official Market Update by Solidecn.com

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Euro Hits Low Amid Dollar Strength and ECB Caution

Solid ECN - The euro dropped to $1.075, its lowest since November 13th, as the US dollar grew more robust. This change came after the latest US jobs report showed strength, and the head of the US Federal Reserve, Jerome Powell, hinted at being careful about lowering interest rates. Meanwhile, the European Central Bank seems unable to ease its monetary policy, even with recent weak economic indicators. 

Reports showed that in December, the drop in prices producers received in the Eurozone got worse, and Germany's exports decreased more than expected due to low worldwide demand. The Ifo Institute also mentioned that the lack of manufacturing orders is increasingly troubling for Germany's economy. Market predictions for the European Central Bank to cut rates by the end of the year have decreased to about 125 basis points from 138 basis points the previous week.

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Rebar Futures Rise Amid Beijing's Expected Aid

Solid ECN - Steel rebar futures have been climbing, approaching the CNY 3,900 per ton mark. This increase comes after a two-week low of CNY 3,850 on January 18th. The market is reacting to the possibility of economic support from the Chinese government, which could boost demand for steel used in construction and manufacturing. 

There's growing optimism that a significant aid package from Beijing might lessen fears about decreasing demand in these sectors. However, economic challenges, especially a drop in property purchases, have significantly reduced major Chinese steel producers' output. In December, steel production in China fell to its lowest in six years, dropping 15% annually and 11% monthly to 67.44 million tonnes. Despite the price recovery, the absence of purchases has caused rebar stocks in central Chinese warehouses to skyrocket more than five times to 112 thousand tonnes.

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EURUSD Tests Support, Eyes Resistance

Solid ECN - The EURUSD currency pair is testing the 1.07228 support after it crossed below the bearish flag. The pair’s value rose to 1.07619 in today’s trading session, which coincides with the broken channel that now acts as resistance. The awesome oscillator bars turned green, but the RSI indicator is still close to the 30 level. The pullback might extend to the Ichimoku cloud resistance area if the EURUSD bulls can close and stabilize the price above 1.07619.

On the flip side, a failure in the above scenario will lead the EURUSD price to decline further to the next support area, the 1.0658 mark.

[Solid ECN ✔️]

Oil Prices Rise Amid Middle East Tensions

Solid ECN - WTI crude oil prices increased to about $73 per barrel on Tuesday, continuing the previous day's gains. This rise was mainly due to growing concerns over potential disruptions to oil supplies from the Middle East, fueled by increasing tensions in the area. Notably, analysts have highlighted recent US airstrikes against militias supported by Iran, though US officials have clarified their intention to avoid a broader conflict in the region. 

Despite these tensions, there has been no immediate impact on the oil supply, helping prices recover slightly after suffering significant losses last week. Specifically, oil prices dropped by over 7% last week, driven by advances in peace talks between Israel and Hamas, which diminished fears of supply disruptions from the Middle East. Additionally, reduced expectations for imminent cuts to interest rates by the US Federal Reserve and ongoing worries about China's economic recovery have further pressured the outlook for global oil demand.

[Solid ECN ✔️]

Oil Prices Rise Amid Middle East Tensions, Down 7%

Solid ECN - WTI crude oil prices climbed above $73.5 a barrel on Wednesday, marking a third consecutive session of gains due to concerns over potential supply interruptions in the Middle East. Market analysts believe the ongoing tensions in the region could lead to fears of supply shortages factoring into oil prices. 

Despite the US responding with airstrikes on Iran-supported groups in Iraq, Syria, and Yemen and hinting at more to come, Iran appears to continue its support for these militias with weapons and intelligence. However, oil prices have fallen by about 7% since the end of January, influenced by progress in peace talks between Israel and Hamas, dwindling hopes for immediate cuts in US interest rates, and ongoing worries about China's economic rebound affecting global demand.

