China’s Commerce Ministry imposed a 15% tax on US coal and liquefied natural gas (LNG) imports, as well as an additional 10% levy on crude oil, farm equipment, and some autos. As a countermeasure, China has implemented export limits on important minerals such as tungsten, tellurium, ruthenium, and molybdenum, citing national security concerns.

Amid escalating trade tensions, the Financial Times writes that Chinese firms are quickening preparations to relocate production overseas, mainly to the Middle East, in order to reduce tariff impacts. Some exporters are also considering passing on prices to US consumers or expanding into new markets.

US Dollar Holds Firm Amid Mixed Economic Data

The US Dollar Index (DXY), which tracks the greenback’s performance against a basket of six major currencies, remains stable near 107.50, putting further downward pressure on the AUD/USD. The dollar’s resiliency comes after a weaker-than-expected US Services PMI fell to 52.8 in January, below the market forecast of 54.3.

Investors now focus on Friday’s US Nonfarm Payrolls (NFP) data, a key economic indicator that could influence the Federal Reserve’s monetary policy stance.

The dollar fell on Wednesday, following a poor US Services PMI report. The ISM Services PMI fell to 52.8 in January from a revised 54.0 in December, missing the market forecast of 54.3. Looking ahead, traders are anticipating Friday’s US Nonfarm Payrolls (NFP) report, which could influence the Federal Reserve’s future policy moves.

Technical Outlook: AUD/USD Pulls Back From 0.6300, Eyes Key Support

The AUD/USD pair hovers near 0.6280 on Thursday, retreating from the 0.6300 level. However, sustained trading above the nine- and 14-day Exponential Moving Averages (EMAs) suggests short-term bullish momentum remains intact. The 14-day Relative Strength Index (RSI) is also holding above 50, reinforcing the bullish bias.

On the upside, the pair might target 0.6330, its seven-week high from January 24.

Immediate support comes from the nine-day EMA near 0.6254, followed by the 14-day EMA at 0.6249.

A breach below these levels might weaken the bullish structure, potentially sending the pair below 0.6087, its lowest level since April 2020, which was recorded on February 3.

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Australian Dollar Slips as US Tariffs on China Take Effect

Australian Dollar Slips as US Tariffs on China Take Effect

The Australian Dollar (AUD) falls for the seventh consecutive day as the US Dollar (USD) strengthens following President Donald Trump’s 10% tariff on Chinese imports. Market volatility remains high as investors monitor the continuing US-China trade talks. Trump signaled he may speak with Chinese officials within the next 24 hours, warning that if a deal isn’t reached, tariffs on China will be “very, very substantial.”

Trump also announced a 30-day tariff relief for Mexico and Canada after their nations agreed to send 10,000 troops to the US border to battle drug trafficking. This move follows the introduction of 25% tariffs on Mexican and Canadian goods just two days before.

Chinese Exporters Seek Alternatives

According to the Financial Times, Chinese manufacturers are speeding up plans to transfer production offshore in reaction to US tariffs. Some companies are considering relocating to regions such as the Middle East, while others are looking into passing costs on to US customers or entering new markets.

RBA Rate Cut Expectations Weigh on AUD

The AUD faces additional pressure amid growing expectations that the Reserve Bank of Australia (RBA) may cut rates in February. The RBA has maintained the Official Cash Rate (OCR) at 4.35% since November 2023, stressing that inflation must return to its 2%-3% target range before easing policy.

Analysts at Westpac continue to forecast 100 basis points of rate cuts in 2025, with the market pricing in a more conservative outlook. ANZ, CBA, Westpac, and National Australia Bank (NAB) all anticipate a 25-basis-point (bps) cut in February, with NAB recently revising its forecast forward from May.

US Dollar Strengthens Amid Economic Developments

The US Dollar Index (DXY) stabilizes around 108.70 after erasing gains from the previous session. Recent US economic data support the greenback, with ISM Manufacturing PMI rising to 50.9 in January from 49.3 in December, exceeding expectations of 49.8.

Inflation indicators remain in focus as the Fed’s preferred measure, the Personal Consumption Expenditures (PCE) Price Index, rose 0.3% MoM in December, up from 0.1% in November. Annual PCE inflation increased to 2.6%, while core PCE held steady at 2.8% YoY for the third straight month.

Jerome Powell, Chairman of the Federal Reserve, highlighted that further policy adjustments would be required if there was clear evidence of inflation advance or labor market weakness. Separately, Treasury Secretary Scott Bessent recently argued for new uniform taxes on US imports, beginning at 2.5% and progressively increasing—a departure from his previous stance that tariffs cause inflation.

Australian Dollar Technical Analysis

AUD/USD trades around 0.6210 on Tuesday, remaining within a descending channel pattern on the daily chart, signaling a bearish bias. However, the 14-day Relative Strength Index (RSI) is recovering toward the 50 level, suggesting weakening downside momentum. A breakout above the channel, combined with an RSI move above 50, could indicate a shift toward a bullish outlook.

On the downside, the pair may test the descending channel’s lower boundary near 0.6150. A break below this level could drive AUD/USD toward 0.6087, its lowest point since April 2020.

AUD/USD is currently testing its initial resistance, the nine-day Exponential Moving Average (EMA) of 0.6225, which aligns with the channel’s upper limit. A decisive move over this level could fuel bullish optimism.

 

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Japanese Yen Maintains Strong Bullish Momentum

Japanese Yen Maintains Strong Bullish Momentum; USD/JPY Struggles Below 154.50

The Japanese Yen (JPY) continues to strengthen in early European trading on Thursday, pushing USD/JPY further below 154.50 and closer to its one-month low from earlier this week. Market expectations that the Bank of Japan (BoJ) will hike interest rates again by year-end continue to support the JPY. Additionally, a fresh decline in US Treasury bond yields, narrowing the US-Japan yield differential, has further boosted demand for the lower-yielding Yen.

However, concerns over the potential economic impact of US President Donald Trump’s trade policies may limit aggressive JPY buying. Meanwhile, the Federal Reserve’s (Fed) hawkish pause on Wednesday has bolstered the US Dollar (USD), which could provide some support to the USD/JPY pair. Traders are now looking ahead to the European Central Bank (ECB) meeting, which may increase market volatility and drive further demand for the safe-haven Yen. Additionally, the Advance US Q4 GDP report could introduce short-term trading opportunities.

JPY Gains on Hawkish BoJ Sentiment Amid Market Uncertainty

  • Minutes from the BoJ’s December meeting, released Wednesday, indicated discussions on using neutral interest rate estimates to guide future rate hikes.
  • Former BoJ board member Makoto Sakurai stated on Tuesday that steady rate increases remain feasible due to rising wages, sustained inflation, and strong economic growth.
  • The Federal Reserve, as expected, held rates steady after its two-day meeting and signaled no immediate plans for rate cuts.
  • Fed Chair Jerome Powell emphasized a patient stance, stating there is no urgency to adjust policy and reaffirming that rates will stay elevated amid concerns over Trump’s trade policies, which could fuel inflation.
  • The 10-year US Treasury yield has struggled to sustain gains post-FOMC due to uncertainty surrounding the Trump administration’s economic policies.
  • Reports from Asahi newspaper indicate that Japan’s Prime Minister Shigeru Ishiba is finalizing plans for a February 7 meeting with US President Donald Trump in Washington.
  • The ECB’s policy decision later today is expected to introduce further volatility, alongside the Advance US Q4 GDP print.

USD/JPY at Risk of Retesting Monthly Lows Near 153.70

The USD/JPY pair faced renewed selling pressure near the 156.00 level, breaking below the key 155.00 psychological mark, confirming a multi-month ascending channel breakdown. Momentum indicators on the daily chart suggest continued downside movement, making a retest of the 153.70 region—a multi-week low touched on Monday—a strong possibility.

Key resistance levels for a rebound:

  • 155.00 round figure
  • 155.35-155.40 region
  • 156.00 psychological level

Any recovery attempt is likely to face selling pressure near these levels. A sustained break above 156.25 could trigger short-covering, potentially lifting USD/JPY toward 156.70-156.75, with further resistance at 157.00 and 157.60.

For now, the bias remains bearish, with further losses expected if the pair stays below 154.00. Traders will closely watch US data and global central bank policy updates for the next directional move.

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Gold Price Retreats from Multi-Month High Amid USD Recovery

Gold Price Retreats from Multi-Month High Amid USD Recovery

Gold price (XAU/USD) faces selling pressure at the beginning of the week, pulling back from its highest level since late October, near the $2,786 mark touched on Friday. The US Dollar (USD) has staged a modest recovery following its worst weekly performance since November 2023, which has weighed on the precious metal. However, the broader market dynamics remain supportive of a bullish outlook, suggesting potential dip-buying opportunities at lower price levels.

Market Sentiment Dampened by Trade Tensions and Fed Speculation

Risk sentiment has deteriorated due to US President Donald Trump’s recent decision to impose tariffs on all imports from Colombia, reigniting fears of a trade war. Additionally, expectations that the Federal Reserve (Fed) may cut interest rates twice by year-end, combined with a flight to safe-haven assets, have triggered a fresh decline in US Treasury bond yields. This decline could limit aggressive gains in the USD, potentially cushioning the downside for gold, a non-yielding asset.

Gold Under Pressure from USD Recovery, but Downside Remains Limited

The US Dollar Index (DXY), which tracks the USD against a basket of currencies, rose nearly 0.25% on Monday, driven by revived concerns over US trade policies. President Trump ordered 25% emergency tariffs on all Colombian imports following the country’s refusal to accept deported migrants from the US, with a threat to raise tariffs to 50% next week. Moreover, reports suggest that Trump’s advisors are considering imposing 25% tariffs on Mexico and Canada starting February 1.

In a recent update, the White House confirmed that Colombia has agreed to Trump’s demands, including the unrestricted acceptance of deported individuals. Meanwhile, Trump has reiterated his call for immediate interest rate cuts, fueling speculation of further easing by the Federal Reserve in 2025. The resulting decline in US Treasury yields may act as a headwind for the USD, potentially limiting the extent of gold’s pullback.

Traders Eye Economic Data for Further Clues

Market participants will turn their focus to key US economic data, including Durable Goods Orders, the Conference Board’s Consumer Confidence Index, and the Richmond Manufacturing Index, for fresh impetus during the US trading session.

Gold Price Outlook: Support and Resistance Levels

Gold’s recent decline may attract dip-buying near the $2,736 support zone, as the technical setup remains bullish. Any further slide below the $2,750-2,748 range could find solid support near $2,736, with additional key levels at $2,725-2,720. A break below $2,720 could trigger technical selling, pushing prices toward the $2,665-2,662 zone.

