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The S&P 500 saw a modest decline on Monday after achieving record highs last week, culminating in a historic close above 5000 for the first time on Friday. Investors appeared to exercise caution by reducing some risk ahead of the release of potentially market-moving US inflation data scheduled for Tuesday. It’s a common market phenomenon for the dominant trend to revert ahead of significant risk events. Considering the remarkable rally in the S&P 500 (SPX) this year, it’s reasonable to anticipate a pullback in the SPX as investors adjust their portfolios accordingly to mitigate potential risks associated with the upcoming event. However, there could be more than just meets the eye. Both markets and investors are clearly well caffeinated, pushing the S&P 500 benchmark to record heights in 2024, driven by a robust U.S. economy and the possibility of rate relief later this year. The S&P 500 has crossed the 5000 mark for the first time, up by 5% this year and a remarkable 21% above the recent dip in late October (just three months ago) Not all are in demand on the Fed dovish pivot; however, the bond market is feeling the weight of ongoing supply, with 10-year yields… Read More »CPI: A consensus core might not be enough

US CPI, the biggest market mover, may spark another rally.  A deep dive into American consumption and inflation in the UK serve as additional major market movers.  The absence of Chinese traders from markets will likely have a positive impact on markets. More fireworks than usual – that was the conclusion after the blockbuster US Nonfarm Payrolls report. The release of the Consumer Price Index (CPI) report could be even bigger, as all eyes remain on inflation.  While China is on holiday (the Lunar New Year also impacts markets) the release of consumer data from the US and UK inflation data add spice to an intense week.  1) Chinese holiday may boost markets The world’s second-largest economy has a week off – but even a non-event can move markets. The lack of any big news coming out of Beijing is positive, as recent figures from China have been worrying. A break from concerns about demand would benefit Oil and also stocks. The only risk is a report suggesting fewer people are traveling and consuming around the Lunar New Year, but that is unlikely to be the case. The bad news will likely wait for next week.  2) US CPI inflation… Read More »Five fundamentals for the week: US CPI overtowers (almost) everything

XAU/USD Current price: 2,015.77 Federal Reserve’s speakers repeat the well-known message of wait and see. The United States will publish the January Consumer Price Index on Tuesday. XAU/USD nears the $2,000 mark with a solid bearish stance in the near term. Gold eased throughout the first half of the day, finding some buyers ahead of Wall Street’s opening but resuming its slump afterwards. XAU/USD trades near a fresh February low of $2,011.97 despite subdued US Dollar demand. In the absence of relevant macroeconomic data and ahead of first-tier figures scheduled for later in the week, the focus was on Federal Reserve (Fed) officials’ words. Board members have been downplaying the odds for a soon-to-come rate hike following the latest monetary policy meeting, generally pointing out that inflation still needs to come closer to their 2% goal and that they need more data before trimming rates. Fed Board of Governors member Michelle Bowman was on the wires on Monday and repeated the current rate is in the rate place, adding it’s too soon “to predict” when rates will come down. Finally, she said that she doesn’t expect cuts to be appropriate in the immediate future. Thomas Barkin and Neel Kashkari will… Read More »Gold Price Forecast: XAU/USD extends its monthly slide towards $2,000

EUR/USD Current Price: 1.0769 ECB and Fed speakers flooding the macroeconomic calendar at the beginning of the week. Investors await the United States January Consumer Price Index before jumping in. EUR/USD trades with a softer tone after failing to advance beyond 1.0800. The EUR/USD pair retreated after reaching a one-week high of 1.0805 and trades around 1.0770 ahead of the United States (US) opening. Financial markets kick-started the week cautiously, awaiting the release of fresh US inflation data. The country will publish the January Consumer Price Index (CPI) a critical guidance for future Federal Reserve’s (Fed) decisions. Adding to the market’s quiet stance, major Asian markets were closed amid local holidays at the beginning of the week. Meanwhile, easing US Treasury bond yields undermine demand for the US Dollar. The 10-year note currently offers 4.16%, down 3 basis points (bps) from its previous close. Wall Street, on the other hand, reflects a better mood. The tech sector leads the advance, with the S&P 500 trading at record levels ahead of the opening. Further gains there will likely maintain the USD at check. Data-wise, the macroeconomic calendar has little to offer, although multiple central banks’ officials will be on the wires.… Read More »EUR/USD Forecast: Caution leads ahead of US inflation figures

EUR/USD continues to move sideways near 1.0800 on Monday. Strong resistance seems to have formed at around 1.0830. The pair could struggle to find direction ahead of US inflation data on Tuesday. EUR/USD closed the fourth consecutive day in positive territory on Friday but was virtually unchanged for the week. The pair holds steady at around 1.0800 to start the new week. The US Dollar (USD) edged lower ahead of the weekend as the Bureau of Labor Statistics (BLS) announced that it revised the monthly Consumer Price Index (CPI) increase for December lower to 0.2% from 0.3%. On Tuesday, the BLS will release CPI figures for January and investors could refrain from taking large positions ahead of the inflation report.  Over the weekend, European Central Bank ECB Governing Council member Fabio Panetta argued that the time for an interest rate cut was fast approaching. “Any speculation on the exact timing of monetary easing would be a sterile exercise,” Panetta added. These comments, however, failed to trigger a noticeable reaction in EUR/USD during the weekly opening. The US economic docket will not feature high-impact data releases on Monday. Meanwhile, US stock index futures trade flat in the early European session, pointing to a neutral… Read More »EUR/USD Forecast: Euro could face stiff resistance near 1.0830

