News en

EUR/USD Current price: 1.0703 Market players are concerned the timing for rate cuts will be further extended. Stock markets struggle to revert recent losses, yields remain near fresh highs. EUR/USD consolidates at around 1.0700, has scope to extend the slump. The EUR/USD pair struggles around the 1.0700 mark on Wednesday as the US Dollar maintains the firm footing triggered by higher-than-anticipated United States (US) inflation. Financial markets turned risk-averse on Tuesday following the release of the US Consumer Price Index (CPI), which rose beyond expectations in January. The figures supported the Federal Reserve’s (Fed) case of waiting longer before loosening the monetary policy through rate cuts. Stocks plummeted and government bond yields soared, resulting in the 10-year Treasury note offering as much as 4.31%, its higher since last December. Fears receded during Asian trading hours, with local stocks trading with a better tone and limiting USD gains. Government bond yields are also down ahead of Wall Street’s opening, with the 10-year note currently offering 4.29%. Meanwhile, European Central Bank (ECB) officials commented on monetary policy. ECB Vice-President Luis de Guindos said on Wednesday that while the Eurozone inflation appears to be heading back to 2%, policymakers should not get ahead of… Read More »EUR/USD Forecast: Bears determined to push it lower

EUR/USD declined sharply on broad US Dollar strength on Tuesday. The pair could extend its decline toward 1.0660 in case 1.0700 support fails. Markets favor a no change in the Fed policy rate in May after inflation data. EUR/USD came under heavy bearish pressure in the American session on Tuesday and touched its lowest level since mid-November at 1.0700. The pair stays in a consolidation phase slightly above this level early Wednesday but the technical outlook shows that the bearish bias remains intact. The US Dollar (USD) outperformed its rivals in the second half of the day on Tuesday and forced EUR/USD to decline sharply. Inflation in the US, as measured by the change in the Consumer Price Index, edged lower to 3.1% in January from 3.4% in December. This reading came in above the market expectation of 2.9%. Additionally, the Core CPI, which excludes volatile food and energy prices, rose 3.9% in the same period, matching December’s increase and surpassing analysts’ estimate of 3.7%. The probability of the Federal Reserve (Fed) leaving the policy rate unchanged at the next two policy meetings climbed to 60% from 40% after inflation data, according to the CME FedWatch Tool. There won’t be… Read More »EUR/USD Forecast: Sellers could target 1.0660 next

Yesterday’s inflation data from the US didn’t go smoothly down the market’s throat. Instead, the stronger-than-expected set of inflation data dashed hopes of seeing the Federal Reserve (Fed) cut rates anytime in the first half of this year. Honestly, one can tell you if June or July would be a better time for the Fed to start cutting. The data will decide when the time comes. Yet the incoming data shows a surprising strength in the US economy. Atlanta Fed’s GDP estimate, for example, prints a 3.4% growth for the Q1 – far from a number that would push the Fed to start cutting rates. As such, the ‘blip’ in yesterday’s disinflation is more understandable than not given how strongly the US consumers spend. As a result, US yields jumped, equities sold off, the US dollar rallied against its major peers and gold slipped below $2000 per ounce. And the dollar’s strength was further backed by softer-than-expected inflation data in the UK and Switzerland. 

GBP/USD trades in negative territory below 1.2600 early Wednesday. Annual CPI inflation in the UK held steady at 4% in January. Improving risk mood helps the pair limit its losses for now. After closing in negative territory on Tuesday, GBP/USD continued to push lower in the European session on Wednesday and touched its lowest level in over a week below 1.2550. The near-term technical outlook suggests that the pair has more room on the downside before turning technically overbought. January Consumer Price Index (CPI) readings from the US triggered a US Dollar rally in the American trading hours on Tuesday and caused GBP/USD to decline sharply. On a monthly basis, the CPI and the Core CPI, which excludes volatile food and energy prices, rose 0.3% and 0.4%, respectively. Both of these reading came in above analysts’ estimates and provided a boost to the USD.  Early Wednesday, the UK’s Office for National Statistics (ONS) reported that the annual CPI inflation and core CPI inflation held steady at 4% and 5.1%, respectively. Monthly CPI declined 0.6% in January, while the monthly Retail Price Index fell 0.3%. Although these prints are not weak enough for Bank of England policymakers to reconsider the timing of… Read More »GBP/USD Forecast: Pound Sterling could extend slide after soft UK inflation

Overview: The underlying momentum in inflation is picking up in the US while it continues to move lower in the euro area. Inflation drivers paint a mixed picture with weak goods inflation and strong service inflation, but inflation is likely to trend lower in 2024. Freight rates have picked up due to the tensions in the Red Sea, but not to the extent that we would expect another significant pick-up in core goods inflation. Oil prices have stabilized, and gas prices have continued trending lower. Tight labour markets continue to support upside risks to core inflation going forward and points to a cautious approach in central banks’ easing cycles. Inflation expectations: Both market and survey-based inflation expectations have declined further over the past month amid some volatility in the US. Market based inflation expectations are now almost consistent with the 2% inflation targets. US: January CPI came out above expectations with a core inflation print of 0.39% m/m (consensus 0.3% m/m) while headline inflation was up 0.3% m/m (consensus 0.2% m/m). The surprise was driven by a broad-based increase of service prices with the ‘super core’ (services ex. shelter) rising 0.85% m/m putting it on a rising trend. On the… Read More »Unpleasant US surprise, Euro inflation better behaved

