Today market outlook

[Zeologic]

GBP/USD rises after Trump's latest tariff policy

Yesterday the GBPUSD currency pair increased above 1.24000, the price drew a long body bullish candle with a small wick at the bottom of the candle. Price has formed a high of 1.25547, a low of 1.23325, closing at 1.24452. The price trend has broken the middle band from the downside.

Pound sterling gained positive traction as the USD weakened when President Trump announced new tariff policies on base metals such as aluminum and steel. President Trump reinstated full 25% tariffs on steel imports and raised tariffs on aluminum imports to 25%. Some countries are exempted from Argentina, Australia, Brazil, Canada, Japan, Mexico, South Korea, the European Union, Ukraine and the United Kingdom.

Yesterday's dollar index fell from a high of 108,463 to a low of 107,782 in line with Trump's latest tariff policy.

Today investors will still pay attention to President Trump Speaks at the White House to see Trump's statements that might influence global markets. Apart from that, Fed Chair Powell Testifies also attracts investors' attention to see subtle clues regarding future monetary policy.

Meanwhile, Cleveland Fed President Beth Hammack commented that she would prefer to keep interest rates steady for some time so the Fed can assess the economy. He added that the policy was 'a bit restrictive' and stressed that it was still unclear whether inflation would continue to move towards the Fed's target of 2%. Meanwhile, according to the CME group's Fedwatch tool, the possibility of the Fed maintaining interest rates at 96% and the possibility of reducing interest rates by 25 basis points is only 4%.

On the other hand, Bank of England (BoE) member Catherine Mann chose to cut interest rates by 50 basis points.

Today's highlight, apart from President Trump Speaks and Fed Chair Powell Testifies, investors are also paying attention to US CPI economic data which will be released today.

[Zeologic]

USD/JPY surges after US inflation data

This week USDJPY experienced a significant increase, three bullish candles showed consecutive increases with the peak of yesterday's increase after US inflation data was released. USDJPY draws a long-body bullish candle with a short wick on the candle top. Price formed a high of 154,796, a low of 152,377, a close of 154,414. Price managed to cross the middle band line and closed near the line.

Yesterday's CPI data release had a good impact on the USD and beat its rivals. The US Bureau of Labor Statistics reported that the Consumer Price Index (CPI) rose 3% on an annual basis in January, above market expectations and December's rise of 2.9%. Additionally, the core CPI, which excludes volatile food and energy prices, rose 0.4% on a monthly basis.

The US dollar index (DXY) became more volatile after the release of CPI data and drew a doji candle with an open 108,009 high of 108,523 and low of 107,979 close of 107,985.

Meanwhile, in Japan, BOJ Governor Ueda warned about rising food prices which could stimulate inflation expectations. This has increased BoJ's hawkish speculation. Kazuo Ueda warned that rising food prices, including fresh food, could accelerate consumer inflation expectations.

Today investors will still highlight Trump's talks which might influence financial markets. Apart from that, investors will wait for the release of US PPI and unemployment claims data which is expected to provide support for the USD. On the other hand, Japan's PPI is predicted to increase by 4.% from 3.8% previously.

[Zeologic]

PPI data was as expected and US unemployment claims were supportive but USD weakened

In yesterday's trading, the USD/CNH pair drew a bearish long-body candle indicating a weakening of the US dollar against the Chinese Renminbi. Price formed a high of 7.3131, a low of 7.2670, and a close of 7.2676, crossing the middle band line from the upside.

Yesterday's US economic data showed monthly PPI at 0.4% from the expected 0.3% but still lower than the previous revision of 0.5%. Meanwhile, core PPI was 0.3% from the previous 0.4%. On the other hand, unemployment claims showed 213k, smaller than forecast, 217k from the last revision of 220k.

The dollar index (DXY) weakened yesterday by drawing a bearish long-body candle by forming a high of 107,996, a low of 107,033, and closing at 107,066. The dollar index tracks the performance of the US dollar against six other major currencies. The weakening of the US dollar may also be triggered by concerns about inflation caused by Trump's tariff policy which some analysts predict will encourage inflation.

