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The Eurozone’s current account surplus climbed to a six-month high of 31.9bn in December. Analysts, on average, had expected a decline to 20.3 bn from 22.5 bn the previous month. The current level was seen in the eurozone during the relatively benign pre-Covid period and sometime before Natural Gas prices spiked in the second half of 2021. The normalisation of the surplus is good news for the single currency, as it means more net capital inflows into the region. But this growth has been fuelled by falling imports, which can be the result of lower commodity and energy prices (which is a very good thing), but also partly indicative of a slowdown in domestic demand. This threatens to translate into economic contraction in the coming months. The euro area experienced periods of severe import contraction in late 2008 and early 2010, and in both cases, the economy experienced a severe downturn. Back in 2008, all this was accompanied by the collapse of the Euro.

Markets Without significant macroeconomic developments, investors have shifted their focus to micro-level dynamics, particularly in the technology sector. Big tech companies have exerted downward pressure on the stock market overnight, lugging it away from its recent all-time highs.  Amid this backdrop, the tech-heavy Nasdaq Composite experienced the most significant decline, dropping nearly 1% in value. The broader market also saw losses, with the S&P 500 falling approximately 0.6% and the Dow Jones Industrial Average decreasing roughly 0.2%. These declines come after a rocky week on the macro front, in which all three major indices closed lower amid doubts about the odds of a “soft landing” after a hotter-than-inflation gut punch knocked investors slightly off their bullish bias.  Investors closely monitored earnings as markets resumed trading in full swing after the Presidents’ Day Break. Still, Wall Street is laser-focused on those from Nvidia (NVDA) scheduled for Wednesday. The market views Nvidia’s earnings as the artificial intelligence ( AI )bellwether. Given its significance as the third-largest company by market value and its focus on AI, it could be seen as a trend-setting short-term turning point. With only a few mega-cap stocks driving most of the recent gains in the market, any potential… Read More »NVDA: Investors have shifted their focus to micro-level dynamics

Gold price sits at multi-day highs near $2,030 ahead of the Fed Minutes. US Dollar stays weak with the US Treasury bond yields, despite a tepid risk tone.  Gold buyers flex muscles after recapturing 21-day SMA near $2,025. RSI flips bullish.   Gold price is looking to extend its winning streak into a fifth straight day on Wednesday, sitting close to the highest level in five days reached at $2,031 on Tuesday. A sustained US Dollar (USD) weakness combined with subdued US Treasury bond yields render positive for Gold price, as buyers await the US Federal Reserve (Fed) January meeting Minutes for the next push higher.   Gold price braces for Fed Minutes and Fedspeak The latest leg down in the US Dollar could be attributed to renewed fears of a United States (US) government shutdown. House Republicans have shifted from optimistically cautious to expecting a government shutdown unless a budget or spending stopgap is passed by March 1, according to a report carried by Axios. The government will go into a full shutdown by March 8. The prolonged fiscal issue in the US is keeping the US Treasury bond yields on the defensive, exerting additional downside pressure on the… Read More »Gold Price Forecast: XAU/USD buyers retain control, with eyes on Fed Minutes

AUD/USD Current Price: 0.6552 The Reserve Bank of Australia Meeting Minutes left the door open for additional rate hikes. Speculation mounts the Federal Reserve will maintain rates higher for longer. AUD/USD advanced for a fifth consecutive day, faces critical resistance at 0.6610. The AUD/USD pair peaked on Tuesday at 0.6578, the highest in three weeks early in the American session. The pair retreated afterwards towards the 0.6550 region, where it stands ahead of the Asian opening, posting gains for the fifth consecutive day. The focus was on central banks at the beginning of the day, as the People’s Bank of China (PBoC) lowered the five-year Loan Prime Rate (LPR) by 25 basis points (bps) to 3.95%. The LPR is a crucial reference lending rate for mortgages and was trimmed by the most on record. Nevertheless, Chinese stocks edged lower as the rate cut fell short of boosting demand. Also, the Reserve Bank of Australia (RBA) released the Minutes of its February monetary policy meeting. The document showed the Board considered either the case to hike by 25 bps or to hold steady, deciding on the latter. Policymakers also agreed it was not to rule out another rise in rates, despite… Read More »AUD/USD Forecast: Buyers willing to push it further up

XAU/USD Current price: $2,026.93 Odds for a Federal Reserve May rate cut continue to decrease, weighing down sentiment. The US Dollar eases alongside government bond yields, Wall Street trades with a soft tone. XAU/USD consolidates gains near $2,030, buyers may push further up. Spot Gold extends its upward route on Tuesday, posting gains for a fourth consecutive day. XAU/USD trades around $2,030, its highest in over a week. The US Dollar suffers from mounting speculation the Federal Reserve (Fed) will keep rates higher for longer, as officials have been anticipating. Investors bet against the Fed amid signs of a resilient United States (US) economy, but policymakers never stopped warning against such bets. The CME Group FedWatch Tool now shows market players are moving their bets towards June. The odds for a 25 basis points (bps) March rate cut had decreased to 34.4%, while June ones increased to 55.1%. The US Dollar is not the only one on the back foot. Wall Street also trades in the red, although losses remain contained amid earnings reports partially offsetting the dismal mood. Finally, it is worth adding government bond yields recovered ground, with lower yields adding to the broad USD weakness. XAU/USD short-term… Read More »Gold Price Forecast: XAU/USD holds on to fresh gains near $2,030