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Stock Market Updates: Earnings Season Midpoint

Solid ECN - US stock futures showed little movement on Wednesday, with investors looking closely at the latest earnings reports during the mid-point of the earnings season. After the market closed, Snap's shares dropped 32% because it did not meet revenue expectations and predicted weak future earnings. On the other hand, Ford's shares increased by 6% thanks to its quarterly earnings surpassing expectations and positive future earnings outlook. Enphase Energy also saw its shares rise by 12%, driven by forecasts of better demand shortly. 

During Tuesday's regular trading, the Dow increased by 0.37%, the S&P 500 went up by 0.23%, and the Nasdaq Composite slightly rose by 0.07%. This was because nine out of eleven sectors in the S&P 500, especially materials, real estate, and healthcare, finished the day higher. This improvement was attributed to strong corporate earnings boosting investor mood despite the Federal Reserve's resistance to cutting interest rates.

In other corporate news, Palantir Technologies experienced a significant surge of 30.8% after it projected profits higher than what was anticipated. Similarly, GE Healthcare's shares climbed 11.7% following positive earnings announcements.

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Euro Hits New Low Amid Dollar Strength

Solid ECN - The euro fell to a new low of $1.07, its lowest since November 13th, as the US dollar grew more robust. This happened because people lost hope that the US Federal Reserve would start cutting interest rates soon. Meanwhile, the European Central Bank (ECB) is expected to slow down the easing of its monetary policy, even after some weak economic reports. Predictions now show that the ECB might cut interest rates by about 125 basis points this year, a decrease from the 160 basis points forecasted at January's end.

A survey from the ECB showed that people in the Eurozone expect inflation to be around 3.2% over the next year, the lowest expectation since February 2022. Additionally, the Eurozone saw its most significant drop in retail sales in a year this December, while Germany's factory orders increased by 8.9%, the highest in more than three years, mainly due to a very high number of aircraft orders.

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UK Pound Stabilizes Amid Interest Rate Talks

Solid ECN - The British currency stabilized at around $1.26, staying near its seven-week low point of $1.2515 from February 5th due to the strong US dollar. This happened as investors soon became less optimistic about the US reducing interest rates. Similarly, expectations for a quick interest rate reduction by the Bank of England were dialed down after Chief Economist Huw Pill mentioned that a rate decrease was not imminent, describing it as inevitable but not immediate. 

In February, UK interest rates remained at their highest in nearly 16 years, with a notable voting difference: two members favored increasing rates, whereas one was for reducing them. The likelihood of the Federal Reserve cutting rates by May is seen as over 50%, with the Bank of England expected to do the same by June.

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Aussie Dollar Rises Amid Rate Hike Warnings

Solid ECN - The Australian dollar climbed past $0.65, recovering from lows not seen in 11 weeks. This happened after the Reserve Bank of Australia decided not to change interest rates, a move many anticipated. However, the bank also hinted at raising rates if high inflation continues. It noted that inflation dropped more than foreseen in the last quarter, yet it's unclear when it will stabilize within the desired 2-3% range. Australia's inflation rate was 4.1% year-over-year in the last quarter, a decrease from 5.4% the previous quarter and lower than the predicted 4.3%. 

The monthly inflation rate decreased to 3.4% in December from November's 4.3%, not meeting the expected 3.7%. Despite these figures, the Australian dollar is still feeling the heat from a strong U.S. dollar, bolstered by positive economic data from the U.S. and the Federal Reserve's firm stance, which has made people less hopeful for a rate decrease.

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NZ Dollar Rises Amid Positive Job Data, Rate Cut Delay

Solid ECN - The New Zealand dollar climbed to approximately $0.61, recovering from its lowest point in 11 weeks thanks to unexpectedly local solid employment figures, which lessened the likelihood of immediate interest rate reductions. The unemployment rate in New Zealand increased slightly to 4% in the last quarter from 3.9% in the previous quarter, better than the Reserve Bank's prediction of 4.2%. Consequently, the market now expects the Reserve Bank of New Zealand (RBNZ) to begin decreasing interest rates in August, a delay from the initial expectation of May. 

