official Market Update by Solidecn.com

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EU Gas Prices Drop to New Low Amid Warm Winter

Solid ECN - Natural gas prices in Europe fell to a new low of €26 per megawatt-hour, marking the lowest point since July, after dropping 7.5% the week before. This decrease is due to warmer weather predictions, high levels of stored gas, and more gas being supplied by Norway. Also, as the cold season in Europe is ending, gas prices are dropping even further. 

By February 10th, the European Union had 67% of its gas storage complete, with Germany at 73%, Italy at 61%, and France at 54%. Norway's gas deliveries to Europe and Britain increased following a temporary halt at the Nyhamna gas plant. Additionally, market watchers are paying attention to an upcoming vote in the US House of Representatives that might undo a pause on approving liquified natural gas (LNG) exports set by the Biden administration.

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UK Pound Stays Firm Amid Rate Cut Speculation

Solid ECN - The British pound remained stable at $1.26, recovering from a seven-week low of $1.2515 on February 5th, after investors adjusted their early predictions for interest rate reductions in the UK and US. This change followed cautious comments from officials in both nations. Bank of England's Deputy Governor, Sarah Breeden, suggested that the bank is now more focused on how long to keep interest rates stable instead of lowering them. This indicates that the bank is not in a hurry to cut rates. 

On the other hand, Chief Economist Huw Pill mentioned that any rate reduction might not happen soon, pointing out that deciding when to ease monetary policy is crucial and not guaranteed. Furthermore, recent economic reports from RICS and Halifax show that the UK's housing market continues to be strong. Earlier in the month, UK officials decided to keep interest rates at their highest in nearly 16 years, hinting at the possibility of a decrease later in the year.

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Aussie Dollar Low Amid RBA Rate Decision Speculation

Solid ECN - The Australian dollar stayed around $0.65, close to its lowest point in twelve weeks, as market players considered the recent remarks from the central bank. Michele Bullock, the Governor of the Reserve Bank of Australia, mentioned that bringing inflation down to 2.5% isn't necessary to reduce the cash rate. 

Yet, she also noted that the RBA hasn't dismissed the chance of raising interest rates further, nor has it confirmed such a move. Analysts at CBA have predicted a total of 75 basis points in rate cuts for this year, with more expected in 2025. This comes as the RBA kept interest rates unchanged during its February meeting but indicated that rates might still go up if inflation stays high. The central bank pointed out that inflation dropped more than anticipated in the last quarter of the year, yet it's still unclear when inflation will fall back into the desired range of 2-3%.

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NZ Dollar Drops Amid Rate Hike Speculation

Solid ECN - The New Zealand dollar dropped to approximately $0.612, losing some of its recent gains as investors became wary before an upcoming speech by the central bank, which might impact future interest rate decisions. Adrian Orr, the Governor of the Reserve Bank of New Zealand, is set to speak on Friday. Last week, the Kiwi saw a 1.4% increase amid thoughts that interest rates might increase due to persistent inflation and a strong job market. 

ANZ analysts predict the Reserve Bank of New Zealand will raise interest rates by a quarter point in February and April, bringing the policy rate to 6%. Investors also note a worldwide trend among major central banks to delay expected rate reductions, particularly in the US and Europe. According to traders, there's about a 44% probability that the RBNZ will hike rates on February 28.

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Oil Prices Steady at $77 Amid Global Tensions

Solid ECN - WTI crude oil prices are stable at about $77 per barrel after rising 6.3% last week due to tensions between countries. Meetings in Beirut hinted at possible improvements in the Gaza situation, but the Houthi group in Yemen announced a new ship attack on the Red Sea, showing ongoing dangers. At the same time, Israel launched air attacks in Gaza's Rafah, rejecting a ceasefire offer from the previous week. 

However, an ample supply of oil worldwide and doubts about demand, especially from China, have limited any further increase in oil prices.