On the upside, a sustained move above the $2,772-2,773 resistance could open the door for a retest of the recent peak near $2,786. Further buying momentum beyond the $2,800 psychological level could signal a renewed bullish phase, extending the upward trend

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Gold Price Holds Defensive Below Multi-Month High Amid Risk-On Sentiment

Gold Price Remains Defensive Below Multi-Month High Amid Risk-On Sentiment

Gold price (XAU/USD) came under selling pressure during the Asian session on Thursday, retreating from the multi-month high of $2,763–$2,764 touched the previous day. This decline halts a three-day winning streak. The US Dollar (USD) gained some strength from its recovery off a monthly low, supported by a rebound in US Treasury bond yields, and the upbeat sentiment in equity markets further dampened demand for the safe-haven metal.

Signs of easing inflation in the US have fueled expectations that the Federal Reserve (Fed) might cut interest rates twice this year, creating a potential headwind for US bond yields and the USD. However, ongoing uncertainty surrounding President Donald Trump’s tariff plans, which could increase trade tensions and market volatility, may help limit the downside for gold prices. Traders may remain cautious and wait for sustained selling pressure to confirm that the one-month uptrend has ended.

Risk-On Mood and Modest USD Rebound Cap Gold Gains

The USD steadied above its recent lows amid recovering Treasury yields, adding pressure to gold prices. In addition, easing geopolitical tensions and a lack of concrete details regarding Trump’s tariff policies have maintained a risk-on sentiment, further undermining gold’s appeal.

While Trump’s proposed tariff policies are considered inflationary, which could prompt the Fed to maintain a hawkish stance, markets are still pricing in at least two Fed rate cuts this year. This outlook may limit the upside for US bond yields and the USD, potentially supporting gold in the near term.

Investors are eyeing Trump’s speech at the World Economic Forum for more clarity on tariffs, alongside the release of US Weekly Jobless Claims, which could influence XAU/USD prices. Upcoming central bank rate decisions, including the Bank of Japan’s meeting on Friday and next week’s announcements from the Fed and the European Central Bank, could inject volatility into the market and impact gold prices.

Gold Price Technical Analysis

Key Support Levels:

  • Immediate support is seen near the $2,725–$2,720 zone, a former resistance-turned-support level.
  • Further declines could target the $2,700 mark, with a decisive break paving the way for a move toward the $2,665–$2,662 region.
  • The $2,627–$2,622 confluence, which includes the 100-day EMA and a short-term ascending trendline, will act as a critical pivot point for short-term traders.

Key Resistance Levels:

  • The recent high near $2,763–$2,764 offers the first resistance level.
  • A break above this zone could see gold prices challenge the all-time high around $2,790, reached in October.
  • The $2,800 mark is the next significant resistance, and a break above it would signal a continuation of the well-established uptrend over the past month.

Outlook:

Gold prices remain influenced by risk sentiment, central bank policy expectations, and USD movements. While near-term bearish factors may limit gains, uncertainty around US tariff policies and inflation trends could provide support, making any dips near key technical levels potential opportunities for dip-buying. Traders will remain focused on upcoming economic data and central bank decisions for further direction.

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Impending Adjustments in US Stocks May Pose Challenges for Global Funds

Impending Adjustments in US Stocks May Pose Challenges for Global Funds

The upcoming shift to a shorter settlement cycle for U.S. securities is presenting significant challenges for international fund managers. This change, set to be implemented on May 28, is a move to a T+1 settlement cycle, where transactions are settled one business day after the trade. This is a reduction from the current T+2 standard and is a direct response to reduce the risks associated with unsettled trades, particularly highlighted by the volatile events like the 2021 GameStop stock plunge.

This transition to T+1 in the U.S. creates a discrepancy with the settlement cycles in most other countries, which typically follow a T+2 cycle. The disparity is leading to a reevaluation of transaction processes among global market participants, with a focus on preventing transaction failures and managing increased trading costs. This change has implications on various operational aspects for fund managers globally.

One of the critical challenges facing international fund managers is staffing. The new settlement cycle demands more rapid processing of trades, which could necessitate additional personnel or shifts in workforce management to ensure timely compliance. Furthermore, fund managers are contemplating holding larger cash reserves. This strategy is considered necessary to bridge potential gaps in transaction processing, although it might adversely impact the overall performance of the funds due to the lower yield on cash holdings compared to other investments.

Another significant concern is the heightened foreign exchange risk. With the faster settlement cycle, fund managers will have less time to manage and hedge against the fluctuations in currency values, which could lead to increased exposure to foreign exchange volatility.

The Depository Trust & Clearing Corporation (DTCC), a key player in securities clearing and settlement in the U.S., has been actively engaging with industry bodies like the Investment Company Institute (ICI) to facilitate this transition. However, despite not commenting directly, DTCC has indicated through a recently published paper that market participants need to expedite their preparation for the change.

Industry experts acknowledge the complexity and the challenges of moving to T+1. They point out that while it is a complicated initiative, it brings substantial risk reduction and operational benefits. For instance, Tom Price, a managing director at the Securities Industry and Financial Markets Association, highlighted the operational benefits of this transition. Similarly, RJ Rondini, the director of securities operations at ICI, pointed out that the overall reduction in capital requirements due to the faster settlement cycle outweighs the risks in other areas.

In summary, while the move to a T+1 settlement cycle in the U.S. is aimed at mitigating risks associated with unsettled trades and enhancing overall market efficiency, it brings a set of new challenges for international fund managers, including staffing adjustments, the need for higher cash reserves, and increased exposure to foreign exchange risk. These factors collectively necessitate a reevaluation of current practices and processes to adapt effectively to this significant market change.

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Japan’s Stocks Fluctuate, Yen Nears 150 Following BOJ’s Predicted Policy Shift

Japan’s Stocks Fluctuate, Yen Nears 150 Following BOJ’s Predicted Policy Shift

On Tuesday the Japanese stock market experienced notable fluctuations, while the national currency, the yen, weakened to a level close to 150 per dollar. This market activity followed the Bank of Japan’s landmark decision to conclude its eight-year practice of negative interest rates, marking the country’s first instance of policy tightening since 2007.

The decision by the Bank of Japan (BOJ) comes at a time when central banks around the world are holding meetings to determine their monetary policies. The BOJ’s move signifies a departure from a prolonged period of extremely accommodating monetary policy. This policy shift involves setting the overnight call rate as the new target, with a guidance range between 0 and 0.1%. Additionally, the central bank announced that it would pay 0.1% interest on excess reserves that financial institutions hold with it.

In anticipation of this policy change, BOJ Governor Kazuo Ueda is scheduled to conduct a press conference at 0630 GMT to elucidate the rationale behind this decision. Market participants are particularly keen to discern insights about the trajectory and speed of potential future rate hikes. Frederic Neumann, the chief Asia economist at HSBC, commented on this development, noting that the BOJ has taken its initial step towards normalizing its policy. However, he expressed skepticism about the BOJ’s ability to significantly increase short-term interest rates soon, coining the term ‘stuck at zero’ to describe this situation.

In the wake of these developments, Japan’s Nikkei index exhibited a volatile performance, alternating between gains and losses. Concurrently, the yen’s depreciation to 149.74 per dollar against the U.S. dollar suggests that market participants had already factored in the BOJ’s policy shift, following weeks of speculation and media reports indicating an imminent change. Analysts believe that the yen’s future trajectory will be more heavily influenced by the Federal Reserve’s policy decisions, including the timing and magnitude of any rate cuts by the U.S. central bank. Furthermore, the BOJ has committed to maintaining an accommodative policy stance, leading traders to anticipate that interest rates will remain at zero for an extended period.

In the context of these developments, HSBC’s Neumann highlighted the need for the BOJ to exercise extreme caution in any further policy tightening. This is to prevent any potential appreciation of the yen that could undermine the hard-earned progress in reflation. In other Asian markets, there was a general downturn. MSCI’s broadest index of Asia-Pacific shares outside Japan fell by 0.62%. In China, stocks also declined, with Hong Kong’s Hang Seng index dropping by more than 1% and the blue-chip shares easing by 0.3%.

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Stocks Rally as Powell Maintains Course on Interest Rate Reductions

Stocks Rally as Powell Maintains Course on Interest Rate Reductions

On Wednesday, U.S. stock markets experienced a significant resurgence, particularly in the technology sector, which made a robust recovery from the previous day’s considerable downturn. This upward trend was largely influenced by investor reactions to Federal Reserve Chair Jerome Powell’s latest comments, suggesting that interest rate cuts are still on the table for this year.

The Nasdaq Composite, known for its concentration of tech stocks, saw an impressive increase of nearly 0.6%. This uptick was a notable turnaround from Tuesday, when tech stocks led a broader market decline. Similarly, the S&P 500 rose by 0.5%, and the Dow Jones Industrial Average grew by 0.2%. Both indices were recovering from losses exceeding 1% from the previous session.

Investor focus is currently centered on Powell’s upcoming testimony to Congress. This event is anticipated to be a key driver for market movements, following two consecutive days of losses. These losses were partly attributed to significant declines in major tech companies like Apple (AAPL) and Tesla (TSLA), which stoked concerns about a potential tech bubble.

Key to investor sentiment is any potential deviation in Powell’s remarks from the Federal Reserve’s consistent message that they are not in a hurry to slash interest rates. In a prior statement to lawmakers, Powell hinted that rate cuts could be appropriate “at some point” in 2024, leaving investors eager for more detailed insights as Powell answers questions from lawmakers over the next two days.

Powell, addressing the House Financial Services Committee, suggested that if the economy continues to progress as expected, it may be appropriate to start reducing policy restraint within the year. His statements are being closely monitored for indications of the Federal Reserve’s future policy direction.

In terms of individual stocks, New York Community Bank (NYCB) experienced a dramatic day, ultimately closing with an increase of over 7%. The stock initially plunged following reports that NYCB was seeking investors for a stock purchase. However, it made a remarkable recovery after the bank announced the appointment of a new CEO and a $1 billion investment from a consortium, including former Treasury Secretary Steven Mnuchin.

Investors are now keenly awaiting further cues from Powell’s testimony, which could significantly influence market trajectories in the days to come. The anticipation surrounding the Federal Reserve’s approach to interest rate adjustments continues to be a pivotal factor in market dynamics.