The Fed is not expected to lower interest rates at its March 19 meeting and maintain high interest rates due to the inflation target that is still uncertain despite concerns about inflation due to Trump's tariff policy. According to the CME group's Fedwatch tool, the possibility of the Fed keeping interest rates at 4.50% is 96%, and the probability of a 25 basis point cut is only 4%.

Meanwhile, the PBoC is expected to maintain the current interest rate of 3.10% set from November 2024 until the final release on January 20 2025.

[Zeologic]

Gold prices retreated on Friday as the rally was not strong enough

Gold prices on Friday drew a bearish long-body candle reflecting gold prices plummeting drastically after reaching near-new highs. The price of gold formed a high of 2939, a low of 2877, closing 2880. The market began to show fatigue because the gold rally did not look so strong.

Gold prior rose for three consecutive days and traded near record highs after US President Donald Trump's order for reciprocal tariffs against several countries increased uncertainty around trade and the global economy. Trump plans to impose 25% tariffs on all steel and aluminum imports into the US.

Meanwhile Fed chairman Jerome Powell's testimony On the first day of his testimony before the Senate Banking Committee, Powell reiterated that the central bank does not need to rush to adjust monetary policy. "The US economy is strong overall; inflation is closer to the 2% target but still somewhat high," the Fed has signaled not to cut interest rates at this week's meeting. According to the Fedwatch tool, the probability of the Fed maintaining interest rates is 97.5% and the possibility of a 25 basis point rate cut is only 2.5%.

The dollar index (DXY) which tracks the USD currency against six major currencies was lower at 106.793 at press time, extending its previous decline to three consecutive days. US inflation data released Wednesday showed that annual inflation, as measured by the change in the Consumer Price Index (CPI) in January, rose to 3% from 2.9% recorded in December. Meanwhile, the core CPI, which excludes volatile food and energy prices, increased by 0.4% on a monthly basis after a 0.2% increase recorded in the previous month. This reading exceeded market expectations by 0.3%.

This week investors will wait for the FOMC minutes to see further market developments. Investors may consider the speeches of FOMC members for subtle clues before the FOMC minutes. Today the US bank holiday may reduce the volume of transactions in financial markets in commemoration of Presidents' Day.

[Zeologic]

AUD/USD moves calmly waiting for RBA interest rates

Yesterday the AUDUSD currency pair drew a small bullish candle with a shadow on the top candle. Price formed a high of 0.63739, a low of 0.63457, a close of 0.63554 near the upper band line.

Even though it rose, the market was sluggish due to the US Bank holiday commemorating President's Day. The AUDUSD currency pair as the Australian dollar performed positively in the upbeat market sentiment. Market sentiment supports risk assets as investors expect United States President Donald Trump's tariff agenda will not have as big an impact as initially feared, as well as a weaker US Dollar.

Meanwhile in Australia, with inflation pressure tending to decline, market players anticipate a reduction in the Reserve Bank of Australia (RBA) interest rate from 4.35% to 4.10%. Nevertheless, the RBA could deliver a hawkish surprise by highlighting the tight labor market and inflation risks.

Markets will also be watching the RBA Monetary Policy Statement and RBA Rate Statement which may hint at the subtle tone of being the last G10 central bank to cut interest rates.

The dollar index (DXY) is currently at the level of 106,742 and yesterday drew a small bearish candle with short wicks on the top and bottom of the candle indicating a sluggish market. The US dollar has weakened more since mid-January. DXY tracks the USD currency against six major currencies.

The Fed is not expected to lower interest rates at this week's meeting. According to the CME Group's Fedwatch tool the possibility of the fed keeping interest rates at 97.5%.

[Zeologic]

NZD/USD falls more ahead of RBNZ Official Cash Rate

Yesterday the price of the NZD/USD currency pair drew a bearish candle with almost no shadow on the top and bottom of the candle. Price formed a high of 0.57347, a low of 0.56938, a closing of 0.57024. The price previously tried to break the upper band line and failed, finally returning to the range bands.

Today the Reserve Bank of New Zealand (RBNZ) will release the official cash rate. The RBNZ Governor decides on interest rate settings after consulting with the bank's senior staff and external advisors. The Reserve Bank of New Zealand (RBNZ) is widely expected to reduce the Official Cash Rate (OCR) by 50 basis points (bp) from 4.25% to 3.75%.