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FTSE MIB Hits 14-Year High; Tod's Shares Surge

Solid ECN - On Monday, the FTSE MIB index increased by roughly 1%, reaching 30,920, a level it hasn't seen since May 2008, inspired by positive developments from Wall Street. Investors were mainly watching the quarterly earnings reports, especially from companies in the manufacturing sector, while also paying attention to the future direction of monetary policy as they awaited inflation figures from the US. 

In Milan, the luxury shoe brand Tod's shares jumped 18% after the announcement that private equity firm L Catterton plans to purchase a 36% stake from the Della Valle family to take the company personally. Other notable gainers included Saipem (up by 5.9%), Telecom Italia (up by 2.9%), and Brunello Cucinelli (up by 2.8%). Conversely, Saras, an oil refining company, saw its shares fall almost 4% following the news that commodity trading giant Vitol intended to buy out the Moratti family's share and take the company private, with the share price falling below the offer price of 1.75 euros per share.

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US Inflation Rate Drops to 2.9% in January 2024

Solid ECN - It's likely that the US's yearly inflation rate dropped to 2.9% in January 2024, marking the lowest rate since March 2021, after a short rise to 3.4% in December. Expectedly, the cost of consumer goods might increase by 0.2% from December, which aligns with the adjusted growth seen in the last two months. 

Furthermore, the yearly rate of core inflation, which excludes food and energy prices, is predicted to decrease to 3.7%, the smallest since April 2021, down from 3.9% in December. The monthly core inflation rate is expected to stay constant at 0.3%. This comes as inflation continues to decrease from its peak of 9.1% in June 2022, the highest since the early 1980s.

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USDJPY Bullish Trend Continuation

Solid ECN - The USDJPY pair is trading above the 23.6% Fibonacci level, around 149.54. The bulls have broken above the 148.8 resistance, signaling a continuation of the bullish trend. The Awesome Oscillator bar turned green in today's trading session, and the RSI indicator also signals bullishness by hovering above the 50 level. Therefore, it is likely that the USDJPY price will see further gains, with the next bullish target potentially being the 151.9 resistance. 

The 38.2% Fibonacci level supports the above-mentioned scenario. If the USDJPY price falls below this level, the scenario should be invalidated accordingly.

This is a technical analysis perspective, and actual market conditions may vary. Always consider multiple factors when making trading decisions.

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EURUSD Technical Analysis: Bears Failed to Crosse the Cloud

Solid ECN - The EURUSD currency pair is trading below the Ichimoku cloud, with the price at 1.076 at the time of writing. The bullish momentum that started from 1.072 could not extend beyond the 50% Fibonacci resistance level, the 1.0805 mark. Interestingly, the technical indicators are bearish, with the RSI indicator hovering below the 50 level, and the Awesome Oscillator bars are in red and on the verge of flipping below the signal level.
According to the technical data we receive from the EURUSD 4-hour chart, it is likely for the pair’s price to decline and return below the bearish flag. If this scenario comes into play, the first target could be the recent lower lows, the 1.07228.

Conversely, suppose the bulls stabilize the price above the 50% Fibonacci. In that case, the bearish scenario should be invalidated, and the EURUSD price could climb to %78.6, in conjunction with the upper line of the bearish channel.

This is a technical analysis perspective, and actual market conditions may vary. Always consider multiple factors when making trading decisions.

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AUDUSD: Bearish Trend Continuation or Bullish Breakout?

Solid ECN - The AUDUSD price currently ranges inside the bearish wedge pattern below the Ichimoku cloud. As of this writing, the pair trades at 0.651. The technical indicators suggest a continuation of the downtrend, which aligns with the primary AUD/USD direction. The Relative Strength Index is crossing below the 50 level, and the Awesome Oscillator bars are in red and about to flip below the signal line.

From a technical standpoint, as long as the currency pair remains below the Ichimoku cloud, the downtrend is valid, and the price will likely test the last lower lows, 0.64678.

Conversely, the bearish trend line (in blue) and the 0.6542 level are pivotal in the bearish and bullish bias. Therefore, if the bulls stabilize the price above the said level, the uptick momentum that began in early February could extend to the January high, 0.6623.

This is a technical analysis perspective, and actual market conditions may vary. Always consider multiple factors when making trading decisions.