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Morgan Stanley: Global Funds Reinvest in China Stocks

Morgan Stanley: Global Funds Reinvest in China Stocks

As February concluded, the dynamics surrounding Chinese equities experienced a significant shift. Recent data compiled by strategists Gilbert Wong and Laura Wang, published in a March 4 note, highlighted a noteworthy deceleration in the outflows from Chinese stocks. Importantly, regional active managers began increasingly focusing on sectors like technology and growth stocks, indicating a renewed interest in the Chinese market.

This development coincides with China’s intensified efforts to instill confidence in its economy. Notably, mainland stocks have successfully halted a six-month trend of net foreign investment outflows. The analysis presented by Wong and Wang suggests that the changing tide in investment flows might not be solely attributable to the Chinese government’s intervention through purchases by state-affiliated entities, often referred to as the “national team.” This observation could alleviate some concerns about the durability of the market’s recovery from its January lows.

The report also pointed out a significant increase in the realized volatility of the MSCI China index. It leaped from 20% in late December to over 30% by mid-February on an annualized basis. Such high volatility levels have made maintaining a substantial underweight position in Chinese stocks a high-risk strategy for most regional investment funds.

Furthermore, the strategists noted a shift in stance by Asia ex-Japan funds and emerging market funds based in the US and Europe. These funds have reportedly lessened their underweight positions in Chinese equities in February. Despite the ongoing trend of net outflows in equities from mainland China and Hong Kong, which amounted to $2.2 billion in February (a slight decrease from $2.6 billion in January), there is a sense of optimism. The bulk of these outflows, around 95%, were attributed to investor redemptions, as per EPFR data.

The recent moderation in outflows could signify a pivotal moment. Money managers across the region appear to be reassessing their asset allocations. Notably, some funds have started to reduce their investments in India, citing overvaluation concerns and a search for better risk-reward opportunities elsewhere. This shift could signal a positive outlook for China’s position in global investment portfolios, suggesting a potential resurgence in its attractiveness to international investors.

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US Equities Decline as Market Anticipates Crucial

US Equities Decline as Market Anticipates Crucial PCE Inflation Data

On Wednesday, US stock markets experienced a decline as investors focused their attention on the anticipated inflation data while evaluating the prospects of interest rate adjustments in the current year. This downturn was marked by a notable drop in major market indices, with the Dow Jones Industrial Average recording its third consecutive session of losses.

The financial community is particularly attentive to the upcoming release of the Personal Consumption Expenditures (PCE) index, scheduled for Thursday. This index is regarded by the Federal Reserve as a critical gauge of inflation. Forecasts by Dow Jones-surveyed economists suggest an expected increase in consumer expenditure prices of 0.3% for January, which surpasses the 0.2% rise observed in the previous month. The significance of this data lies in its potential influence on the Federal Reserve’s interest rate decisions throughout the year. A higher-than-anticipated inflation figure could pivot the Fed’s strategy on rate adjustments.

Analysts, including Arnim Holzer of Easterly EAB Risk Solution, have commented on the market’s anticipation of the PCE report. They speculate that the inflation rate might exceed last month’s figures, but also acknowledge the Federal Reserve’s current stance of cautious observation. This approach seems prudent given the Fed’s ongoing efforts to manage inflation effectively.

Investor sentiment regarding the possibility of rate cuts by the Federal Reserve has seen a shift. There is a growing consensus that fewer rate reductions might occur this year. This change in outlook is partly due to the resilience of the US economy, which appears robust enough to lessen the necessity for aggressive rate cuts aimed at staving off a recession.

Market predictions, as reflected in the CME FedWatch tool, indicate a nearly certain expectation that the Federal Reserve will maintain current interest rates at its forthcoming policy meeting. Furthermore, there’s a 57% probability, as per market projections, that the Fed will limit rate reductions to 75 basis points or less by year-end. These predictions underscore a cautious yet optimistic view of the economy, balancing the need to control inflation with the importance of sustaining economic growth. The forthcoming PCE index report thus holds significant weight in shaping the Fed’s monetary policy and the broader economic outlook for the year.

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European Shares Show Mixed Performance

European Shares Show Mixed Performance Following Worldwide Market Retreat; Abrdn Rises by 4.5%

European Shares Show Mixed Performance Following Worldwide Market Retreat; Abrdn Rises by 4.5%

European markets exhibited a mixed performance on Tuesday morning, reflecting a broader trend of declining momentum in global markets. The Stoxx 600, a key European stock market index, was relatively unchanged as of 9:20 a.m., indicating a cautious stance among investors. This was a notable contrast to the recent global market downturn, demonstrating the variable nature of current market sentiments.

In the Stoxx 600, mining stocks were a standout, rising by 1.3%, showcasing resilience in this sector. This uptick in mining stocks could be attributed to various factors, including commodity prices or sector-specific developments. On the other hand, media stocks didn’t fare as well, experiencing a 0.5% decline. This decrease in media stocks could be reflecting changing investor attitudes towards the media sector or broader market trends impacting these stocks.

One significant mover in the European market was the investment firm and asset manager, Abrdn. Abrdn’s stock rose by 4.3%, a noteworthy increase, following the announcement of its financial results. Despite a 5% fall in operating profit, the results surpassed market expectations, instilling confidence among investors. Moreover, Abrdn also revealed plans to streamline its operations by cutting 500 jobs. This restructuring plan likely contributed to the positive investor sentiment, as it could be seen as a move towards greater efficiency and cost management in a challenging economic environment.

In the Asia-Pacific region, markets turned lower overnight, contributing to the global market pullback. Hong Kong’s stock market led these declines, indicating specific regional challenges or sentiment. Japan’s Nikkei 225 also retreated, relinquishing gains from earlier in the session. This shift in the Asia-Pacific markets reflects the interconnectedness of global financial markets and how regional events can influence broader market trends.

The trading sentiment globally was subdued, following a pause in the previously robust Wall Street rally. On Monday, major U.S. indexes pulled back from their record highs, signaling a potential recalibration of investor expectations or reactions to emerging market data. Early Tuesday, S&P 500 futures were nearly flat, suggesting a breather in the market rally and possibly a period of reassessment for investors.

In the United States, investors are closely monitoring upcoming economic indicators. A key focus this week is the monthly personal consumption expenditures (PCE) price index, the U.S. Federal Reserve’s preferred inflation gauge. Scheduled for release on Thursday, this data could provide crucial insights into inflation trends and potentially influence the Federal Reserve’s monetary policy decisions. The anticipation surrounding this release underscores the current market sensitivity to inflation data, as it plays a critical role in shaping monetary policy and investor expectations in an evolving economic landscape.

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Nikkei Reaches Historic Peak, Echoing

Nikkei Reaches Historic Peak, Echoing 1989 Highs

Nikkei Reaches Historic Peak, Echoing 1989 Highs

Japanese stocks have achieved a remarkable milestone, reaching a record high on Thursday that surpasses levels last witnessed in 1989 during the height of the bubble economy. This surge in the Nikkei share average, which peaked at 39,156.97 points, has marked a significant moment in Japan’s financial history, breaking the previous intraday record of 38,957.44 points set on the final trading day of 1989. The index closed even higher at 39,098.68, showcasing a robust 2.19% increase.

This achievement is not just about surpassing a numerical threshold; it represents a historic recovery, taking 34 years to reclaim its heights – a duration longer than any major market has taken, including Wall Street’s recovery from the 1929 crash and the Great Depression. Tsutomu Yamada, a senior market analyst at Au Kabucom Securities in Tokyo, reflects on this achievement as the dawn of a new era, symbolizing Japan’s escape from deflation and the opening of a new chapter in its economic story.

In 2023, the Nikkei was already showing signs of this resurgence, being the best-performing major bourse in Asia with a 28% surge. This momentum has continued into 2024, with an impressive 17% rise so far. This performance stands out even when compared to tech-heavy indices like Nasdaq, which had a 43% rise last year and a 6% increase in 2024.

The breakthrough moment was met with excitement on Nomura’s Tokyo trading floor, where traders celebrated as the Nikkei surpassed its 1989 high. This enthusiasm was not just about numbers; it was a collective acknowledgment of overcoming decades of underperformance that had deterred global investors.

Japan’s economic resilience, despite facing a domestic recession, conflicts in Europe and the Middle East, a global inflation shock, and rising rates worldwide, has been noteworthy. Its trade exposure and a weaker currency have been instrumental in insulating the economy from internal demand issues and boosting exporters’ earnings.

The resurgence of the Nikkei also symbolizes a significant psychological shift for the Japanese people, many of whom have never seen the index at these levels. Richard Kaye, a Japan-based portfolio manager at Comgest, highlights the potential for this momentum to attract domestic liquidity in unforeseen amounts.

Corporate governance changes in Japan, such as driving buybacks and unwinding cross-holdings, have been catalysts in this rally. Foreign investment, including significant investment from Warren Buffett in 2020, has put a spotlight on Japan’s attractive valuations. Foreign investors infused a substantial 6.3 trillion yen ($42 billion) into the equity market last year, with a net spend of 1.16 trillion yen in Japanese equities in January alone.

Further fueling this rally is a robust earnings season, a depreciating yen nearing the 150 per dollar level, and expectations that the Bank of Japan will maintain its ultra-easy monetary policy. Bank of America’s Asia fund manager survey for February reflects this optimism, with nearly a third of participants expecting double-digit returns from Japan’s stock market over the next 12 months. This optimism is underlined by analysts raising their year-end forecasts for the Nikkei, with expectations now set at around 39,000 points by the end of 2024.

However, despite this strong performance and optimism, there are indications in the derivative market of potential short-term disruptions to this momentum. Nevertheless, the current scenario portrays a revitalized Japanese stock market, drawing significant interest and investment, and marking a historic turning point in its financial narrative.

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XAG/USD Dips Below $27.00 as Risk Appetite Grows

XAG/USD Dips Below $27.00 as Risk Appetite Grows

Silver prices (XAG/USD) softened for a second day, hovering around $26.95 during the early European session on Tuesday. The market’s improved sentiment, driven by reduced fears of escalating Middle East conflicts, is dampening demand for the metal known for its safe-haven allure. Investors are also cautious, opting to stay on the sidelines while awaiting the release of the US preliminary S&P Global Purchasing Managers Index (PMI) data for April later in the day.

The price of silver has declined to near three-week lows as the potential for a wider conflict in the Middle East seems to be abating, prompting traders to shift their investments from safe havens like silver to riskier assets. This shift occurred after Iran’s Foreign Minister, Hossein Amirabdollahian, announced last Friday that Iran would not retaliate against Israel’s recent strikes. Moreover, the lack of further public comments from Israeli officials suggests that both nations might be seeking to de-escalate the situation.

