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Global equity markets may face challenges in gaining ground early this week as the possibility of early interest rate cuts diminished in light of persistent inflationary pressures. While seasonal factors likely contributed to the inflationary trends, the uncertain state of the US economy has left macro traders in a cautious stance. With a relatively quiet week in terms of economic data, investors may find limited guidance in this regard. However, market participants will closely monitor statements from Federal Reserve officials, particularly in light of the recent overshoot in services inflation. This development may raise concerns within the Federal Reserve, especially considering Jerome Powell’s apprehensions that services may not carry the baton once the disinflation effect of falling goods prices dissipates. Asia-Pacific markets opened mixed Tuesday as investors await an update on its key lending rates from China’s central bank. As trading activity resumes in Asia on Tuesday and liquidity returns to normal post-US Presidents Day, investors will focus on whether Chinese markets can sustain their gradual recovery from recent lows and if Japan’s stocks can reach levels not seen in over 30 years. The return of Chinese markets after the Lunar New Year break will be closely watched to gauge… Read More »China’s travel boom spin has failed to impress international investors

AUD/USD Current Price: 0.6538 Trading was choppy at the beginning of the week amid holidays in America. The Reserve Bank of Australia will publish the Minutes of its latest meeting. AUD/USD maintains its positive tone, aims to test the 0.6610 resistance level. The Australian Dollar benefited from the better tone of equities at the beginning of the week, posting modest gains against its American rival. AUD/USD traded as high as 0.6551, standing a handful of pips below the level ahead of the Asian opening. Activity across financial markets was limited amid holidays in the United States (US) and Canada, alongside a scarce macroeconomic calendar. Australia will open the macroeconomic calendar with the release of the Reserve Bank of Australia (RBA) Meeting Minutes. The central bank kept the Official Cash Rate (OCR) steady at 4.35% in its February meeting, and policymakers reiterated that they remain data-dependent. Additionally, officials maintained a mildly hawkish tone, indicating that “a further increase in interest rates cannot be ruled out.”  The minutes could provide fresh clues on what the RBA Board plans to do next or even what policymakers need to feel more confident about inflation going down and begin trimming rates. Meanwhile, the People’s Bank… Read More »AUD/USD Forecast: Bulls may take their chances and push it towards 0.6600

Quiet start, but Nvidia earnings provide highlight of the week ahead. UK Rightmove HPI gains 0.9% in February. Markets continue to question rate pathway after recent inflation data. European markets have stumbled into a new week, with the habitual record highs set for the likes of the DAX and CAC holding off for the time being. Today brings a relatively quiet session for global markets, with national holidays in the US and Canada coming alongside a lack of any notable US earnings or economic data. Nonetheless, today’s slow start belies the excitement ahead as AI posterchild Nvidia gear up to provide one of the most hotly anticipated reports of the quarter on Wednesday. Coming off the back of particularly impressive earnings and performance from Arm Holdings, bulls will hope that Nvidia can post numbers that continue to justify the lofty valuations that come with a stock that has gained 47% since the start of the year. The UK housing market came back into focus this morning, with the Rightmove House Price Index gaining another 0.9% in February. Coming off the back of a year that saw growing concerns that rising borrowing costs would result in a collapse within house prices,… Read More »Markets continue to question rate pathway after recent inflation data

XAU/USD Current price: $2,016.16 Most Asian and European indexes edged higher, indicating a better market mood. Financial markets await fresh clues from the Fed after hotter-than-expected US inflation. XAU/USD advances for a third consecutive day, could recover beyond $2,030. Spot Gold advanced throughout the first half of Monday amid absent demand for the US Dollar, resulting in XAU/USD extending its recovery to $2,023.04 a troy ounce. The Greenback found some near term demand by the end of the European session, with the pair currently trading at around $2,016, holding on to modest intraday gains. The week started in slow motion at the FX board as the macroeconomic calendar had little to offer, while holidays in Canada and the United States (US) weighed down the market volatility. However, Asian and European indexes provided interesting clues for speculative interest.  Chinese shares rose following the long New Year holiday, while the Nikkei 225 flirted with record highs, to end the day with modest losses. Across the pond, EU markets posted a mixed performance, with most indexes closing with modest gains, also holding near record levels. Financial markets seem to have digested the latest US inflation figures indicating heating price pressures in the worlds’… Read More »Gold Price Forecast: XAU/USD extends recent gains in choppy trading

EUR/USD Current price: 1.0776 Asian and European stock markets pressure record highs, weighing on USD demand. Holidays in the United States and Canada limit volatility among major pairs. EUR/USD holds within familiar levels without clear directional strength. The EUR/USD pair seesaws around the 1.0770 level, confined to a tight range on Monday. A light macroeconomic calendar and holidays in the United States (US) and Canada limit the market volatility. US markets will remain closed amid Presidents Day, with no activity in stocks or bonds. During European trading hours, the German Deutsche Bundesbank released the Buba Monthly Report, a document providing a detailed analysis of current and future economic conditions from the bank’s viewpoint. The news was discouraging, as it indicated the economy is likely in a recession, noting weak external demand, muted consumption, and cautious investments as the reasons behind the setback. On a positive note, Asian and European indexes maintain a positive momentum, reflecting prevalent confidence among market participants. This week’s focus will be on the Federal Open Market Committee (FOMC) Minutes, to be released on Wednesday. The Federal Reserve (Fed) announced its decision on monetary policy late in January and cooled down expectations for a March rate cut, triggering panic… Read More »EUR/USD Forecast: Absent buying interests despite prevalent optimism