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US Stocks Fall as Inflation Surprises Market

Solid ECN - On a recent Tuesday, the three extensive US stock indexes - the S&P 500, Dow Jones, and Nasdaq - all fell. The S&P 500 dropped more than 1%, the Dow Jones went down over 300 points, and the Nasdaq decreased almost 2%. This happened because the inflation rate in the US was higher than what people thought it would be. This made investors think twice about whether the Federal Reserve would lower interest rates in March and May. The yearly inflation rate dropped to 3.1%, but people thought it would drop even more to 2.9%. 

Also, the yearly core inflation was 3.9%, higher than the expected 3.7%. Consumer prices increased by 0.3% compared to the month before, and the core rate went up to 0.4%, both more than expected. The real estate and tech sectors both went down about 2%. Stocks of big tech companies like Microsoft, Amazon, NVIDIA, and Alphabet also dropped nearly 2%. But, Coca-Cola did well and went up about 2% after they reported earnings that met expectations and revenue that was higher than expected.

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BTCUSD Enters Consolidation Phase

Solid ECN - Bitcoin's price has declined after reaching as high as $50,374 in today's trading session. As of writing, the digital gold trades around the $48,700 mark, near the 25 simple moving average. According to the technical indicators, the relative strength index has exited the overbought area, while the awesome oscillator shows a minor divergence. This could signal that Bitcoin might be entering a consolidation phase.

From a technical standpoint, if the BTCUSD price falls below the 25 simple moving average, the phase mentioned above might extend to the $23.6 Fibonacci support level, followed by the $46,877 resistance.

We suggest waiting for the bitcoin price to stabilize above the $46,000 level before adding new or more bids to the bullish market.

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Oil Prices Dip Amid US Stockpile Surge 

Solid ECN - WTI crude oil prices dropped to around $77.5 per barrel by Wednesday, halting a week-long rise due to a report indicating a significant increase in US oil stockpiles by 8.52 million barrels the previous week. This most considerable increase since mid-November exceeded the anticipated rise of 2.6 million barrels. The US Energy Information Administration official report is expected later the same day. 

Additionally, oil prices were affected by the latest US inflation data, which was higher than expected. This development reduced expectations for the Federal Reserve to lower interest rates soon, which could impact global economic growth and oil demand. The inflation news also drove the dollar to its highest value in three months, making oil, priced in dollars, more costly for those with different currencies.

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NZ Dollar Hits Week Low Amid Policy

The New Zealand dollar fell below $0.61, its weakest in a week, as the market weighed the US Federal Reserve's delayed interest rate cuts against New Zealand's lower inflation forecasts and the Reserve Bank of New Zealand's (RBNZ) firm approach. US data showed a less significant drop in inflation than expected for January, leading investors to delay their expectations for the Fed's policy easing. 

In New Zealand, figures showed inflation expectations hitting their lowest in more than two years for the first quarter, indicating that past rate increases effectively controlled rising costs. Yet, RBNZ's Governor Adrian Orr remarked that the battle against inflation isn't over, pointing out widespread financial pressures as the reason for continuing a "restrictive monetary policy."

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Yen Hits 3-Month Low, Japan Eyes Market Action.

Solid ECN - The Japanese yen dropped beyond 150 against the dollar, reaching a three-month low due to unexpected high inflation in the US, which makes it less likely for the Federal Reserve to lower interest rates soon. This significant fall in the yen's value led Japan's finance minister, Shunichi Suzuki, to warn that the government was watching the market. However, he did not say if they would step in again.

The Vice Finance Minister for International Affairs, Masato Kanda, mentioned that Japan might take necessary measures in the foreign exchange market to prevent economic harm from the yen's rapid decline. In 2022, Japan intervened in the currency market three times when the yen hit a 32-year low of 152 against the dollar and has not intervened since. Meanwhile, investors are looking into the Bank of Japan's future monetary policy, especially after hints that it may not increase rates sharply, even if it moves away from negative interest rates.