Adding pressure to silver prices, the US Dollar is finding support from a lower likelihood of interest rate cuts by the US Federal Reserve (Fed), thanks to strong US economic performance and hawkish remarks from Fed officials. New York Fed President John Williams recently indicated no immediate need to lower rates considering the economic strength. Similarly, Chicago Fed President Austan Goolsbee affirmed that the current tight monetary policy aligns well with the ongoing economic data.

The persistent narrative of higher US interest rates for an extended period could further erode the appeal of silver, which does not offer interest returns. Market predictions reflect dwindling expectations for rate cuts in the near future: the likelihood of a reduction in June is just 15%, while a cut by July is seen as less than likely at under 45%. Even a cut by September, not fully anticipated, holds a probability of less than 70%, as shown by the CME FedWatch Tool.

Overall, silver’s attractiveness as a non-yielding asset is diminishing amid a backdrop of a stronger dollar and shifting investor focus towards assets with potential for higher returns, influenced by global economic dynamics and geopolitical calm.

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Gold Price

Gold Price Stays Under $2,400, Bullish Outlook Holds

Gold Price Stays Under $2,400, Bullish Outlook Holds

Gold prices (XAU/USD) struggled to extend their recovery from a recent low of $2,325-2,324, hovering within a narrow range during Tuesday’s Asian trading session. Despite the lackluster performance, gold remained close to its all-time high set last Friday, supported by ongoing geopolitical tensions in the Middle East and a slight retreat in US Treasury yields.

These factors collectively provide a supportive backdrop for the precious metal, often viewed as a safe-haven asset during times of crisis. The decline in Treasury yields, which typically moves inversely to gold prices, also helped prop up the market.

However, potential headwinds for gold arise from expectations surrounding US monetary policy. With the US economy demonstrating resilience and persistent inflation issues, it is anticipated that the Federal Reserve may delay any interest rate cuts. This prospect tends to bolster US bond yields and strengthen the US Dollar, which reached its highest level since early November. A stronger dollar can restrain gold’s upside, as it makes the metal more expensive for holders of other currencies.

Investors and traders are now focusing on upcoming speeches by Federal Open Market Committee (FOMC) members, including Fed Chair Jerome Powell. These presentations are crucial as they could offer new insights into the Fed’s policy direction and its implications for economic conditions and interest rates.

These factors are likely to influence short-term trading dynamics for gold. The interplay between a strong dollar, stabilizing bond yields, and geopolitical risks will continue to dictate the precious metal’s price movements in the near term. As such, market participants remain vigilant, ready to adjust their strategies based on the latest economic indicators and policy statements from central bank officials.

 

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WTI

WTI Remains Under $85.50 Amid Concerns Over Inflation

WTI Remains Under $85.50 Amid Concerns Over Inflation

Western Texas Intermediate (WTI), the benchmark for U.S. crude oil, lingered around $85.00 per barrel on Friday, reflecting a subdued trading environment amid inflationary concerns. The price of WTI dipped slightly as expectations for imminent U.S. interest rate cuts diminished due to persistently high inflation rates. This economic backdrop suggests a challenging path ahead for rate adjustments by the Federal Reserve.

The recent economic data from the U.S., including inflation and employment reports, suggests that inflation is not subsiding as hoped. The minutes from the Federal Open Market Committee (FOMC) meeting on Wednesday highlighted the uncertainty among members about the persistent high inflation rates. The members expressed concerns that recent data have not convincingly demonstrated that inflation is trending back towards the Fed’s target of 2%. Financial markets, having digested these insights, now anticipate only a couple of rate cuts this year, likely beginning in September, according to projections from the CME FedWatch Tool. This sentiment supports a “higher-for-longer” U.S. interest rate scenario, which could dampen oil demand due to increased costs associated with financing and storing crude oil.

Adding to the downward pressure on WTI prices, the latest Energy Information Administration (EIA) report revealed an unexpected rise in crude oil stockpiles. For the week ending April 5, inventories surged by 5.841 million barrels, significantly overshooting the market’s forecast of a 2.366 million barrel increase. This buildup follows a previous week’s increase of 3.21 million barrels, suggesting a softer demand outlook for crude.However, geopolitical tensions in the Middle East are providing some support to oil prices, mitigating further declines.

The ongoing conflict and diplomatic strains in the region, especially concerning Israel and Hamas, continue to fuel uncertainties. Fresh negotiations have taken place this week in the enduring Gaza conflict, though they have yet to yield a conclusive agreement. Additionally, rising tensions between Iran and Israel following a suspected Israeli airstrike on an Iranian embassy in Syria on April 1st contribute to the geopolitical risks that might prevent a significant drop in WTI prices for the near future.

These factors collectively shape the current state of the oil market, with geopolitical risks partially cushioning the impact of economic headwinds such as inflation and potential adjustments in U.S. monetary policy. The intricate interplay between these elements underscores the volatile nature of oil prices and the global economic landscape influencing them.

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WTI Drops

WTI Drops to $84.70 Amid Gaza Ceasefire Talks, US CPI Data Anticipation

WTI Drops to $84.70 Amid Gaza Ceasefire Talks, US CPI Data Anticipation

Western Texas Intermediate (WTI), the benchmark for US crude oil, is currently trading near $84.60, marking its fourth consecutive day in the red. This decline is influenced by a combination of factors including the build-up of US crude stocks and profit-taking activities. Market attention is now turning towards the upcoming release of the US March Consumer Price Index (CPI) report and the Federal Open Market Committee (FOMC) Minutes, both scheduled for later today.

Last week’s US employment report has sparked debates among investors about the Federal Reserve’s potential postponement of interest rate cuts this year. The impending US CPI data for March is highly anticipated, as it could provide valuable insights into the inflation trends and influence the Federal Reserve’s monetary policy decisions. A stronger-than-expected CPI report could bolster the US Dollar (USD), potentially impacting WTI prices, which are denominated in USD.

Adding to the downward pressure on WTI prices is the larger-than-anticipated increase in US crude inventories. Data for the week ending April 5 showed a rise of 3.034 million barrels, exceeding both the previous week’s decline of 2.286 million barrels and market predictions of a 2.415 million barrel increase, according to figures released by the American Petroleum Institute (API).

Another factor in the oil market dynamics is the statement from the leader of Iran’s Revolutionary Guard navy, suggesting the possibility of closing the Strait of Hormuz if deemed necessary. This strait is a crucial passage for global oil trade, with about a fifth of the world’s oil consumption passing through it daily. Such a move could stoke fears of supply disruptions, potentially limiting further declines in WTI prices.

In the geopolitical arena, the latest developments in the Middle East are also being monitored by oil traders. An Israeli proposal for a ceasefire in Gaza was deemed insufficient by Hamas in meeting the conditions set by Palestinian militant groups. However, Hamas has indicated a willingness to consider the proposal. The continuing tensions in the region could exacerbate concerns about market tightness and influence oil prices.

Together, these various factors – the US CPI report, FOMC minutes, crude inventory levels, and Middle Eastern geopolitical tensions – are shaping the current dynamics of WTI prices and the broader oil market.

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WTI Holds Near Multi-Month High

WTI Holds Near Multi-Month High, Above $85 per Barrel

WTI Holds Near Multi-Month High, Above $85 per Barrel

West Texas Intermediate (WTI) U.S. Crude Oil has exhibited signs of a bullish market, maintaining a strong position in a narrow trading range during Thursday’s Asian trading session. The commodity’s prices have been hovering just above the $85 mark, mirroring the stability seen at its highest point since October of the previous year. While there have been negligible changes in its price as the day progresses, WTI is at the confluence of several influencing factors.

A surprising development affecting oil prices came from the Energy Information Administration’s (EIA) report on Wednesday, revealing an unexpected increase in U.S. crude inventories. This accumulation is typically seen as a negative influence on oil prices, as it suggests a potential surplus of oil availability. Despite this, WTI prices find some support against the backdrop of multiple global concerns.

Recent geopolitical developments are fanning the flames of market anxiety, particularly the Ukrainian attacks on Russian oil refineries, which are exacerbating fuel shortages. Tensions in the Middle East also play a crucial role, as there is a palpable fear that the conflict between Israel and Hamas could escalate, potentially involving Iran and disrupting oil supply chains from this pivotal region. These geopolitical risks are supporting crude oil prices, countering the downward pressure from increased U.S. stockpiles.

Moreover, the Organization of the Petroleum Exporting Countries and their allies, known as OPEC+, held a meeting where they decided to maintain their current oil supply policy. They urged member countries to adhere more strictly to the agreed output cuts, reaffirming their commitment to market stability.

On the economic front, Jerome Powell, the Chair of the Federal Reserve, indicated a cautious stance regarding future interest rate cuts given the resilience of the U.S. economy. An additional boost to oil demand expectations came from the positive manufacturing data out of China, the world’s largest crude importer. The combination of a recovering Chinese economy and steady global demand is providing a bulwark against a significant downturn in crude oil prices.

In this complex interplay of market dynamics, crude oil prices are navigating through geopolitical tensions, economic data, and energy policy decisions. These factors collectively influence the delicate balance of global supply and demand, which is reflected in WTI’s steady pricing above the $85 threshold. Investors and market watchers will continue to monitor these variables closely as they dictate the direction of future price movements for crude oil.

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Gold Price

Gold Price Nears Record High, Despite Strong USD as Potential Obstacle

Gold Price Nears Record High, Despite Strong USD as Potential Obstacle

The Gold price (XAU/USD) continues to experience a notable uptrend, recording gains for the sixth consecutive day on Tuesday. This steady ascent brings it tantalizingly close to the all-time high it achieved the day before. The price movement of this precious metal, traditionally viewed as a safe haven, is influenced by a mix of geopolitical and economic factors.

Recent geopolitical tensions have played a significant role in this upward trajectory. Reports of an Israeli strike near Iran’s embassy in Damascus, Syria, have escalated regional tensions. Such geopolitical unrest typically increases the appeal of gold as a safe investment during times of uncertainty. This is evident in the current market dynamics, where gold is gaining traction as a preferred asset for risk-averse investors.

On the economic front, the uncertainty surrounding the Federal Reserve’s interest rate decisions is another key driver. There are doubts about whether the Fed will implement as many as three interest rate cuts within the year, contributing to a cautious global risk sentiment. This uncertainty further bolsters the demand for gold.

However, recent upbeat US manufacturing data, released on Monday, has led investors to reconsider the likelihood of a rate cut by the Fed in June. As a result, US Treasury bond yields have remained high, supporting the strength of the US Dollar (USD). Since gold is priced in dollars, a stronger USD could potentially restrain further increases in the gold price. The dollar reached its highest level since February 14, indicating a robust performance that could act as a headwind to gold’s appreciation.

