XAUUSD is moving in Ascending channel and market has reached higher low area of the channel
GOLD – Gold Price in Red Below $2,180, Limited Downside Expected Before US CPI
Gold prices are moving in Flat against USD this week due to US CPI Data for February month is scheduled today. Forecast is inline with previous month reading. So based on data Rate cuts or Rate hold is decided by US FED.
Gold price (XAU/USD) faces selling pressure below $2,180 in early European trading as traders lighten bullish positions amid overbought conditions on the daily chart. The focus is on the upcoming US Consumer Price Index (CPI) release, which will influence expectations regarding the Federal Reserve’s rate cut trajectory and guide the next directional move for the non-yielding yellow metal.
Anticipation of a Fed rate cut in June keeps US Treasury bond yields depressed, preventing the US Dollar (USD) from capitalizing on its recent recovery. Despite a generally positive risk tone, the Gold price receives support from this backdrop, creating a potential headwind. However, the fundamental environment favors bulls, suggesting the possibility of dip-buying at lower levels.
Market movements will depend on the outcome of the US CPI report, which plays a crucial role in shaping expectations for Fed actions. The headline CPI is expected to increase to 0.4% in February, with the yearly rate remaining at 3.1%. The Core CPI is forecasted to ease to a 3.7% YoY rate from the previous 3.9%.
The mixed US monthly jobs report released on Friday increased expectations of rate cuts, lowering the yield on the benchmark 10-year US government bond to a five-week low. The CME group’s FedWatch tool indicates a 70% chance of a rate cut by June, keeping USD bulls on the defensive and supporting the Gold price.
While a sticky inflation print may pose challenges for the commodity, a cooler CPI reading could boost bets for an early rate cut, triggering a fresh upward movement for Gold.
EURUSD – US CPI Forecast: Anticipated Core Inflation Cooling, Fueling Fed Policy Pivot Expectations
The US CPI Data for the month of February is expected rate is 3.1% it is same as January month reading. Core CPI excluded Food and Energy prices is expected at 3.7% it is down from 3.9%.
EURUSD is moving in an Ascending channel and the market has fallen from the higher high area of the channel
The Bureau of Labor Statistics (BLS) is set to release the high-impact US Consumer Price Index (CPI) inflation data for February on Tuesday at 12:30 GMT, a development expected to influence market perceptions of the Federal Reserve (Fed) policy pivot and potentially increase volatility in the US Dollar (USD).
Anticipated CPI Data for February:
– The forecast predicts a 3.1% annual increase in inflation for February, aligning with the January figure.
– The Core CPI inflation rate, excluding volatile food and energy prices, is expected to dip to 3.7% from the previous 3.9%.
– Monthly CPI and Core CPI are projected to rise by 0.4% and 0.3%, respectively.
Federal Reserve Chairman Jerome Powell, in his recent semi-annual testimony before the US Congress, emphasized the uncertain economic outlook and expressed the intention to lower the policy rate at some point in the year. Powell stressed the importance of greater confidence in inflation sustainably moving toward 2% before taking action.
TD Securities analysts anticipate a 0.3% monthly slowdown in core inflation for February, maintaining the 3-month annualized rate at 4.0%. The report suggests balanced risks between a 0.2% and a 0.4% gain.
Potential Impact on EUR/USD:
– The January CPI data showed a slowdown in the disinflationary trend, contributing to a brief positive effect on the USD, which later reversed due to expectations of a delayed Fed policy pivot.
– Markets currently reflect a nearly 75% probability of a Fed rate cut in June, according to the CME FedWatch Tool.
– While February CPI figures may not significantly alter market positioning, a stronger-than-expected increase in monthly Core CPI could prompt a USD rebound, allowing investors to unwind USD shorts from the previous week’s sell-off.
– Conversely, a monthly Core CPI at or below the market consensus of 0.3% may reinforce June as the anticipated month for the policy pivot. Although the USD could weaken initially in this scenario, an extended sell-off might be limited unless accompanied by a risk rally in US stocks or a sharp decline below 4% in the benchmark 10-year US Treasury bond yield.