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Swiss Franc Hits 2-Month Low Amid Low Inflation

Solid ECN - The Swiss franc fell below 0.88 against the US dollar in February, hitting its lowest point in over two months, following an unexpectedly low inflation report. This report supported those in the Swiss National Bank who favor less aggressive monetary policy. In January, Switzerland's consumer price index increased by 1.3% compared to the previous year, missing the expected increase of 1.7% and marking the lowest rise over two years. 

This was also the seventh month in a row that inflation stayed under the SNB's preferred maximum of 2%. The drop in inflation came even as there were expectations for higher figures amidst the country's gradual removal of electricity subsidies and adjustments to the value-added tax system. This led to increased speculation that the SNB might reduce its key interest rate sometime in the year's first half, possibly as early as March. Additionally, the franc's value was further lowered as the SNB grew its foreign exchange reserves in January for the second consecutive month, signaling a recovery from a continuous decrease over the last two years, bringing the reserves to their lowest in seven years.

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GBPJPY Breaks January Record: Trading Above 188.8 Support

Solid ECN - The GBPJPY currency pair trades above the 188.8 support after it broke the January all-time high on Tuesday. As seen in the GBPJPY 4-hour chart, the primary trend is bullish, but the pair bounced from 190.0, perhaps to test the blue trendline, which acts as double support to the price. 

Interestingly, the technical indicators show signs of divergence, which can be interpreted as the beginning of a consolidation phase or a trend reversal. Therefore, the uptrend would continue if the GBPJPY price can maintain its position above the 23.6% of the Fibonacci retracement level.

On the other hand, if the price falls below the Fibo level mentioned above, the consolidation phase might extend to the 50% Fibonacci level, which is backed up by the Ichimoku cloud.

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Yen Drops to 3-Month Low Amid US Inflation Surge.

Solid ECN - The Japanese yen fell below 150 against the dollar, reaching its lowest point in three months due to unexpectedly high US inflation rates, which reduced the likelihood of the Federal Reserve cutting interest rates soon. This significant drop in the value of the yen led Japan's finance minister, Shunichi Suzuki, to warn that the government is closely monitoring market movements. However, he did not confirm any plans for intervention. 

Masato Kanda, the Vice Finance Minister for International Affairs, also mentioned that Japan might take necessary measures in the forex market if the yen continues to drop, as it negatively affects the economy. Economically, Japan faced a setback with a 0.1% decrease in its GDP for the last quarter, contrary to the anticipated 0.3% growth, and after a 0.8% decline in the previous quarter. The economy saw a 0.4% reduction yearly, marking two consecutive quarters of decline.

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Canadian Dollar Dips Amid US Inflation Concerns

The Canadian dollar dropped below 1.35 against the USD, getting close to the almost two-month low of 1.345 it hit on February 9th. This happened because persistent inflation in the US made people think the Federal Reserve might not lower interest rates soon, which made the US dollar stronger. 

This drop comes after the Canadian dollar had improved last week, thanks to positive job reports in Canada. In January, Canada added almost 40,000 jobs, and nearly 20,000 fewer people were unemployed, bringing the unemployment rate down for the first time since December 2022. This was a sign of hope amid growing concerns that high-interest rates set by the Bank of Canada (BoC) are slowing down the economy, even as the threat of rising inflation continues.

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Gold Hits $2000 Amid Economic Concerns.

Solid ECN - The price of gold climbed to $2,000 per ounce last Thursday, boosted by a weaker dollar and lower bond yields. This increase came as investors welcomed the latest U.S. economic figures and looked forward to insights from Federal Reserve officials regarding when they might start reducing interest rates. U.S. retail sales fell significantly more than expected in January, and the number of people filing for unemployment benefits unexpectedly hit a four-week low, hinting that the economy could be weaker than previously believed. 

Austan Goolsbee, the President of the Chicago Federal Reserve, expressed concern on Wednesday about the risk of delaying interest rate cuts too long. At the same time, Michael Barr, the Federal Reserve's Vice Chair for Supervision, mentioned that recent inflation numbers suggest achieving the 2% inflation goal could be challenging.