EURUSD
- Consolidation above 1.0800: EUR/USD is maintaining its weekly gains, consolidating above 1.0800 in the early European morning on Friday.
- Fed's Monetary Easing Expectations: The prospect of the Federal Reserve (Fed) implementing a series of monetary easing measures gained credibility, driven by stronger-than-expected US inflation data in January, including CPI and PPI readings.
- ECB's Rate Reduction Consideration: ECB Accounts revealed a general agreement among members that it was too early to deliberate on rate reductions. However, they acknowledged the possibility of revising downward the March 2024 inflation forecast.
- Balanced Risks on Inflation Target: ECB officials indicated that the risks associated with achieving the inflation target were viewed as broadly balanced or approaching a more equitable distribution.
- Caution Against Premature Expectations: ECB Board member Wunsch, on Wednesday, advised against prematurely raising expectations regarding interest rates. He cited elevated wage pressures and constrained labor markets as factors influencing this caution.
| SMA (20) | Falling |
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| RSI (14) | Rising |
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| MACD (12, 26, 9) | Slightly Rising |
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Closing statement: EUR/USD remains consolidated above 1.0800 as the market weighs the possibility of Fed monetary easing against ECB's cautious stance on rate reductions. The ECB, while acknowledging potential downward revisions in inflation forecasts, emphasizes a balanced view on inflation risks. ECB Board member Wunsch's caution further highlights the complexity in navigating the economic landscape. Investors will continue to monitor central bank actions for potential impacts on the EUR/USD pair.
GBPUSD
- Modest Gains Above Mid-1.2600s: GBP/USD posted modest gains, maintaining its position above the mid-1.2600s in early European trading on Friday.
- Robust US Labor Market: The US Initial Jobless Claims for the week ending February 17 fell to 201K, signaling a robust US labor market. This may influence the Federal Reserve (Fed) to delay interest rate cuts.
- Delayed Rate Cut Expectations: Investors have pushed back their expectations for the first rate cut from the Fed to June from May, driven by a solid job market and hotter-than-expected inflation readings in January.
- Improved US Manufacturing PMI: On Thursday, the US Manufacturing PMI improved to 51.5 in February, surpassing the previous reading of 50.7 and the estimation of 50.5. This marks the highest reading in 16 months.
- Focus on Fed Christopher J. Waller's Speech: Investors will be attentive to the speech by Fed's Christopher J. Waller on Friday for further insights. Additionally, anticipation builds for the release of the US Gross Domestic Product Annualized (GDP) for the fourth quarter next week.
| SMA (20) | Slightly Falling |
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| RSI (14) | Rising |
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| MACD (12, 26, 9) | Slightly Rising |
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Closing statement: GBP/USD maintains modest gains amid a robust US labour market and delayed rate cut expectations. The improved US Manufacturing PMI adds positive sentiment. Investors keenly await insights from the upcoming speech by Fed's Christopher J. Waller and the release of US GDP data, which could further shape the trajectory of the GBP/USD pair.
GOLD
- Mild Positive Bias in Asian Trading: Gold price exhibits a mild positive bias during the Asian session on Friday, holding below a nearly two-week high reached in the previous day's trading.
- China’s House Price Index and Global PMI Data: The ongoing downfall in China’s House Price Index, coupled with mixed global business PMI data, contributes to a tempering of the risk rally, impacting gold price dynamics.
- Hawkish Fedspeak: Statements from Fed officials, including Governor Christopher Waller, expressing no rush to cut interest rates, and Vice Chair Phillip Jefferson suggesting it might be appropriate to begin cutting policy rates later this year, contribute to the complex market sentiment.
- Gold Price Action and Market Sentiment: The Gold price action is currently influenced by broad market sentiment, with traders closely monitoring the dynamics of the US Dollar. The ongoing Fedspeak and the forthcoming Fed’s Monetary Policy Report are significant factors in shaping market expectations.
- Upcoming Events: Traders are anticipating more Fedspeak, and the release of the Fed’s Monetary Policy Report is on the horizon, adding to the factors that will impact the gold market.
Closing statement: Gold price maintains a mild positive bias amid a backdrop of China’s economic indicators, mixed global data, and hawkish Fedspeak. The market sentiment, influenced by ongoing Fedspeak and the awaited Fed’s Monetary Policy Report, remains a key determinant for gold dynamics as traders navigate these factors in their decision-making process.
CRUDE OIL
- WTI Prices Edge Higher: West Texas Intermediate (WTI) prices experience upward movement, buoyed by a combination of factors including the EIA Crude Oil stockpiles report falling just below expectations and lingering uncertainty in the Middle East.
- Crude Oil Inventory Data: The Energy Information Administration (EIA) reported an increase in crude oil inventories by 3.514 million barrels for the week ending February 16, a notable decrease from the previous week's substantial gain of 12 million barrels.
- Geopolitical Tensions in the Middle East: Ongoing geopolitical tensions in the Middle East contribute to concerns about potential disruptions in crude supplies, providing support for WTI prices in the current market environment.
- Interest Rate Narrative Impact: There is a consideration that the 'higher for longer' interest rate narrative from the US Federal Reserve (Fed) and major central banks might limit the upside potential for WTI prices.
- Upcoming Events: Oil traders are attentively monitoring the German Gross Domestic Product (Q4) and Fed Christopher J. Waller's speech on Friday for potential market-moving insights.
| SMA (20) | Rising |
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| RSI (14) | Rising |
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| MACD (12, 26, 9) | Rising |
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Closing statement: WTI prices see an uptick driven by a combination of supportive factors such as favourable crude oil inventory data, ongoing geopolitical tensions in the Middle East, and considerations regarding the interest rate narrative. As traders await key economic indicators and central bank communications, the trajectory of WTI prices remains subject to these multifaceted influences.
DAX
- Private Sector PMIs: Private sector Purchasing Managers' Index (PMI) figures for Germany and the Eurozone capture investor attention. Germany's Services PMI rises from 47.7 to 48.2 in February, while the Eurozone Services PMI notably increases from 48.4 to 50.0.
- Fed Speakers and NVIDIA Earnings Impact: The market reacts to statements from Federal Reserve (Fed) speakers and the earnings report from NVIDIA, contributing to increased buyer demand for DAX-listed stocks.
- Germany's GDP Contraction: Germany's price-adjusted Gross Domestic Product (GDP) experiences a quarterly contraction of 0.3% in the fourth quarter of 2023, aligning with preliminary figures.
- Ifo Business Climate Index: Later in the morning session, investor attention is directed towards the Ifo Business Climate Index numbers from Germany, providing insights into the business sentiment in the country.
- Corporate Earnings: Significant corporate earnings reports are expected to influence market dynamics. Deutsche Telekom AG, BASF, and Allianz, among other major names, are scheduled to release earnings on Friday.
| SMA (20) | Rising |
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| RSI (14) | Rising |
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| MACD (12, 26, 9) | Slightly Rising |
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Closing statement: The DAX witnesses a day of dynamic market activity, influenced by positive movements in private sector PMI figures, market response to key earnings reports and Fed communications, and the release of important economic indicators such as Germany's GDP and the Ifo Business Climate Index. As investors await corporate earnings updates, the DAX remains subject to both macroeconomic trends and company-specific performances.