USDJPY – BoJ’s Ueda Emphasizes Positive Wage-Inflation Cycle for Price Target Success
The BoJ Governor Khazao Ueda Addressed Japan Parliament today and said Wage- inflation cycle is improving is based on incoming data, People purchasing power increasing by less cost push inflation pressure. We need some more data points to judge is real wage price is hiking towards Inflation reading in the economy.
USDJPY has broken the Ascending channel in downside
Bank of Japan (BoJ) Governor Kazuo Ueda is scheduled to address the Japanese Parliament, the Diet, on Tuesday. Here are key points from his speech:
– Japan’s economy is recovering moderately, despite some weak data.
– Consumption is improving due to easing cost-push pressure and optimism for higher wages.
– Some firms are delaying investment, but capital expenditure plans remain strong.
– Various data have been observed since January, and more will be released this week. A comprehensive analysis of these data will guide our monetary policy decisions.
– Our focus is on determining whether a positive wage-inflation cycle is starting, as we assess the likelihood of sustained, stable achievement of our price target on the horizon.
USDCHF – oscillates above the mid-0.8700s, US CPI data looms
The Geopolitical tensions increasing in Jerusalem area, This month is Islam Festival Ramdan month and clashing in Jerusalem , Israel area due to Holy place and month of Islam. The Swiss Franc may be lifted if war increases at steady pace.
USDCHF is moving in an Ascending channel and the market has reached the higher low area of the channel
Investors remain cautious ahead of the crucial US inflation report later today, contributing to a subdued market sentiment that may offer support to the Swiss Franc (CHF). USD/CHF is currently trading around 0.8772, unchanged for the day.
Last week, Federal Reserve officials emphasized the central bank’s data-dependent stance and the need for confidence in sustainably achieving the 2% inflation target. Money markets have priced in a 70% probability of a rate cut in June, while the chance for a May rate cut stands at 22%, according to the CME FedWatch Tool. Investors are eagerly anticipating the US CPI inflation data for fresh market direction.
The forecast suggests the headline CPI will remain steady at 3.1% YoY in February, while the Core CPI is expected to drop to 3.7% YoY from January’s 3.9%. This data has the potential to introduce volatility to the market. A stronger-than-expected report may diminish expectations of a Fed rate cut, supporting the US Dollar (USD) and providing a tailwind for USD/CHF.
On the flip side, escalating geopolitical tensions in the Middle East could boost safe-haven assets like the Swiss Franc (CHF) and limit the pair’s upside. Concerns are growing about violence spreading, particularly in Jerusalem, during the Islamic holy month of Ramadan, with a ceasefire remaining elusive, as reported by the BBC.
Looking ahead, investors will closely monitor the US February CPI inflation data later today. Later in the week, attention will shift to US Retail Sales for February, expected to show a 0.8% YoY increase. On Friday, the release of US Industrial Production and the Michigan Consumer Sentiment Index will also be significant.
EURGBP – Rises Below Mid-0.8500s on UK Labor Market, German CPI Data
The German CPI data for the month of February came at 2.5% inline with expected 2.5% reading.The Harmonised index of consumer prices came at 2.7% YoY in February month.
EURGBP is moving in box pattern and market has fallen from the resistance area of the pattern
According to recent data from the UK Office for National Statistics, the ILO Unemployment Rate in the three months to February worsened, reaching 3.9% compared to the previous reading of 3.8%. Additionally, the number of people claiming jobless benefits increased by 16.8K in February, contrasting with a gain of 3.1K in January. The UK Employment Change recorded -21K in January, diverging from the 72K increase in December.
On the Euro front, the German Consumer Price Index (CPI) report for February aligned with market estimates, with the CPI holding steady at 0.4% MoM and 2.5% YoY. The Harmonized Index of Consumer Prices (HICP) for February matched expectations at 0.6% MoM and 2.7% YoY.
Looking ahead, Wednesday will see the release of UK monthly Gross Domestic Product (GDP), Industrial Production, Manufacturing Production, and Trade Balance data for January. Traders are anticipated to respond to this data, exploring potential trading opportunities around the EUR/GBP cross.
GBPUSD – UK Unemployment Rate: 3.9% in Q1, Exceeds Expected 3.8%
The UK Unemployment rate for last quarter Q4 2023 came at 3.9% from 3.8% expected, Jobless claims rose to 16.1Kin February versus 3.1K rise in January month. The Employment change data came at -21K in January versus 72K rise in December. The GBP Pairs down after the data released. Lower employment giving way for Rate cuts from Bank of England policies.