Gold price trades on the wrong footing at the start of the new week. Markets stay cautious amid holiday-thinned trade, ahead of Tuesday’s US CPI data. Gold price test critical daily support line at $2,023, as RSI flips bearish. Gold price is looking to extend the previous week’s downtrend at the start of the new week on Monday. Gold price is testing the $2,020 level even though the US Dollar (USD) and the US Treasury bond yields remain on the back foot amid holiday-thinned trading conditions. Most of the major Asian markets are closed on Monday, in observance of the Lunar New Year holiday. Gold price stays vulnerable, with eyes on US CPI data Markets are also sensing a calm before Tuesday’s US Consumer Price Index (CPI) data storm, as they refrain from placing any fresh directional bets on the US Dollar, as well as, the Gold price. Investors are resorting to adjusting their positions on the US Dollar, keeping the Greenback on the back foot so far this Monday. Last week, the US Dollar managed to find its feet against its major rivals, despite markets paring back aggressive US Federal Reserve (Fed) interest rate cut bets, as a batch… Read More »Gold Price Forecast: XAU/USD looks south as the US CPI inflation week kicks in

United States macroeconomic data supports the Federal Reserve’s wait-and-see stance. European Central Bank officials gave mixed signals, but rate cuts remain out of the table. EUR/USD remains under selling pressure and could fall towards the 1.0550 price zone. The EUR/USD pair remained under selling pressure throughout the week, extending its slide to a fresh 2024 low of 1.0722 on Monday. The US Dollar momentum, however, receded as days went by, resulting in EUR/USD ending the week pretty much where it started it, around 1.0780. USD rally stalls, Euro remains unattractive Major pairs traded within limited ranges amid a scarce macroeconomic calendar and as global policymakers stuck to their cautious stance on future interest rate cuts. Following a row of central banks’ announcements and key economic data, market participants feel discouraged. Investors hoped central banks would speed up monetary tightening in 2024, given that inflationary pressures continued to ease, and as the risks of steeper economic setbacks pend like Damocles’ sword among most countries. Yet officials made it clear that they are in no rush to change course, comfortable in the current wait-and-see stances. Eventually, interest rates will be lowered, but not before policymakers have more evidence that inflation, employment, and… Read More »EUR/USD Weekly Forecast: Market players not getting what they want

Pound Sterling languished near two-month lows on renewed US Dollar demand. The UK/ US inflation data set to drive GBP/USD price action in the upcoming week. The daily technical setup points to more pain ahead for GBP/USD. The Pound Sterling (GBP) extended its losing streak against the US Dollar (USD) into a fourth straight week, keeping GBP/USD undermined near two-month troughs. Pound Sterling is not out of the woods yet It was all about the market’s pricing of the US Federal Reserve (Fed) interest rate cut expectations following the stellar January Nonfarm Payrolls (NFP) report, which kept the US Dollar broadly elevated. Odds for a March Fed rate cut dropped to nearly 20% this week, compared with a 68.1% probability at the start of the year. Meanwhile, the odds for a May Fed rate cut now stand at 65%. Markets now price in 115 basis points (bps) of cuts this year, compared with around 150 bps of reductions anticipated a month ago, according to CME Group’s FedWatch tool. The dialing back of Fed rate cuts for this year received a fresh thrust after Fed Chair Jerome Powell, in an interview aired early Monday, dismissed a rate cut next month while… Read More »GBP/USD Weekly Forecast: Pound Sterling set to maintain its bearish potential

Gold failed to make a decisive move in either direction. $2,020 aligns as first near-term technical support for XAU/USD. January inflation data will be featured in the US economic docket next week. Gold struggled to gather directional momentum and closed the week with marginal losses. Investors will scrutinize the January inflation data from the US next week and pay close attention to technical developments for a directional clue. Gold price fluctuated in a relatively narrow channel this week In a televised interview with CBS News’s 60 Minutes on Sunday, Federal Reserve (Fed) Chairman Powell repeated that the March policy meeting was likely too soon to have the confidence to start cutting rates. He also reiterated that they could move sooner if they saw labor market weakness or inflation coming down persuasively. The benchmark 10-year US Treasury Note yield extended the rally that was fuelled by the impressive jobs report and rose more than 3% on Monday, causing Gold to end the day in negative territory near $2,020. In the absence of high-tier macroeconomic data releases and fundamental drivers, the US Dollar Index corrected lower alongside the US yields, allowing XAU/USD to stage a modest rebound. Meanwhile, Qatar, acting as a… Read More »Gold Weekly Forecast: Sideways grind continues ahead of US inflation data

EUR/USD fluctuates in a tight channel below 1.0800 on Friday. Hawkish comments from ECB officials help the Euro limit its losses. The pair needs to break out of the 1.0700-1.0800 range to find direction. Following a two-day rebound, EUR/USD failed to preserve its bullish momentum and closed virtually unchanged on Thursday. The pair continues to move sideways below 1.0800 as investors’ search for fresh catalysts continues. The US Dollar (USD) outperformed its rivals in on Thursday as the benchmark 10-year US Treasury bond yield stretched higher after the Department of Labor reported that there were 218,000 Initial Jobless Claims in the week ending February 3, down from 227,000 in the previous week. Nevertheless, the currency struggled to gather further strength and helped EUR/USD limits its losses as Wall Street’s main indexes held steady. Meanwhile, cautious comments from European Central Bank (ECB) officials on the timing of a policy pivot seem to be further supporting the Euro. ECB policymaker Martins Kazaks said that he was not optimistic for a rate cut in Spring and Governing Council Member Francois Villeroy de Galhau noted on Friday that the central bank will probably cut rates this year. Similarly, policymaker Pierre Wunsch said on Thursday that there is value… Read More »EUR/USD Forecast: Euro remains stuck between key technical levels