Gold price licks wounds as US inflation data pares Fed easing expectations.   US Dollar pauses before the next push higher; focus shifts to Fedspeak.  Gold price appears ‘sell the bounce’ trade amid bearish technicals. Gold price is flirting with the lowest level in two months near $1,990 early Wednesday, consolidating the previous day’s steep sell-off. The US Dollar (USD) rally has taken a breather alongside the US Treasury bond yields, allowing Gold price a temporary relief.   Hot US CPI data reinforces Gold sellers Having briefly extended Tuesday’s slide in Asian trading on Wednesday, Gold price is nursing losses, as markets resort to profit-taking on the US Dollar upsurge that followed the hotter-than-expected US Consumer Price Index (CPI) inflation data. The annual CPI inflation in the US fell to 3.1% in January following a brief increase to 3.4% in December but outpaced forecasts of 2.9%. The US CPI edged up 0.3% MoM, the most in four months, and above forecasts of 0.2%. Further, annual core CPI rose 3.9%, compared to expectations of a 3.7% growth. The monthly inflation rate edged up to 0.4%. Hot US inflation report reinforced the US Federal Reserve’s (Fed) pushback against early and aggressive interest… Read More »Gold Price Forecast: XAU/USD set for more pain on a daily close below $1,993

AUD/USD drops to new yearly lows near 0.6450. The US CPI-led bounce in the greenback weighed on spot. Consumer Confidence in Australia improved in February. The Australian dollar encountered renewed selling pressure amidst the sudden and strong rebound in the US Dollar (USD), which was particularly exacerbated after US inflation figures rose more than expected in January. On the latter, the intense buying pressure lifted the USD Index (DXY) to fresh tops near the 105.00 barrier for the first time since mid-November, along with an equally robust bounce in US yields, all in response to investors’ repricing of a potential rate cut by the Federal Reserve (Fed) later than anticipated (maybe June?). Back to the domestic front, Tuesday’s strong retracement now leaves the door open to extra weakness in the Aussie dollar, which appears so far underpinned by USD dynamics, the yearly downtrend in prices of copper and iron ore, and the omnipresent uncertainty surrounding the Chinese economy. On the positive side, the latest hawkish hold by the RBA in combination with the tight labour market and solid fundamentals should somehow maintain the downside pressure in the Australian currency. Regarding the Reserve Bank of Australia (RBA), market participants continued to… Read More »AUD/USD Forecast: Sentiment remains bearish

XAU/USD Current price: 1,993.79 United States inflation rose by more than anticipated in January, spurring risk-off. US CPI figures backed the Federal Reserve’s wait-and-see stance. XAU/USD trades at fresh two-month lows and has room to extend its slump. Spot gold collapsed on Wednesday following the release of United States (US) inflation figures. XAU/USD  traded as low as $1,989.97, its lowest in two months, and currently changes hands at around $1,993 a troy ounce. The US Dollar traded with a weak tone throughout the first half of the day but drastically changed course following the release of the US Consumer Price Index (CPI). The US Bureau of Labor Statistics (BLS) reported that the CPI rose 0.3% MoM in January, while the core reading in the same period printed  0.4%, surpassing the market’s expectations. Compared to a year earlier, inflation rose 3.1%, better than the previous 3.4% but above the 2.9% expected. Finally, the core annual CPI rose 3.9%, matching December’s reading but surpassing the market’s forecast of 3.7%. Stronger than anticipated inflation figures confirmed the Federal Reserve´s (Fed) stance of extending the waiting period before shifting to tighten the monetary policy through rate cuts. As a result, financial markets turned risk-averse,… Read More »Gold Price Forecast: XAU/USD plunges below $2,000 after hot US CPI

EUR/USD struggles to find direction and continues to trade below 1.0800. Annual inflation in the US is forecast to soften to 2.9% in January. The USD could come under selling pressure on a weaker-than-expected CPI print. EUR/USD continues to move up and down in a tight channel below 1.0800 early Tuesday after closing the first day of the week marginally lower. January Consumer Price Index (CPI) data from the US could help the pair break out of its range in the second half of the day. Inflation in the US, as measured by the changed in the CPI, is forecast to soften to 2.9% in January from 3.4% in December. The Core CPI is seen rising 3.7% in the same period, down from the 3.9% increase recorded in December. On a monthly basis, the CPI and the Core CPI are expected to increase 0.2% and 0.3%, respectively. Inflation figures are unlikely to alter the market view about the Federal Reserve’s (Fed) policy decisions in March. The CME Group FedWatch Tool shows that markets are pricing in a nearly 90% probability of the Fed staying on hold at the next meeting. However, investors are still undecided about whether there will be… Read More »EUR/USD Forecast: Will bulls take action on a soft US inflation print?

GBP/USD rose toward 1.2650 in the European session on Tuesday. The pair could face stiff resistance at 1.2670. US January inflation data will be watched closely by market participants. GBP/USD gained traction and touched its highest level in more than 10 days above 1.2650 in the European session on Tuesday. Although the pair’s near-term technical outlook points to a bullish tilt, buyers could refrain from betting on a steady advance unless 1.2670 resistance is cleared. The UK’s Office for National Statistics reported early Tuesday that the ILO Unemployment Rate declined to 3.8% in the three months to December from 4.2%. This reading came in below analysts’ estimate of 4%. Other details of the report showed that wage inflation, as measured by the change in the Average Earnings Excluding Bonus, softened to 6.7% from 6.2%. Although both of these prints could be welcoming news for the Bank of England (BoE), wage inflation is arguably still strong enough for policymakers to avoid cutting rates prematurely.