Previously, RBNZ Governor Adrian Orr explicitly predicted a 50 bp cut this month, if economic conditions continue to develop as projected, the committee hopes to reduce the OCR further early year. This decision was driven by concerns over a slowing economy and inflation returning to the central bank's target range of between 1% and 3%. New Zealand's annual Consumer Price Index (CPI) rose 2.2% in the third quarter (Q3) of 2024, in line with market projections and marking a sharp deceleration from 3.3% growth in the previous quarter.

In the third quarter New Zealand entered a recession with GDP contracting 1% and contracting 1.1% the previous quarter. However, New Zealand's economy remains sluggish despite easing policy in November.

Ahead of the RBNZ meeting the NZDUSD currency pair reached the level of 0.57494 driven by the easing of tensions around United States (US) President Donald Trump's tariffs and the downward trend of the US Dollar.

The dollar index (DXY), which tracks the USD currency against six major currencies, began to come under pressure in mid-January, although it rose at the beginning of February at 109,861 but fell more afterward, now at 107,009.

[Zeologic]

Ahead of the FOMC minutes, Silver prices hovered near the upper band line

The XAGUSD pair yesterday drew a bearish higher high candle with wicks on both sides of the top and bottom candles. Price formed a high of 33,074, a low of 32,443, and a close of 32,689 near the upper band line.

Silver prices increased further because they were driven by safe-haven buying amid concerns about economic uncertainty amid Trump's tariff policy which analysts considered could encourage inflation. Gold has reached an all-time high while Silver remains in focus, mainly due to industrial and monetary demand.

Next, the market will also focus on the FOMC minutes which may influence short-term movements. With the Fed's interest rate currently at 4.25%-4.50% investors will be looking for clues as to how long the Fed will maintain interest rates. Any hawkish hint could push Treasury yields higher and strengthen the US dollar, potentially limiting Silver's upside. On the other hand, if the Fed declares an economic slowdown, this could benefit Silver, a pause in interest rates or a reduction in interest rates in the future could support precious metals such as Gold and Silver, because lower interest rates reduce the opportunity cost of owning non-yielding assets.

Trump's tariff policy is weighing on financial markets, but if inflation concerns persist, demand for safe-haven assets could continue.

Today, apart from focusing on the FOMC minutes and President Trump's speech, investors will also look at US economic data related to Unemployment Claims which are expected to rise to 215k from the previous 213k.

[Zeologic]

The Japanese Yen strengthened across all currency pairs on expectations of a BOJ rate hike

The USDJPY pair yesterday drew a bearish candle extending the previous day's decline. Price formed a bearish long-body candle with a high of 151,445, a low of 149,397, a closing of 149,632. USDJPY landed on the lower band almost crossing the line.

The strengthening of the Japanese Yen seems to be triggered by several factors such as Trump's tariff threat, reviving concerns about the trade war, and also benefiting the JPY as a safe-haven currency. The hope of an increase in interest rates is also an attraction for the Japanese Yen.

BOJ Governor Kazuo Ueda and Deputy Governor Himino recently hinted at the possibility of another interest rate hike if the economy and prices match projections. One BoJ board member said that Japan's real interest rates remain highly negative and the central bank will have to adjust the level of monetary support further if the economy moves in line with forecasts. Japan's strong Gross Domestic Product (GDP) report released earlier this week and signs of widespread inflationary pressures suggest that the BoJ will raise borrowing costs sooner.

Meanwhile, the results of a Reuters poll published on Thursday showed that the majority of economists expect the BoJ to raise interest rates during the third quarter, to 0.75%. Meanwhile, Trump's threat of tariffs sparked concerns about a global trade war which in turn increased safe-haven assets, including the Japanese Yen.

On the other hand, the Fed will take careful action in considering cutting interest rates because Fed officials note a high level of uncertainty. Today several high-impact news will be released regarding several major currencies and this may increase market volatility.

[Zeologic]

Gold prices are still floating near the all-time high entering a consolidation phase and failed to make a firm move in any direction until the end of the week.