Gold bulls, or investors betting on the price increase of gold, might also exercise caution due to the current market conditions. The daily chart indicates an overstretched scenario for gold prices, suggesting the possibility of near-term consolidation. Investors are likely to adopt a wait-and-watch approach, closely monitoring upcoming US macroeconomic data and the statements from various influential members of the Federal Open Market Committee (FOMC).

Overall, while gold continues its climb towards record highs, influenced by geopolitical tensions and Fed policy speculations, the strong performance of the USD and the potential for market adjustments suggest a complex and dynamic environment for gold investors.

 

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WTI Crude Oil Prices Dip Below $68.50 Amid Stronger USD

WTI Slips to Near $81.50 Amid Fed’s Hawkish Remarks, Unexpected Rise in US Crude Inventories

WTI Slips to Near $81.50 Amid Fed’s Hawkish Remarks, Unexpected Rise in US Crude Inventories

Western Texas Intermediate (WTI), the benchmark for US crude oil, saw its prices hovering around $81.50 on Wednesday. This downward shift is attributed to the strengthening of the US Dollar (USD) and an unexpected increase in U.S. crude and gasoline stocks.

The recent hawkish remarks by US Federal Reserve (Fed) policymakers, particularly Fed Governor Christopher Waller, played a key role in bolstering the USD. Waller, known for his hawkish stance, indicated that the Fed is not poised to reduce the benchmark interest rate soon and might maintain the current rate target for an extended period. This stronger USD creates a challenging environment for WTI, as oil priced in dollars becomes more expensive for holders of other currencies, potentially reducing demand.

Compounding the pressure on WTI prices was the surprising data from the Energy Information Administration (EIA), revealing a rise in US crude oil inventories by 3.165 million barrels for the week ending March 22. This increase, contrasting with the previous week’s decline of 1.952 million barrels, added to the bearish sentiment around oil prices.

On the geopolitical front, escalating tensions in the Middle East and the ongoing conflict between Russia and Ukraine are factors that could limit the decline in WTI prices. The conflict has seen Ukraine increasingly target Russia’s oil infrastructure. With seven drone attacks reported this month, impacting approximately 12% of Russia’s total oil processing capacity, concerns over global supply tightness are heightened.

In response to these geopolitical dynamics, the Organisation of Petroleum Exporting Countries and its allies (OPEC+) have decided to maintain output cuts of about 2.2 million barrels per day (bpd) until the end of June. OPEC+ is likely to reaffirm its commitment to these production cuts at a full ministerial meeting scheduled for June.

Investors and oil traders are now turning their attention to upcoming economic indicators. The US Gross Domestic Product (GDP) for the fourth quarter is projected to remain steady at 3.2%. Furthermore, the upcoming release of the US Personal Consumption Expenditures Price Index (PCE) for February and a speech by Fed’s Chairman Powell are eagerly awaited, as they could provide further insights into the economic landscape and influence oil market dynamics.

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EUR/USD Edges Higher Toward 1.0450, Upside Limited Amid Risk-Off Sentiment

EUR/USD Edges Higher Toward 1.0450, Upside Limited Amid Risk-Off Sentiment

EUR/USD pauses its two-day decline, trading near 1.0440 during Wednesday’s Asian session. However, upside potential remains capped as risk-off sentiment prevails ahead of the Federal Reserve’s (Fed) interest rate decision later in the North American session.

The US Dollar (USD) remains supported by the Fed’s cautious policy stance. According to the CME FedWatch tool, markets are nearly certain the Fed will maintain its policy rate within the 4.25%-4.50% target range. However, traders will closely follow Fed Chair Jerome Powell’s press conference for any indications of future monetary policy shifts.

Additionally, the Greenback strengthened following tariff threats from former US President Donald Trump. On Monday evening, Trump announced plans to impose tariffs on imports of computer chips, pharmaceuticals, steel, aluminum, and copper, aiming to boost domestic manufacturing.

Meanwhile, the Euro (EUR) faces headwinds as markets anticipate the European Central Bank (ECB) will cut its Deposit Facility rate by 25 basis points (bps) to 2.75% on Thursday. This expectation is driven by the Eurozone’s sluggish economic outlook and confidence that inflation will sustainably return to the ECB’s 2% target.

With a 25 bps rate cut largely priced in, investors will focus on ECB President Christine Lagarde’s press conference for insights into the potential economic impact of Trump’s tariff policies and their influence on future monetary decisions.

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GBP/USD Drops Below 1.2500 on Dovish BoE Outlook and Trump Tariff Moves

GBP/USD Slips Below 1.2500 Amid Dovish BoE Expectations and Trump’s Tariff Plans

The GBP/USD pair reverses its three-day rally, trading near 1.2440 during Tuesday’s Asian session. The British Pound (GBP) faces mounting pressure as markets anticipate a likely rate cut by the Bank of England (BoE) to 4.5% at its next meeting.

Key Drivers Behind GBP Weakness

  1. Weaker UK Economic Data:
    Recent economic indicators from the United Kingdom, including declining inflation, sluggish retail sales, soft labor market performance, and weak GDP growth for December, have solidified expectations for a 25-basis-point rate cut by the BoE in February. This dovish outlook has weighed heavily on the Pound.
  2. US Dollar Strength:
    The US Dollar Index (DXY) hovers near 108.00, supported by President Donald Trump’s announcement of new tariff plans. Trump proposed tariffs on critical imports such as computer chips, pharmaceuticals, steel, aluminum, and copper, aiming to bolster domestic manufacturing.
  3. Trump’s Aggressive Trade Policies:
    Treasury Secretary Scott Bessent suggested starting with a phased 2.5% universal tariff on US imports, but Trump has expressed a preference for significantly higher rates. These proposals have fueled inflation concerns and boosted US Treasury yields, providing further support for the Greenback.
  4. Fed Policy Uncertainty:
    Amid the backdrop of Trump’s trade and immigration policies, the Federal Reserve is treading cautiously. Markets are now closely watching Wednesday’s FOMC decision, which could further influence USD momentum.

Market Outlook for GBP/USD

  • Downside Risks:
    The pair could face further selling pressure if upcoming UK economic data or BoE commentary reinforces the likelihood of rate cuts. Additionally, stronger US economic data, including Durable Goods Orders, the Consumer Confidence Index, and the Richmond Fed Manufacturing Index, could drive the US Dollar higher.
  • Key Support Levels:
    Immediate support lies near 1.2400, with a break below potentially exposing the 1.2350 region.
  • Upside Potential:
    Resistance is seen near 1.2500, followed by 1.2550. Sustained recovery would depend on a shift in BoE policy expectations or a pullback in USD strength.

Conclusion

The GBP/USD remains vulnerable as dovish expectations surrounding the BoE and Trump’s aggressive tariff policies bolster the US Dollar. Traders should keep an eye on critical economic data and central bank decisions for further cues on the pair’s direction.

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EUR/USD Dips Below 1.0500 as US Dollar Index Rebounds from Monthly Lows

EUR/USD Dips Below 1.0500 as US Dollar Index Rebounds from Monthly Lows

EUR/USD slid to approximately 1.0480 during the Asian session on Monday as the US Dollar Index (DXY) recovered from its monthly low of 107.22, recorded last Friday. At the time of writing, the DXY is trading near 107.60.

The US Dollar gained traction after the release of mixed US Purchasing Managers’ Index (PMI) data. Market uncertainty regarding the implications of US President Donald Trump’s trade and immigration policies may further encourage the Federal Reserve’s cautious approach to interest rate adjustments this year.

According to S&P Global data released on Friday, the US Composite PMI dropped to 52.4 in January from December’s 55.4. The Manufacturing PMI, however, improved to 50.1 in January from 49.4, surpassing market expectations of 49.6. Meanwhile, the Services PMI fell to 52.8 in January, down from December’s 56.8 and missing the consensus estimate of 56.5.

On the other hand, the Euro gained some support as the HCOB Eurozone preliminary Composite PMI expanded in January, signaling growth after two months of contraction. The S&P Global report indicated an increase in overall business activity, with the Composite PMI rising to 50.2 in January from November’s 49.6, beating economists’ forecasts of a slower decline to 49.7.

Nevertheless, the Euro remains under pressure due to a dovish sentiment surrounding the European Central Bank’s (ECB) monetary policy outlook. The ECB is widely expected to reduce its Deposit Facility Rate by 25 basis points to 2.75% during its Thursday meeting, with further cuts anticipated over the next three policy sessions. ECB officials appear confident that inflation will gradually return to the target rate of 2%.

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EUR/USD Gains Support Around 1.0450 Ahead of Eurozone and US PMI Data

EUR/USD Gains Support Around 1.0450 Ahead of Eurozone and US PMI Data

The EUR/USD pair found support near 1.0450 during the early Asian session on Friday, driven by weakness in the US Dollar (USD). Investors are now focusing on the preliminary January readings of the HCOB Purchasing Managers Index (PMI) for the Eurozone and Germany, set to be released later in the day. On the US front, the spotlight will be on the flash S&P PMI for January.

The USD faced additional pressure following remarks from former US President Donald Trump at the World Economic Forum in Davos. Trump called for immediate interest rate cuts and suggested that rates should be lowered globally.

“Markets appear increasingly concerned about potential rate cuts and are focusing on signs that indicate further reductions,” said David Eng, Investment Adviser at Sonora Wealth Group in Vancouver.

In Europe, recent statements from European Central Bank (ECB) officials suggest that a rate cut may be on the horizon. Earlier this week, ECB Croatian central bank chief Boris Vujcic stated that market expectations for ECB interest rate cuts are reasonable, adding that risks surrounding the inflation outlook remain balanced.

ECB President Christine Lagarde also commented on Wednesday that the central bank is “not overly concerned” about inflation risks stemming from abroad. She confirmed that the ECB will continue its gradual approach to reducing interest rates. Markets are now pricing in a 96% probability of a rate cut at the upcoming ECB meeting.

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EUR/USD Stalls Recovery Amid Midweek Slowdown

EUR/USD Stalls Recovery Amid Midweek Slowdown

The EUR/USD pair slipped slightly on Wednesday, losing approximately 0.1% as markets entered a quiet phase ahead of key economic data releases later in the week. U.S. President Donald Trump has temporarily paused his ongoing trade war rhetoric and threats of broad-based import taxes, leaving investors with limited drivers for market movement.

Thursday’s trading session is expected to mirror Wednesday’s subdued activity, with a sparse economic calendar and the U.S. Federal Reserve (Fed) in its typical blackout period ahead of next week’s interest rate decision. Meanwhile, the European Central Bank (ECB) has fewer constraints but offers little new commentary to shift market sentiment. ECB President Christine Lagarde made an appearance on Wednesday, though her remarks had minimal impact on markets.