GBPUSD has broken the Ascending channel in downside
The UK’s ILO Unemployment Rate edged up to 3.9% in the three months leading to January, slightly higher than December’s 3.8%, according to data released by the Office for National Statistics (ONS) on Tuesday. Market projections anticipated a 3.8% figure for the reported period.
Further insights from the report revealed a 16.8K increase in the number of people claiming jobless benefits in February, contrasting with a 3.1K gain in January. The market had forecast a 20.3K rise in the specified period.
In terms of British Employment Change, January posted a decrease of -21K, diverging from the 72K rise recorded in December.
For Average Earnings excluding Bonus, the UK experienced a 6.1% year-on-year increase in January, down from December’s 6.2%, falling short of the expected 6.2% growth.
In the category of Average Earnings including Bonus, there was a 5.6% increase in the reported period, compared to December’s 5.8%, and slightly below the anticipated 5.7% growth.
AUDUSD – AUD Steadies with ASX 200 Gain, Eyes US CPI Data
The RBA Assistant Governor Sarah Hunter said latest Q4 GDP came at inline with expected reading, inflation reading also came at inline, inflation is mainly trouble for House hold consumption.The Australian NAB Business condition improved to 10 in February month and NAB Confidence index moved to 0 in February from 1 in the previous month.
AUDUSD is moving in an Ascending channel and the market has fallen from the higher high area of the channel
The Australian Dollar (AUD) is showing lateral movement with an inclination to recover recent losses against the backdrop of a stable US Dollar (USD). However, the AUD/USD pair encounters challenges as investors exercise caution in anticipation of a crucial inflation report from the United States (US), which has the potential to influence the monetary policy outlook of the Federal Reserve.
Australia’s S&P/ASX 200 Index demonstrated improvement on Tuesday, buoyed by gains in financial and gold stocks, providing potential support for the Aussie Dollar (AUD). Sarah Hunter, Assistant Governor (Economics) at the Reserve Bank of Australia (RBA), addressed a panel at the AFR Business Summit, discussing fourth-quarter GDP in line with forecasts. Hunter noted that recent inflation data met expectations, with inflation remaining a primary impediment to household consumption.
The US Dollar Index (DXY) remains steady, consolidating gains as markets approach the US Consumer Price Index (CPI) data cautiously. Expectations indicate a month-over-month increase in February, although the yearly index is anticipated to remain unchanged. A stronger-than-expected CPI report could diminish prospects of a near-term rate cut by the Federal Reserve (Fed), potentially strengthening the US Dollar and posing challenges for the AUD/USD pair.
Notable market developments include Australia’s NAB Business Confidence and Conditions indices, with the former decreasing to 0 in February and the latter improving to 10. Additionally, Australia’s Trade Balance showed an increased surplus in February, while GDP growth in the fourth quarter slightly lagged market expectations. Australia’s Treasurer, Jim Chalmers, announced the abolition of nearly 500 import tariffs to streamline trade and reduce compliance costs.
In China, Consumer Price Index (CPI) rebounded in February, exceeding market expectations, while Producer Price Index (PPI) weakened. Federal Reserve Chair Jerome Powell and Cleveland Fed President Loretta Mester reiterated the central bank’s position on potential rate cuts. Despite a slight decrease in the probability of rate cuts in March and May, there’s an increased likelihood of a 25 basis points rate cut in June, according to the CME FedWatch Tool. In the US, Nonfarm Payrolls exceeded expectations in February, while Average Hourly Earnings saw a slight dip year-on-year and monthly.
NZDUSD – maintains modest gains around 0.6175-80, lacks momentum ahead of US CPI.
This week NZ Food price index data is scheduled, NZ Dollar moving in Positive territory due to FED is expected to do rate cuts in June month. China CPI Data yesterday printed at larger reading makes NZ Dollar moved in Positive way.