Last week, XAUUSD mostly floated near the all-time high with an indecision candle pattern. On Friday, the price formed a high of 2949, a low of 2916, a close of 2932, and an open of 2935. The price drew a closer as a doji candle.

The precious metal gold has recorded increases for eight consecutive weeks. Concerns over Trump's tariffs appear to be affecting gold demand and triggering arbitrage trading. Some geopolitical and political headlines are likely to continue to influence Gold's valuation in the near term.

President Donald Trump announced 25% tariffs on all steel and aluminum imports in the previous week and plans to impose tariffs of around 25% on foreign cars and added that imports of semiconductor chips and pharmaceuticals would be the next to face higher tariffs.

Meanwhile, in the minutes of the Federal Reserve's January policy meeting, several noted that potential changes to Trump's policies on trade and immigration could hamper the disinflation process. This indicates that inflation is predicted to remain high.

On the other side of gold, news related to several of the largest financial institutions in the world such as JPMorgan and HSBC trying to take advantage of the price difference between the Gold futures market in New York and the cash market in London to take advantage of arbitrage opportunities from the difference in gold spot prices and COMEX futures prices

Meanwhile, Goldman Sachs revised its gold price forecast from $2,890 to $3,100 as structurally higher central bank demand will add 9% to gold prices by the end of the year, which, combined with a gradual increase in ETF holdings.

Today, no high-impact news is predicted to affect gold. Even the Japanese bank holiday in observance of the Emperor's Birthday may slightly reduce volume in Asian markets. However, this week, several investors are focused on waiting for US GDP and PCE data.

[Zeologic]

The EUR/JPY pair corrected slightly near the lower band.

Yesterday, the EURJPY currency pair drew a bullish small-body candle with a short shadow wick on the top candle. The price formed a high of 157,252, a low of 156,002, and a close of 156,690. EURJPY has fallen more since February 13 after failing to cross the middle band line. Bollinger bands drawing a descending channel reflect the market more to the downside.

The Japanese yen weakened slightly due to a small correction in the 10-year JGB yield. The asset strengthened as the Japanese Yen (JPY) weakened overall amid a small correction in the 10-year Japanese bond yield. Investors rushed to buy Japanese bonds after Bank of Japan (BOJ) Governor Kazuo Ueda said he could increase the government's bond purchase program if long-term interest rates rise sharply. The 10-year JGB yield fell to nearly 1.41% from 1.45%, the highest level seen in nearly 15 years.

The hope that the BoJ will raise interest rates may be able to maintain the Yen. This hope is increasingly convincing because the Japanese National Consumer Price Index (CPI) data for January were higher than expected.

Today investors will focus on important data releases such as European GDP data which is predicted to be the same as the previous revision of -0.2%.

[Zeologic]

The Swiss franc strengthened as the yield on 10-year Swiss government bonds rose

Yesterday the price of the USD/CHF currency pair drew a bearish long-body candle crossing the middle band from the upper side indicating a strong decline. Price formed a high of 0.89778 low of 0.89122 closing at 0.89288 on the FXOpen platform.

The Swiss Franc is gaining positive traction due to the weakening US dollar following disappointing US economic data such as last week's Jobless Claims and the S&P Global Purchasing Managers' Index (PMI). Meanwhile, the Swiss Franc (CHF) found support as the yield on the 10-year Swiss government bond rose.

Traders may still be anticipating the Fed's interest rate prospects, which are predicted to maintain interest rates for a longer time amid uncertainty over President Donald Trump's economic policy. According to the CME group's Fedwatch tool, the possible target rate at the March 19 Fed meeting is forecast to hold interest rates at a 96.5% probability and only a 4.5% probability of a 25 basis point cut.

Meanwhile, the Dollar Index (DXY) is currently at 106,283 at the time of writing, the DXY value is weakening more referring to the 50 EMA which is drawing a descending channel above the price. On the other hand, the 10-year Treasury yield fell 1.92% from the previous day's 1.98%.

In Switzerland inflation has fallen to 0.4%, the lowest level in almost four years raising expectations of easing in March, earlier in December the SNB had cut interest rates by 50 basis points and signaled the possibility of additional cuts.

Today investors will also focus on Trump's speech which will hold a press conference about his latest executive order at the White House.

Edited 15 hours ago by Zeologic