Attention now turns to Friday’s release of the Purchasing Managers Index (PMI) data for both the EU and the U.S. These business activity surveys for January are anticipated to show mixed results. While the services components are expected to decline slightly—or remain flat in the EU—manufacturing is forecasted to recover marginally. PMI data generally has a limited market impact unless the figures deviate significantly from expectations. However, low survey response rates suggest the results should be interpreted with caution.

EUR/USD Price Forecast

EUR/USD bulls faced resistance near the 50-day Exponential Moving Average (EMA) at 1.0460, failing to break through the 1.0450 level and retreating toward the 1.0400 zone. The pair has struggled to maintain upward momentum, despite rebounding 2.75% from last week’s dip to two-year lows below 1.0200.

Although technical indicators have flipped to bullish after signaling oversold conditions, sustained upward momentum remains elusive. Traders looking for a longer-term bullish trend should wait for confirmation of a higher low pattern before entering positions based on technical signals.

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EUR/USD Edges Lower Near 1.0400 Amid Trump’s Tariff Threats

EUR/USD Edges Lower Near 1.0400 Amid Trump’s Tariff Threats

The EUR/USD pair dipped slightly to around 1.0415 during Wednesday’s Asian trading session, with the Euro (EUR) under pressure against the US Dollar (USD). This decline follows US President Donald Trump’s announcement of potential tariffs on the European Union (EU). Traders now await a speech from European Central Bank (ECB) President Christine Lagarde later today for further market direction.

On Tuesday, Trump stated his intention to impose 25% tariffs on Canada, Mexico, China, and the European Union starting February 1, citing trade deficits with the US as a key concern. European Commission President Ursula von der Leyen underscored the need to safeguard EU-US trade relations, noting that the transatlantic partnership accounts for €1.5 trillion in trade and significant mutual investment, highlighting the stakes for both sides. Trump’s policies could bolster the USD, adding further pressure on the Euro.

Market sentiment around the ECB also weighs on the EUR. Speculation of a dovish policy shift persists, with expectations of a rate cut on January 30 and a potential reduction in the benchmark rate to 2% by year-end. ECB policymaker Boris Vujčić stated on Monday that market expectations of rate cuts are justified, while inflation risks remain broadly balanced.

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EUR/JPY Dips Towards 161.00 as BoJ Signals Possible Rate Hike

EUR/JPY Dips Towards 161.00 as BoJ Signals Possible Rate Hike

The EUR/JPY pair slipped to approximately 161.10 during early European trading on Tuesday, as the Japanese Yen gained strength amid increasing speculation that the Bank of Japan (BoJ) may raise interest rates during its upcoming policy meeting on Friday. Additionally, market attention is turning to Germany’s ZEW Economic Sentiment Survey for January, set to be released later in the day.

Markets are currently pricing in a 92% probability that the BoJ will increase interest rates by the end of its January 23-24 meeting. Such a move would push short-term borrowing costs to levels not seen since the 2008 global financial crisis.

Japan’s Vice Finance Minister for International Affairs, Atsushi Mimura, commented on Tuesday that the outlook for the US economy depends on its macroeconomic policies. Meanwhile, Japan’s Finance Minister Katsunobu Kato emphasized the need to monitor the global impact of US economic policies closely. He also expressed confidence that the BoJ would implement monetary policies effectively to achieve its 2% inflation target.

Conversely, the Euro’s performance against the Yen may be hindered by the dovish stance of the European Central Bank (ECB). According to the ECB’s December Monetary Policy Meeting Accounts, policymakers agreed to proceed cautiously with rate adjustments but also indicated that further rate cuts could be necessary. Weakened inflationary pressures and a subdued economic outlook in the Eurozone have led markets to anticipate 25-basis-point rate cuts at each of the ECB’s next four policy meetings. These expectations weigh heavily on the Euro’s performance against stronger currencies like the Yen.

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USD/JPY Holds Steady Near 147.00 as Yen Weakens on Trade Tensions and BoJ Rate Outlook

USD/JPY Holds Steady Near 147.00 as Yen Weakens on Trade Tensions and BoJ Rate Outlook

The Japanese Yen (JPY) continues to trade with a bearish bias on Wednesday, keeping the USD/JPY pair firm around the 147.00 mark during the Asian session. A stronger US Dollar and persistent concerns over rising trade tensions are weighing heavily on the Yen, as markets brace for the impact of US tariffs on Japanese goods starting August 1. 

Former US President Donald Trump’s announcement of a 25% tariff on Japanese imports, coupled with the threat of retaliatory action, has sparked renewed fears over Japan’s economic resilience. The country’s Q1 GDP contracted, real wages in May dropped at their steepest pace in nearly two years, and political uncertainty is rising ahead of the July 20 House of Councillors election. Recent polls suggest the ruling LDP-Komeito coalition may struggle to retain its majority, further dampening investor confidence. 

These developments have led traders to scale back expectations of a rate hike by the Bank of Japan this year. The combination of domestic headwinds and external pressure is weakening the JPY, while the US Dollar continues to gain on expectations that rising tariffs will stoke inflation and prompt the Federal Reserve to maintain a hawkish stance. 

The Fed’s June decision to hold interest rates steady, along with a strong US jobs report, has reinforced the belief that rate cuts may be delayed until at least October. The FOMC meeting minutes, due later today, will be closely watched for insights into the Fed’s policy trajectory. Markets currently anticipate up to 50 basis points in rate cuts by year-end. 

Technical Outlook: Bullish Momentum Builds 

Technically, USD/JPY’s break and close above the 100-day Simple Moving Average (SMA) — for the first time since February — signals potential for further gains. Positive momentum on the daily chart supports a move toward the 147.60–147.65 resistance area, with the 148.00 handle, a key June high, in sight. 

On the downside, immediate support lies near 146.50, with the 100-day SMA just below 146.00 acting as a critical pivot. A decisive break below this level could shift momentum in favor of bears, opening room for deeper losses. 

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NZD/USD gains ground to near 0.5700 on weaker US PMI data

During the early Asian session on Thursday, the NZD/USD pair was trading slightly higher at 0.5690. The Greenback falls against the New Zealand Dollar (NZD) as US economic data disappoints. Investors will keenly monitor developments in the rekindled trade battle between the United States and China, the world’s two largest economies. 

The weaker US Services Purchasing Manager Index (PMI) could weigh on the Greenback and generate a tailwind for the pair. The US ISM Services PMI fell to 52.8 in January from 54.0 (revised from 54.1) in December. This reading came in below the market consensus of 54.3.

On the other hand, New Zealand’s fourth-quarter employment report will put the RBNZ on pace to decrease the Official Cash Rate (OCR) by 50 basis points (bps) to 3.75% this month. Statistics New Zealand said on Wednesday that the country’s unemployment rate increased to 5.1% in Q4, up from 4.8% the previous quarter. This result was a four-year high and exceeded the 25-year average of 4.8%. Rising expectations that the Reserve Bank of New Zealand (RBNZ) may decrease interest rates may further impact on the New Zealand Dollar (NZD).

“In line with RBNZ guidance, markets continue to imply another 50bps rate cut to 3.75% at the February 19 meeting and the policy rate to through around 3.00% over the next 12 months. Bottom line: NZ-US 2-year bond yield spreads can further weigh on NZD/USD,” noted Société Générale’s FX analysts. 

On Tuesday, the finance ministry in China unveiled a package of tariffs on various US products such as crude oil, farm equipment, and some autos in a sharp response to an announcement made by US President Donald Trump imposing a 10% tariff on Chinese imports. Further, China served notice to several companies including Google for potential sanctions in response to Trump’s tariffs. Any sign of uncertainty or a rising trade war tension may see the China-proxy Kiwi being dragged lower, as China remains one of the major trading partners to New Zealand.

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JPY Recovers Losses vs. USD, Bullish Outlook Intact

Japanese Yen Recovers Some Losses Against USD; Bullish Outlook Remains Intact

The Japanese yen (JPY) cut some of its intraday losses against the US dollar (USD) on Monday, bringing the USD/JPY pair back below the mid-155.00s during the early European session. The Bank of Japan’s (BoJ) Summary of Opinions showed conversations about the possibility of further hikes in interest rates. Furthermore, Tokyo’s core inflation increased at the quickest annual rate in nearly a year, raising expectations of further policy tightening by the BoJ, which supports the JPY.

Beyond monetary policy, narrowing interest rate differentials between Japan and other major economies, including the US, alongside a broader risk-off sentiment, provide additional support to the safe-haven JPY. However, concerns over the economic impact of US President Donald Trump’s newly announced trade tariffs limit the yen’s upside. Meanwhile, the USD remains broadly strong, allowing the USD/JPY pair to maintain its positive momentum for a second consecutive day, ahead of the upcoming US ISM Manufacturing PMI report.

Yen Gains Traction Amid BoJ Rate Hike Bets and Trade War Fears

US President Donald Trump signed an executive order on Saturday to impose 25% tariffs on imports from Canada and Mexico and 10% tariffs on Chinese goods, effective Tuesday.

Canada’s Prime Minister Justin Trudeau, Mexico’s President Claudia Sheinbaum, and China’s foreign ministry all replied quickly, indicating probable retaliation. The US Dollar continues to climb, approaching a two-year high last hit in January, supporting the USD/JPY pair’s upward trend.

The Bank of Japan’s latest Summary of Opinions, released on Monday, showed that policymakers are thinking about additional rate hikes, though this has failed to appreciably lift the JPY.

Board members of the Bank of Japan stressed the need of continuing to raise interest rates if economic conditions and inflation remain stable.

Japan’s Finance Minister Katsunobu Kato stated that the government is closely monitoring the impact of Trump’s tariffs on the yen amid concerns over potential economic fallout.

Economy Minister Ryosei Akazawa reiterated Japan’s commitment to achieving the BoJ’s 2% inflation target while implementing measures to offset rising living costs.

The US-Japan yield spread remains near a multi-week low, which, coupled with risk aversion, could help stabilize the yen in the near term.

Investors now turn their focus to key US economic data, starting with today’s ISM Manufacturing PMI, followed by the highly anticipated Nonfarm Payrolls (NFP) report on Friday.