EUR/USD edges higher toward 1.0800 to start the week. Technical buyers could take action once 1.0800 is confirmed as support. US markets will remain closed in observance of the Presidents’ Day holiday. After closing the previous week marginally lower, EUR/USD gained traction early Monday and advanced toward 1.0800. In case the pair stabilizes above that level, it could extend its recovery in the near term. The data from the US showed on Friday that the Producer Price Index (PPI) rose at a stronger pace than expected in January. Although the immediate reaction provided a boost to the US Dollar (USD), the currency struggled to preserve its strength later in the American session.  The economic calendar will not feature any macroeconomic data releases that could influence EUR/USD’s action later in the day. Germany’s Bundesbank is scheduled to release its monthly report, which is likely to be ignored by participants. Stock and bond markets in the US will remain closed in observance of the Presidents’ Day holiday on Monday. Hence, thin trading conditions could make it difficult for EUR/USD to gather directional momentum in the second half of the day. Later in the week, preliminary Manufacturing and Services PMI reports from Germany… Read More »EUR/USD Forecast: Euro closes in on key resistance

Expectations for relative Mid-East calm and a US bank holiday imply a seemingly calm start to the week. The FOMC Meeting Minutes stand out as investors fear higher rates for longer. Jobless claims and forward-looking PMIs promise a turbulent Thursday in markets.  Only three? Yes, this week is lighter on big events – and begins with a US bank holiday on Monday. The Middle East could always provide surprises, but the chances of big developments this week are lower. A senior Israeli minister warned that without the release of hostages before the beginning of Ramadan on March 10, the military would enter Rafah, the last major town at the southern tip of the Gaza Strip. This stated deadline means a lower chance of action now.  That leaves US developments to dominate the scene. Here are the main events for the week: 1) FOMC Meeting Minutes Wednesday, 19:00 GMT. The Federal Reserve clarified that it intends to leave rates unchanged in March, contrary to market hopes for a cut. Fed Chair Powell downed markets in the latest decision in late January; since then, data has been strong. Bond markets seem to have received the message, but stocks remain elevated. The bank… Read More »Three fundamentals for the week: FOMC Minutes, Jobless Claims, and Flash PMIs stand out

It is safe to say it has been an energetic start to the year, underscoring meaningful shifts in the economic landscape and rate expectations. Last week delivered a busy slate of tier-1 risk events; this week’s economic calendar, however, offers a lighter docket. Monday is poised to be a snooze. Void of tier-1 numbers and US banks closing in observance of Presidents’ Day, volatility is likely to slow heading into US trading hours. RBA minutes The Reserve Bank of Australia (RBA) minutes will be released on Tuesday at 12:30 am GMT and could be one worth observing for Asia Pac traders, though it is doubtful we’ll see much more than what we already know. You may recall that the central bank left the Cash Rate unchanged at 4.35% at its first policy-setting meeting this year, a 12-year high. In addition, the accompanying Rate Statement pencilled in a fresh line noting that further policy tightening ‘cannot be ruled out’. However, on the other side of the fence, according to the Statement of Monetary Policy (SoMP), the central bank’s projections announced a downward revision to its growth and inflation forecast, alongside higher unemployment. The RBA anticipates CPI inflation (as well as trimmed-mean inflation)… Read More »Week ahead: RBA/Fed Minutes and global PMIs in the crosshairs

Summary We wrote reports in 2016 and again in 2019 to determine if election periods had a significant impact on U.S. economic activity. With the 2024 presidential election right around the corner, we revisit that analysis. Initial theories suggested that elections positively impact the economy through the actions of politicians, who may try to stimulate it as a part of their re-election campaigns. More recent theory, however, implies the opposite, suggesting that elections weigh on near-term economic growth, as individuals and businesses may delay large purchases or investments in the face of political uncertainty. Our analysis in 2016 and again in 2019 did not find evidence of weaker economic growth in the 18 presidential election years that occurred between 1948 and 2016. In fact, we found that growth rates of real GDP, real consumer spending and real business investment spending were stronger during presidential election years than non-election years. Did elected officials “juice” the economy via stimulative fiscal policy to improve their electoral prospects? Apparently not. Our 2016 analysis did not find a statistically significant difference between growth in real government spending in election years compared to non-election years. We forecast the U.S. economy will continue to expand in 2024,… Read More »Do elections affect economic activity?

Gold price extends its recovery mode at the start of the week on Monday. US Dollar eases with Treasury bond yields, as investors reassess Fed rate cut bets.  Gold buyers need to crack the 21-day SMA at $2,025. RSI steadies below the 50 level.   Gold price sets off the new week on the front foot, as buyers extend the previous week’s recovery mode into Monday. The upward trajectory in the Gold price is powered by a broadly softer US Dollar (USD), tracking the US Treasury bond yields lower amid a mixed market sentiment. Gold price extends recovery gains Chinese traders return to markets with full optimism after a week-long Lunar New Year holiday but rest of the Asian equity markets trade with caution. Investors reassess the US Federal Reserve (Fed) interest rate cut expectations, especially after hot US Consumer Price Index (CPI) and Producer Price Index (PPI) data came in hotter-than-expected and helped push back their expectations of a Fed rate cut from March to June. Markets are currently pricing a 77% chance of a cut in June, the CME Group’s Fed Watch Tool shows. Despite hopes for a delayed Fed rate cut than previously expected, the non-yielding Gold… Read More »Gold Price Forecast: XAU/USD looks to recapture key $2,025 hurdle on road to recovery