RBNZ's Chief Economist, Paul Conway, recently argued against the early rate cut predictions, stating that inflation remains excessively high despite efforts to control it through stringent policies. In the year's final three months, New Zealand's inflation rate grew by 0.5% from the previous quarter, a decrease from the 1.8% rise in the third quarter. The yearly inflation rate also dropped to 4.7% in the last quarter from 5.6% in the quarter before, marking the lowest rate since mid-2021.

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Yen Recovers Amid Dollar Pullback and Fed Policies

The Japanese yen has stabilized at around 148 to the dollar, recovering from its lowest point in two months. This improvement comes as the dollar weakens, a change driven by investors evaluating the Federal Reserve's future financial strategies. Despite this, the US's better-than-anticipated economic performance and Federal Reserve Chairman Jerome Powell's firm stance have kept the dollar strong.

This situation has placed pressure on other significant currencies. At the same time, there's ongoing uncertainty about whether the Bank of Japan will stop its hostile interest rate policy within the year. This uncertainty persists as decisions are postponed, influenced by recent reports showing Japan's economic difficulties. The country's manufacturing sector is performing below expectations, and consumer spending is not increasing as much as hoped.

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Dollar Index Stabilizes; Fed Rate Cut Odds Dip

Solid ECN - The dollar index hovered around 104 on Thursday, decreasing for two consecutive days. This happened as investors analyzed recent comments from Federal Reserve officials to understand future interest rate changes. The Boston Fed President Susan Collins mentioned that the Federal Reserve cautiously evaluates the latest data and forecasts. She indicated that adjusting the policy might be suitable later this year. 

Currently, the market expects a less than 20% possibility of a rate decrease by the Fed in March. This expectation has significantly dropped from the beginning of the year when it was closer to two-thirds. Investors are now waiting for new data on jobless claims this Thursday to check the state of the job market. While the dollar maintained its recent downturn against most major currencies, it performed well against the Japanese yen.

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Czech Republic's Unemployment Hits 4% in January 2024

Solid ECN - In January 2024, the unemployment rate in the Czech Republic climbed to 4%, slightly higher than the expected 3.9% and an increase from 3.7% the month before. This rate is the highest since April 2021, with the unemployed population rising by 16,319 from the previous month to 295,546, and up 12,487 compared to the same period last year. At the same time, job openings fell by 5,006 from December, reaching 266,783, which is 14,358 fewer than in January of the previous year.

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Gold Price Stable as Fed Rate Cut Chances Dip

Gold's price stabilized above $2,030 per ounce on Thursday, supported by decreases in dollar and Treasury yields. This situation arose as investors waited cautiously for upcoming talks from US Federal Reserve officials, looking for hints about future monetary policy directions. However, the expectation for a reduction in interest rates was tempered by unexpectedly strong US employment and services data and strong statements from Fed Chair Jerome Powell. 

In a recent interview, Powell confirmed that a rate decrease in March is not likely, echoing his earlier remarks following the FOMC meeting. He also mentioned that the Federal Reserve plans to reduce rates more slowly than investors might anticipate. Currently, the likelihood of a rate cut by the Fed in March is perceived to be below 20%, a sharp decline from the two-thirds probability expected at the beginning of the year.

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Silver Prices Dip Amid Fed Rates & Demand Outlook

Silver prices fell below $22.5 for each ounce, marking the lowest point in two weeks. This drop was mainly because the hope for lower Federal Reserve interest rates diminished. Jerome Powell and other officials emphasized that any reduction in interest rates would be gradual and unlikely to start in March. Furthermore, recent U.S. jobs and services data, which was better than expected, suggested that the cost of borrowing might remain high until late spring. This situation made investments that don't produce income, like silver, less attractive. 

However, silver did see some positive momentum from the anticipation of more support for China, the biggest consumer of silver, and the forecast of rising demand throughout the year. The Silver Institute's latest report predicted that the global demand for silver would hit 1.2 billion ounces in 2024, making it the second-highest demand level ever recorded, mainly due to industrial purchases.