USD/JPY Faces Resistance Near 156.25; Bears in Control Below This Level

From a technical standpoint, last week’s strong rebound from the 50% Fibonacci retracement level of the December-January rally and the subsequent upside move favor bullish traders. However, additional gains beyond 156.00 may encounter resistance near last week’s swing high at 156.25. A sustained break above this level could spark a short-covering rally, pushing the pair towards:

  • 156.70-156.75 resistance
  • 157.00 psychological mark
  • 157.60 horizontal barrier
  • Potential extension towards 158.00, with an ultimate target at the 158.85-158.90 multi-month high from January 10

Conversely, on the downside:-

  • 155.00 serves as immediate support
  • Below this, watch for key levels at 154.55-154.50 and 154.00
  • A break below the 153.70 January low could accelerate the decline towards 153.30 and eventually 153.00

While the JPY is exhibiting some resilience, the overall trend remains unpredictable, with market participants intently watching economic indicators and geopolitical developments.

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Australian Dollar Drops as RBA Rate Cut Bets Rise, Fed Decision Looms

Australian Dollar Slides Amid Rising Odds of RBA Rate Cuts, Fed Decision in Focus

The Australian Dollar (AUD) extends its losing streak for a third consecutive session against the US Dollar (USD), weighed down by softer-than-expected inflation data from Australia.

Australia’s Consumer Price Index (CPI) rose by 0.2% quarter-on-quarter in Q4 2024, matching the previous quarter but missing the expected 0.3%. On an annual basis, CPI eased to 2.4% from 2.8% in Q3, below the market forecast of 2.5%. Despite December’s monthly CPI ticking up to 2.5% YoY, inflation remains within the Reserve Bank of Australia’s (RBA) 2%-3% target range. Meanwhile, the RBA’s Trimmed Mean CPI slowed to 3.2% YoY, its weakest pace in three years, slightly under the anticipated 3.3%.

Australian Treasurer Jim Chalmers expressed confidence that “the worst of the inflation challenge is behind us” and that a “soft landing” is increasingly likely. The cooling inflation strengthens the case for an RBA rate cut in February. The central bank has held the Official Cash Rate (OCR) steady at 4.35% since November 2023, emphasizing the need for inflation to “sustainably” return to target before considering a rate reduction.

AUD Pressured by Risk Aversion, Trump’s Tariff Threats

The AUD faces additional headwinds from risk-off sentiment following tariff threats by former US President Donald Trump. On Monday, Trump announced plans to impose tariffs on imports of key commodities, including computer chips, pharmaceuticals, steel, aluminum, and copper, aiming to boost US manufacturing.

Meanwhile, the US Dollar Index (DXY) holds firm around 108.00 as traders turn their attention to the upcoming Federal Reserve (Fed) interest rate decision. Market expectations, per the CME FedWatch tool, indicate near-certainty that the Fed will maintain its policy rate at 4.25%-4.50%. Investors will closely watch Fed Chair Jerome Powell’s press conference for guidance on future policy shifts.

Concerns over the potential inflationary impact of Trump’s trade policies add another layer of uncertainty. US Bank chief economist Beth Ann Bovino noted, “A number of White House proposals appear inflationary, which could keep the Fed in check.” Additionally, Treasury Secretary Scott Bessent has proposed universal tariffs on US imports starting at 2.5%, with Trump reportedly favoring even higher rates.

China’s Economic Slowdown Adds Pressure on AUD

The Australian Dollar remains vulnerable to China’s economic struggles. China’s NBS Manufacturing PMI dropped to 49.1 in January from 50.1, missing expectations, while the Non-Manufacturing PMI slipped to 50.2 from 52.2. As Australia’s largest trading partner, China’s weak data weighs heavily on the AUD.

Despite China’s recent stimulus measures, including a $7.25 billion investment in index products and long-term stock investments, concerns persist. Industrial profits fell 3.3% YoY in 2024, marking a third consecutive year of contraction, driven by weak demand, deflationary pressures, and a prolonged property sector slump.

Technical Outlook: AUD/USD Turns Bearish Below 0.6250

The AUD/USD pair trades near 0.6230 on Wednesday after breaking below the ascending channel on the daily chart, signaling a shift toward a bearish bias. The 14-day Relative Strength Index (RSI) has dropped below 50, reinforcing downside momentum.

A decisive break below key support at the lower boundary of the ascending channel strengthens the bearish outlook, potentially pushing AUD/USD toward 0.6131—its lowest level since April 2020. On the upside, immediate resistance lies at the nine-day Exponential Moving Average (EMA) at 0.6256. A rebound above this level could reintroduce a bullish bias, with the next upside target near 0.6360.

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US Dollar Surges as Trump Revives Tariff Threats

US Dollar Surges as Trump Revives Tariff Threats

The US dollar strengthened significantly against all major currencies after President Donald Trump and his Treasury Secretary reignited concerns about potential tariffs, raising fears that trade policies may return to the forefront. Risk-sensitive currencies, particularly those tied to China, saw sharp declines, while the euro weakened amid speculation that the European Union could soon face tariff pressures. Simultaneously, the Japanese yen took a hit as traders hedged against potential US inflation spikes and rising Treasury yields.

This market turbulence followed a Financial Times report indicating that Scott Bessent, the newly appointed Treasury Department official, supports a phased approach to implementing universal tariffs on US imports. The initial proposal suggests starting with a 2.5% tariff rate. However, President Trump hinted at a much broader scope, potentially targeting a range of imports from steel to semiconductor chips and suggesting higher tariff rates over time.

The administration’s “moderate” proposal involves a gradual increase in tariffs, reaching 20% over eight months in increments of 2.5% per month. This timeline has triggered speculation about more extreme scenarios and raised questions about the global trade concessions needed to halt these measures. Bessent’s approach, which allows businesses time to adjust, could also spark a rush of imports and exports to avoid higher future costs.

Amid these developments, financial markets are grappling with the potential outcomes. Traders are assessing whether the proposed tariff measures are fully priced in and evaluating the likelihood of de-escalation through negotiation.

On the positive side, any concessions or agreements that delay or reduce tariffs could stabilize markets. However, the risks of escalating tariffs, particularly if negotiations fail, remain a significant concern. Higher tariffs could disrupt global trade and have far-reaching implications for currency valuations.

While we initially favored long positions on the dollar, the unfolding tariff narrative has introduced significant uncertainty. Staying prepared for sudden shifts in policy and market dynamics is now crucial as the situation continues to evolve.

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Australian Dollar Weakens Amid Concerns Over Trump’s Trade Policies and Mixed Chinese Data

Australian Dollar Weakens Amid Concerns Over Trump’s Trade Policies and Mixed Chinese Data

The Australian Dollar (AUD) ended its three-day winning streak against the US Dollar (USD) on Monday, with the AUD/USD pair trading flat following the release of mixed Chinese Purchasing Managers’ Index (PMI) data. As a close trade partner, Australia’s economy is heavily influenced by China’s economic performance.

China’s National Bureau of Statistics (NBS) reported that the Manufacturing PMI fell to 49.1 in January, down from 50.1 in December, missing market expectations. Similarly, the Non-Manufacturing PMI dropped to 50.2 from the previous month’s 52.2. These weaker-than-expected figures suggest a slowdown in China’s economic recovery, weighing on the risk-sensitive Australian Dollar.

Despite fresh stimulus measures from China aimed at revitalizing its equity markets, the AUD struggled to gain momentum. The China Securities Regulatory Commission (CSRC) announced a second round of long-term stock investment pilot programs valued at 52 billion Yuan ($7.25 billion). However, these measures have done little to alleviate investor concerns about China’s economic challenges.

Risk Aversion Rises Amid Trump’s Trade Tariff Push

Broader market sentiment took a hit as reports emerged that US President Donald Trump’s advisers are pushing to impose 25% tariffs on Mexico and Canada as early as February 1, bypassing negotiations. According to the Wall Street Journal, Trump’s willingness to move swiftly on tariffs follows similar actions taken against Colombia, raising fears of escalating trade tensions and dampening demand for riskier assets like the Australian Dollar.

Adding to the negative outlook, China’s Industrial Profits declined by 3.3% year-over-year in 2024 to CNY 7,431.05 billion, marking the third consecutive year of contraction. This downturn highlights ongoing economic headwinds, including weak demand, rising deflationary pressures, and a prolonged slump in the property sector.

Technical Analysis: AUD/USD Eyes Key Resistance Amid Bullish Setup

The AUD/USD pair is trading near 0.6290 on Monday, showing signs of upward momentum within an ascending channel on the daily chart, indicating a potential bullish bias. The 14-day Relative Strength Index (RSI) remains slightly above 50, reflecting mild optimism in the market.

On the upside, the pair could retest the psychological resistance level at 0.6300, with the next target near the channel’s upper boundary around 0.6350.

Support levels are found at the nine-day Exponential Moving Average (EMA) of 0.6265, followed by the 14-day EMA at 0.6254. A stronger support lies near the channel’s lower boundary around 0.6240, which could act as a safety net in case of a downside correction.

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NZD/USD Struggles

NZD/USD Struggles Below 0.5700 Amid Trump’s Tariff Plans and Dovish RBNZ Expectations

The NZD/USD pair remains under pressure, trading near 0.5675 during the early Asian session on Friday. The New Zealand Dollar (NZD) faces headwinds due to uncertainty surrounding US President Donald Trump’s proposed tariffs on China and the dovish outlook of the Reserve Bank of New Zealand (RBNZ).

New Zealand’s Consumer Price Index (CPI) for the fourth quarter of 2024 indicated a continued decline in underlying inflation, strengthening expectations of additional rate cuts by the RBNZ. Swap markets now estimate a nearly 90% chance of a 50-basis-point (bps) rate cut on February 19, building on the two cuts already implemented in this cycle. The RBNZ is projected to deliver a total of 100 bps in rate cuts through the remainder of 2025.

Meanwhile, the downside for the pair could be capped by recent comments from Trump. Speaking at the World Economic Forum in Davos on Thursday, Trump called for immediate interest rate cuts by the US Federal Reserve (Fed). “With oil prices going down, I’ll demand that interest rates drop immediately, and likewise, they should be dropping all over the world,” Trump said.

Investors are now closely watching for further details on Trump’s tariff policies, alongside key US economic data releases. The flash US S&P Global Manufacturing and Services PMI for January will be a key focus later on Friday, along with the release of US Existing Home Sales and the Michigan Consumer Sentiment Index.

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US Yields Boost Dollar, Weaken Yen

US Yields Boost Dollar, Weaken Yen

US Yields Boost Dollar, Weaken Yen

The dollar strengthened on Tuesday, driven by rising U.S. yields, putting pressure on low-yielding currencies like China’s yuan and Japan’s yen, which fell to its lowest level since 1986.