EUR/USD Current price: 1.0804 Market players await a fresh directional catalyst after central banks’ frenzy. A scarce macroeconomic calendar adds to the absence of fresh clues. EUR/USD struggles to extend gains beyond 1.0800 but bulls not giving up. The EUR/USD pair reached a fresh three-week high of 1.0809 mid-European session, as the US Dollar retained its broad weakness. Demand for the Euro, however, remains subdued, with the pair still confined to a well-limited intraday range. Speculative interest struggles to find directional clues after understanding central banks will take time to loosen the monetary policy. Global policymakers have entered a wait-and-see stance regarding monetary policy, although the reasons behind the decisions differ. On the one hand, the European Central Bank (ECB) paused tightening amid increased recessionary risks. The latest macroeconomic data somehow confirms the downturn in the Eurozone is still far from over. The ECB should hike rates further, but the economy won’t stand it. On the other hand, the Federal Reserve (Fed) also stayed pat amid concerns that excessive tightening could affect growth. The big difference is that the United States’ (US) economy proved to be in much better shape than the EU’s, giving the Fed more time to assess its… Read More »EUR/USD Forecast: Cautiously optimistic buyers take the lead

The decline in negotiated wage growth from 4.7 to 4.5% year-on-year confirms expectations that wage growth is no longer accelerating. But it is too small to open the door to an ECB rate cut in March. With wage growth expected to trend down carefully from here, we expect modest ECB cuts starting in June. Wage growth is the number one worry for the ECB at the moment, as has been stressed by European Central Bank President Christine Lagarde time and again in recent speeches. While we anticipate that wage growth will moderate significantly over the course of 2024 on the back of abated inflation and weakened economic conditions, it must come as a relief in Frankfurt that negotiated wage growth fell from 4.7 to 4.5% in the fourth quarter. Sure, it’s only a small tick down, but broadly in line with expectations that negotiated wage growth will start to trend down over the course of 2024. That also follows from the ECB’s own wage tracker, which monitors wage growth agreed in collective bargaining agreements for the 12 months ahead. This has plateaued for some time now and most recent agreements have trended lower. We expect to see a more meaningful decline… Read More »Drop in Eurozone negotiated wage growth brings relief to ECB

EUR/USD continues to fluctuate in a narrow channel below 1.0800. The pair could start stretching lower in case risk mood sours. The US economic docket will not offer any high-impact data releases on Tuesday. EUR/USD failed to gather directional momentum and closed the first day of the week virtually unchanged as trading conditions remained thin due to the US Presidents’ Day holiday. The pair continues to move sideways below 1.0800 early Tuesday.

Amidst a backdrop of rising risk appetite in the financial markets, last week witnessed record highs across major indices worldwide, despite looming concerns over potential inflation resurgence in the US. As global bond yields surged and Bitcoin reached two-year highs, investors grappled with evolving dynamics. This week, key events and themes are poised to shape market sentiment and asset trajectories. From Nvidia’s pivotal earnings report to the release of critical PMI surveys, investors brace for a week of significant developments that will undoubtedly influence trading decisions and market trends. Highlights: Nvidia’s earnings: A crucial test for bulls Thursday’s PMI surveys: Gauge of economic momentum Technical trends and currency pairs 1. Nvidia’s earnings: A crucial test for bulls The semiconductor behemoth Nvidia, whose market cap surpassed tech giants Alphabet/Google and Amazon last week, stands as a significant focal point. Positioned at the epicenter of the AI revolution, Nvidia trades at a substantial multiple, reflecting elevated market optimism. However, the continuation of its robust growth trajectory remains pivotal for sustaining investor enthusiasm. Traders eagerly await Nvidia’s earnings report, with expectations set at $4.18 for EPS and $20.4B for revenue. Beyond financial metrics, attention will be keenly directed towards the company’s guidance and… Read More »Charting the path: Market dominance and economic fortitude in the week ahead

Gold price pauses its three-day recovery rally amid cautious markets early Tuesday US Dollar ticks higher with US Treasury bond yields, as investors keep cheering bets of fewer Fed rate cuts.  Gold sellers return after facing rejection at the 21-day SMA near $2,025. RSI surrenders the 50 level.   Gold price is trading on the back foot below $2,020 early Tuesday, following a positive start to the week and logging a three-day recovery rally. The Gold price upside seems likely capped by a renewed uptick in the US Dollar and the US Treasury bond yields, as markets brace for a return of the American traders. Gold price looks to Wednesday’s Fed Minutes for fresh impetus Risk sentiment remains in a weak spot so far this Tuesday, as investors fail to cheer a bigger-than-expected Loan Prime Rate (LPR) by the People’s Bank of China (PBoC). The Chinese central bank left the one-year LPR unchanged but lowered the five-year mortgage lending rate by a record 25 basis points (bps) from 4.20% to 3.95%. However, a lack of fiscal policy support measures from China leaves markets unimpressed. Traders also digest the recent fading expectations of early and aggressive Federal Reserve (Fed) rate cuts,… Read More »Gold Price Forecast: XAU/USD recovery rally stalls, as focus shifts to Wednesday’s Fed Minutes