NZDUSD is moving in an Ascending channel and the market has fallen from the higher high area of the channel
The US Dollar (USD) struggles to attract buyers and extend its rebound from a nearly two-month low after the mixed US jobs report on Friday. Market expectations of a Federal Reserve (Fed) policy shift, with a higher chance of interest rate cuts in June, keep USD bulls on the defensive, providing support to the NZD/USD pair.
A positive sentiment in US equity futures adds to the Greenback’s weakness, benefiting the risk-sensitive New Zealand Dollar (Kiwi). However, traders are cautious, awaiting the release of the latest US consumer inflation figures. The crucial US CPI report will significantly influence market expectations regarding the Fed’s rate cut trajectory and drive demand for the USD. Consequently, investors exercise caution before taking aggressive positions in the NZD/USD pair.
Throughout the week, investors will also assess the release of New Zealand’s Food Price Index on Wednesday, followed by US monthly Retail Sales figures and the Producer Price Index (PPI) on Thursday. These events could provide meaningful momentum for the NZD/USD pair and determine its next directional move.
CADJPY – Japan Suzuki: Still Facing Deflation Risk
The Japan Finance Minister Shunichi Suzuki said Japan is still under Deflation, not recover from Deflation area. If media point wrong manner to Public in related to Monetary policy settings, then Bank of Japan do necessary actions on it. Wage hike is progressing and inflation is slowly recovering and but still needed time to change monetary policy settings.
CADJPY is moving in the Descending channel and the market has rebounded from the lower low area of the channel
Japanese Finance Minister Shunichi Suzuki highlighted on Tuesday that the central bank has not reached a stage where Japan can avoid the risk of falling back into deflation. In his key quotes, Suzuki acknowledged positive developments in Japan’s economy, such as high pay hikes and record capital expenditure. However, he emphasized that despite these positive signs, the risk of deflation remains, and it is premature to declare deflation as overcome.
Suzuki refrained from commenting on market movements, including foreign exchange and stock prices. Additionally, he declined to provide insights into the interest rate outlook following the end of negative rates. The finance minister emphasized that specific monetary policy decisions are within the purview of the Bank of Japan (BoJ) and expressed expectations for the BoJ to implement appropriate policies.
Furthermore, Suzuki noted that the BoJ should take suitable measures if media reports inaccurately reflect Governor Ueda’s intended messages, underlining the importance of clear communication regarding monetary policy.
XTIUSD – WTI Holds Steady Around $77.80, Awaits Monthly Oil Agency Reports
ANZ Analysts expected Crude Oil prices remains flat, OPEC+ reports largely outcome is unchanged is expected, if any demand increased in the market then crudeoil prices moved to elevation. US Crude Oil output winning in the Sixth straight year as 12.9 million barrel per day production. December 2023 made record breaking output is 13.3 million BPD.
XTIUSD is moving in Ascending channel and market has rebounded from the higher low area of the channel
During the Asian hours on Tuesday, the West Texas Intermediate (WTI) oil price has been hovering around $77.80 per barrel. The crude oil markets exhibit a subdued atmosphere, eagerly awaiting the release of the Consumer Price Index (CPI) data from the United States (US). Anticipations suggest a modest uptick in February’s US inflation figures, with expectations of the annual index holding steady.
The potential impact of a robust CPI report is significant, as it could reduce the likelihood of an immediate rate cut by the Federal Reserve (Fed). Such an outcome might strengthen the US Dollar (USD), presenting challenges for crude oil prices. The CME FedWatch Tool indicates a slight decrease in the probability of a rate cut in June, currently standing at 68.9%.
Market participants are keenly anticipating the monthly market reports from major oil agencies, including the Organization of Petroleum Exporting Countries (OPEC), the International Energy Agency (IEA), and the Energy Information Administration (EIA). These reports, set to be released this week, aim to provide insights into the global demand outlook.
ANZ analysts highlighted in a report that the crude oil market is currently confined within a narrow trading range as traders await demand projections from the aforementioned monthly reports. While they anticipate these projections to remain largely unchanged, any unexpected upward revisions could alleviate concerns regarding demand.
According to the Energy Information Administration (EIA), US crude oil production has maintained its leadership in global oil production for the sixth consecutive year. It reached a record-breaking average production of 12.9 million barrels per day (bpd). The US crude oil production surged to a new monthly record high of over 13.3 million bpd in December.
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