Benchmark 10-year Treasury yields increased nearly 14 basis points to 4.479% overnight. Analysts attributed this rise to expectations of Donald Trump winning the U.S. presidency, which could lead to higher tariffs and increased government borrowing.

As the dollar gained, the euro reversed part of a small rally following the first round of France’s election, which aligned with polling predictions. The euro last traded at $1.0735.

The yen dropped to 161.72 per dollar on Monday, its weakest in nearly 38 years, primarily due to the significant interest rate gap between the U.S. and Japan. On Tuesday, the yen traded at 161.55 per dollar in Asia and was under pressure from yen bears wary of potential intervention by Japanese authorities. The yen also hit a lifetime low of 173.67 against the euro on Monday and remained near that level on Tuesday.

In the bond market, the 10-year yield gap between U.S. and Japanese rates stood at 340 basis points, and nearly 440 basis points at the two-year tenor. China’s yuan, which reached a seven-month low against the dollar last week, faced similar pressure, with U.S. 10-year yields more than 220 basis points higher than Chinese government bond yields.

Robust manufacturing data in China and an announcement from the central bank about borrowing bonds, likely to sell them and stabilize falling yields, provided only a brief boost to the currency on Monday. The yuan last traded at 7.3043 in offshore markets on Tuesday, close to its June low.

The New Zealand dollar slipped 0.3% in early trade and was testing support at its 200-day moving average at $0.6075. The British pound remained steady at $1.2641. The Australian dollar hovered within its recent range at $0.6650, with traders focused on central bank minutes to gauge the likelihood of future interest rate hikes. Swaps market pricing suggests a one-in-three chance of a rate hike as soon as next month.

The question remains about the trigger for such a move. ING economist Rob Carnell noted that discussions have taken place, but the specific trigger for a hike is still uncertain. There is a leaning towards forecasting a hike at the August meeting.

Overall, the strengthening dollar and rising U.S. yields continue to exert pressure on low-yielding currencies, with markets closely watching upcoming central bank decisions and geopolitical developments.

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Cryptocurrency Move Back to Support the Pack to Level

If we have a look at the bearish start to the day in the majors and the Bitcoin move back to the level by $18,500 to the support pack. The Bitcoin to USD was seemed down at the level by 1.16% on this Thursday that reversing a 1.25% gain to the Wednesday to the ended the day at the level $18,260.0. At the start of the day, the Bitcoin rose to the early morning intraday to the high at the level before hitting the reverse level.

The major resistance level goes at the level by $18,878 and the Bitcoin fell to the intraday low to the level by $17,935.0.

The close term bullish pattern stayed flawless, disregarding the most recent pullback to sub-$18,000 levels. For the bears, Bitcoin would have to slide through the 62% FIB of $10,095 to shape a close term bearish pattern.

The Bitcoin was somewhere near at the level by 1.03% to $18,072.0. A blended beginning to the day saw Bitcoin ascend to an early morning high of $18,299.0 prior to tumbling to a low of $18,070.0.

Bitcoin left the significant help and obstruction levels untested from the get-go.

Somewhere else, it was a bearish beginning to the day for the majors. The Ripple’s XRP was somewhere around at the level 2.69% to lead the route down.

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Bitcoin Slips Down Below at Level $13,000 Since the Last Rally

Bitcoin Slips Down Below at Level $13,000 Since the Last Rally

The Bitcoin seems to the low at the level of $9,813 in September that managed the bitcoin to reach at the level high at $13,868. The bitcoin price is rejected to the sequential indicators on the 3-day chart.

If we have a look at the current candlestick of the 3-day chart it will seem significantly bearish and the TD sequential indicators are presented a sell signal. The 50- SMA seems down at the level of $10,600 and the 100 SMA at the level of $9,47.

The In/Out of the Money Around Price chart shows the closest and most grounded help region to be somewhere in the range of the level at $12,687 and $13,073 with near 624,000 BTC in volume. A break below this point can drive the cost of Bitcoin down to $11,914.

Despite the fact that bears appear to have assumed responsibility for the present moment, the powerful day by day upswing stays unblemished for Bitcoin. The 50-SMA and the 100-SMA harmonize around $11,200 which will go about as a critical help level. The MACD keeps bullish and the most basic obstruction level is still at $13,863. A breakout over this point can without much of a range drive the lead digital currency towards the untouched high at the level of $20,000.

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Bitcoin Price Clear the Path and Rose to the Level $13,000

Bitcoin Price Clear the Path and Rose to the Level $13,000

Bitcoin Price of the bulls has been the full control of the market to the price at the level of $11,340 to $12,835. The cryptocurrency had the largest to the single day that put the gain. The MACD shows the increasing the bullish momentum to price the growth anticipated.

The position detector is a convenient little apparatus that causes us to imagine solid opposition and backing levels. According to the everyday conjunction detector, there is an absence of solid obstruction levels on the potential gain. This should be empowering news for the buyers as they plan to bring BTC into the $13,000-zone.

Santiment’s holder’s distribution charts show you the number of addresses having a place with a specific symbolic section. According to the chart, the number of addresses holding 10,000-100,000 tokens tumbled from 111 on October 8 to 104 on October 20. This is an intensely bearish sign as it shows that the whales are selling off their property.

Bitcoin buyers have the opportunity to bring the cost into the level at $13,000 and even the $14,000 interference. The everyday intersection finder shows a total absence of solid opposition barriers straightforward.

For the bears, the drawback is covered off at the $12,000-$12,100 uphold divider. A break below that zone will bring the value down to $11,000, which has both the 50-day and 100-day SMA

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Cryptos Market: Bitcoin Shows Bullish Momentum Over Dollar Strength

Cryptos Market: Bitcoin Shows Bullish Momentum Over Dollar Strength

The BTC/USD traded at the level of $11,355 after the mild rejection of the top-level $11,720 that losing some of the bullish.

Ethereum USD had a similar fate at the higher risk that seeing the longer pullback than the Bitcoin. If we talk about the XRP/USD is the clear loser after breaking below the 50 SMA and the 100 SMA on the daily chart that currently trading at the level of $0.2482 after yet facing another rejection.

Bitcoin, BTC to USD, fell by 1.02% on Tuesday. Incompletely turning around a 1.55% increase from Monday, Bitcoin finished the day at the level of $11,442.0.

It was a quiet beginning to the day. Bitcoin rose to a late morning intraday high to the level of $11,574.9 before operating reverse.

Missing the mark concerning the primary significant obstruction level at $11,830, Bitcoin tumbled to an early evening intraday low of $11,333.0.

Avoiding the primary significant help level at $11,201 Bitcoin quickly returned to $11,470 levels before moving back.

The close term bullish pattern stayed perfect, upheld by the most recent move back through to $11,000 levels. For the bears, Bitcoin would need to slide through the 62% FIB of $6,400 to shape a close term bearish pattern.

Bitcoin was up by 0.22% to $11,467.0. A beginning to the day saw Bitcoin tumble to an early morning low of $11,427.0 before ascending to a high at the level of $11,467.0. Bitcoin left the support and Resistance levels untested at an early stage.

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Ethereum Rate Hits at Higher Level More Profitable Than Bitcoin Mining

Ethereum Rate Hits at Higher Level More Profitable Than Bitcoin Mining

Let’s have a look at the cryptocurrency that hovering near to the level at $10,600 mark. The Bitcoin price is consolidating to the 50-12 Hour SMA and the 200-12 Hours SMA. The strong resistance lies at the level 50-12 SMA that repeatedly rejected the price.

This repeated dismissal may drop the value down to the level at  $10,400 uphold level, which is by all accounts the main observable help level on the drawback. If case this level doesn’t hold firm, at that point you can anticipate that the cost should plunge below $10,000. For this situation, one can anticipate that BTC should tumble to the level of $9,700 before it experiences another solid help.

While this may not appear to be a huge number, remember that every one of these addresses holds a great many dollars worth of Bitcoin. The fishes using the stale value activity to merge their positions look good for the general market.

With respect to the top 50 digital forms of money, the greatest failures incorporate Compound, down 12% over the most recent 24 hours, UMA down 12%, OMG Network down at the level 13%, Yearn.finance down 16%, and Aave down 18%. The main bull among the sloths of bears is EOS, which broke out greatly as covered Tuesday.

Ethereum has since September 23, been holding inside a rising equal channel. Recuperation towards $400 flamed out marginally above $360 a week ago. On the drawback, the misfortunes that followed grasped uphold at the level of $335 throughout the end of the week, permitting the shrewd agreement sign to revitalize, making strides above $350.

The Ethereum selling pressure in the market halted the increase at the 50 SMA and 100 SMA. Ether fell below the climbing channel, confirming a bear banner.

The downside of a significant help zone shows that Ethereum is at grave risk of spiraling to the level at $300. Other than the various simple help zones, the most significant one lies somewhere in the range of $298 and $309. Previously, around 879,000 locations purchased almost 2 million ETH.

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Cryptocurrency Bitcoin Shows the Bullish Divergence on User Count

Cryptocurrency Bitcoin Shows the Bullish Divergence on User Count

The Bitcoin moves back and shows the bearish to the start of the day with the support level at $10,900 to the broader market.

The Bitcoin BTC to USD is rose by the level at 1.33% this Tuesday and reversing the loss at the level of 0.83% on Monday.

It was a mixed start to the day. Bitcoin fell to an early morning low $10,674.2 before finding support.

Steering clear of the major support levels, Bitcoin struck a late morning high at the level of $10,815.4 before operating reverse.

Coming up short of the major resistance levels, Bitcoin slid to a late afternoon intraday low $10,654.0.

Steering clear of the first major support level at $10,585, Bitcoin rallied to a final hour intraday high at the level of $10,889.0.

Falling short of the first major resistance level at $10,915, Bitcoin eased back to end the day at sub-$10,860 levels.

The near-term bullish trend remained whole, in contempt of the latest pullback. For the bears, Bitcoin would need to slide through the 62% FIB of $6,400 to form a near-term bearish trend. At the hour of composing, Bitcoin was somewhere around 0.28% to the level of $10,826.0. It was a blended beginning to the day. Bitcoin rose to an early morning high $10,866.0 before tumbling to a low $10,826.0.

Bitcoin started the significant help and obstruction levels untested from the get-go. Somewhere else, it was a blended beginning to the day.

Bitcoin Cash ABC (+0.54%), Bitcoin Cash SV to the level (+0.62%), and Crypto.com Coin (+0.65%) evaded the pattern right off the bat.

It was a bearish beginning to the day for the remainder of the majors, in any case. Binance Coin was somewhere around 1.18% to lead the way down.

https://xtreamforex.com/nasdaq-futures-shows-the-short/

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