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Canadian Dollar Falls Amid US Economic Strength

The Canadian dollar dropped beyond 1.35 against the US dollar in early February, reaching its lowest point in over four weeks. This decline was influenced by solid economic reports from the US and firm statements from the Federal Reserve, which suggested that high interest rates in the US might persist, boosting the US dollar's strength. The ISM PMI indicated that service sector activity in the US was more substantial than expected in January, with high inflation levels, aligning with Federal Reserve Chair Powell's remarks that it's too early to claim success in controlling inflation. 

On the other hand, Canada's PMI data showed its private sector shrinking, highlighting the need for the Bank of Canada to adopt a more supportive monetary policy. Additionally, oil prices were low due to speculation about a possible ceasefire between Hamas and Israel, which lessened worries about oil supply issues and decreased the flow of foreign currency, weakening support for the Canadian dollar, also known as the loonie.

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Brazil's Currency Hits 3-Month Low Amid Economic Woes.

Solid ECN - The Brazilian Currency fell to 5 against the US dollar in February, hitting its lowest point in three months due to weak economic indicators showing that not much foreign money was coming into the country. The trade surplus for January was decent, but it didn't meet the expectations and was the smallest in almost a year. Moreover, the foreign direct investment in Brazil went down unexpectedly in December, when it was anticipated to rise, making the situation tighter for foreign money inflow.

At the same time, China is experiencing its worst deflation in 14 years as of January, leading to worries about reduced international demand for Brazil's main exports, such as iron ore, oil, and soybeans. Despite expectations, inflation in January decreased to 4.51%, slightly more than what the central bank aims for in 2024. This situation puts the market's expectations for rate reductions by Brazil's central bank at risk.

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Euro Rises Amid Rate Cut Cautions: ECB & Fed Update

Solid ECN - The euro experienced a slight increase, going over $1.075, following a drop to a low of $1.072 on February 5th. This happened as the major central banks in Europe and the US took a careful stance on reducing interest rates. During a Financial Times interview on Wednesday, Isabel Schnabel, a member of the ECB's board, stressed the need for patience in deciding on changes to interest rates. 

She pointed out the risk of inflation rising again as a concern. Additionally, ECB survey results showed that Eurozone consumers expect inflation to be at 3.2% over the next year as of December, the lowest expectation since February 2022. In the US, the anticipation for the Federal Reserve to lower interest rates soon diminished. This change in outlook was influenced by cautious remarks from Federal Reserve officials and the emergence of robust economic data.

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Pound Steady Amid UK, US Rate Cut Speculations

Solid ECN - The British pound remained stable at $1.26, recovering from a seven-week low of $1.2515 on February 5th. This stability comes as investors recalibrated their expectations for imminent interest rate reductions in the UK and the US, prompted by careful comments from officials in both nations. Sarah Breeden, the Deputy Governor of the Bank of England, hinted at a new approach focusing more on maintaining the current interest rate levels instead of planning further hikes, suggesting the bank is not hurrying to lower rates. 

Huw Pill, the chief economist, mentioned that no potential rate decrease is expected soon, highlighting that the decision to ease monetary policy will depend on timing. Recent RICS and Halifax data show the UK's housing market is strong. Earlier in the month, UK officials decided to keep interest rates at their highest in nearly 16 years, with hints that reductions might be considered later in the year.

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Euro Stability Amid ECB Rate Cut Speculation

Solid ECN - The euro stayed near $1.077, avoiding a recent low of $1.072 from February 5th, as market expectations for early European Central Bank (ECB) rate reductions cooled. This shift followed cautious statements from several ECB officials about easing financial policies. The likelihood of an ECB rate cut in April dipped below 50% after key figures like Philip Lane, the chief economist, and Pierre Wunsch, the head of the Belgian central bank, stressed the importance of confirming that inflation is moving towards the 2% goal before slashing interest rates. 

Moreover, ECB member Robert Holzmann mentioned the possibility of not cutting rates at all this year or the end. On another note, the US dollar strengthened from jobless solid claims data, suggesting the Federal Reserve might proceed cautiously with any policy changes.