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EUR/USD holds comfortably above 1.0950 after closing in positive territory on Wednesday. Technical buyers could take action if the pair manages to stabilize above 1.0990-1.1000. Markets await December Consumer Price Index data from the US. Following a quiet European session, EUR/USD gathered bullish momentum in the second half of the day and closed in positive territory above 1.0950 on Wednesday. The pair holds its ground early Thursday and trades within a touching distance of 1.0990-1.1000 resistance area.  Improving risk mood caused the US Dollar (USD) to come under selling pressure during the American trading hours. As Wall Street’s main indexes continued to push higher after opening with marginal gains, the USD Index turned south and erased a large portion of the gains it recorded on Tuesday. Inflation in the US, as presented by the change in the Consumer Price Index (CPI), is expected to edge higher to 3.2% on a yearly basis in December from 3.1% in November. The Core CPI, which strips volatile food and energy prices, is forecast to rise 0.3% on a monthly basis to match November’s reading. A smaller-than-anticipated increase in the monthly Core CPI could further weigh on the USD and help EUR/USD extend its… Read More »EUR/USD Forecast: Euro could reclaim 1.1000 on a soft US inflation print

Good Morning! Dollar Index is holding above 102 while Euro could rise towards 1.10 or higher while above 1.0870-1.09. EURJPY and USDJPY have declined from immediate resistances of 160 and 146 respectively. USDCNY has sipped and could now be headed towards 7.10/12. Aussie could head towards 0.6750 or higher while Pound could rise towards 1.28 or higher in the near term. USDRUB could test 89-88 before moving higher. EURINR could be headed towards 91.50. USDINR needs to rise from 82.90 to rise towards 83.20. Release of US CPI data would be crucial to watch today. The US Treasury yields have inched up slightly. We retain our view of seeing more rise from here before the overall downtrend resumes. The US CPI data release today will be important to watch. The German yields continue to move up as expected. There is room to rise more from here before reversing lower again. The 10Yr GoI continues to move down as expected. Bearish view is intact, and the yield can fall more. The 5Yr GoI is nearing the lower end of its range. We expect the range to break on the downside and the yield to fall more. Dow Jones is moving up… Read More »Morning briefing: Euro could rise towards 1.1000 or higher

Gold price finds support once again near $2,020, as all eyes remain on US inflation data.  The US Dollar loses further ground despite the recent advance in US Treasury bond yields. Gold price stays between 21-day SMA and 50-day SMA, awaits a range breakout. Gold price is attempting a bounce in Asian trading early Thursday, having found fresh demand again near the $2,020 region. Gold buyers are retesting their luck, as all eyes turn toward the US Consumer Price Index (CPI) inflation data due at 13:30 GMT.    Gold price braces for volatility on US CPI report Asian traders are witnessing some cautious optimism, following a positive close on Wall Street overnight. However, they prefer to stay on the sidelines ahead of the all-important US CPI data, which is likely to significantly impact the market’s pricing of the US Federal Reserve (Fed) interest rate cuts this year. The US CPI is expected to rise at an annual pace of 3.2% in December, up slightly from a 3.1% increase in November. The Core CPI inflation is set to decline to 3.8% YoY in the reported period versus 4.0% in November. Meanwhile, the monthly CPI is seen increasing 0.2% in the same… Read More »Gold Price Forecast: Will XAU/USD buyers retain control on US CPI release?

AUD/USD advanced modestly on Wednesday. Australian CPI lent support to a pause by the RBA. Next risk event will be the release of US CPI. In line with the broad-based positive sentiment in the risk-associated space, AUD/USD clocked a decent advance on Wednesday, this time managing to reclaim, albeit briefly, the area north of 0.6700 the figure. The small pullback in the greenback prompted the USD Index (DXY) to keep orbiting around the low-102.00s amidst the continuation of the downward bias in US yields, at a time when market participants kept their focus on the imminent release of US inflation figures gauged by the CPI and their implication on the Fed’s plans to start trimming its interest rates. Speaking about inflation, consumer prices in Australia rose less than initially estimated by 4.3% in the year to November, the slowest rate since January 2022 when tracked by the RBA’s Monthly CPI Indicator. Indeed, further signs of disinflationary pressures in the economy could prompt the central bank to stay on the sidelines at its upcoming meeting in February, despite inflation continuing to run well above the bank’s target. In addition, the mixed performance of the commodity complex saw copper prices regain some… Read More »AUD/USD Forecast: Focus now shifts to US inflation

Further progress in terms of disinflation and the room this creates for central bank easing seem to be the only economic ‘certainties’ for 2024. What is left is a list of important questions that should be answered as the year progresses. What will be the pace and extent of rate cuts? Is there a risk of underestimating the impact of past rate hikes that still must manifest itself? What about the timing and strength of the pickup in growth in reaction to lower inflation and the start of policy easing? Is there a downside to the scenario of a soft landing in the US? The answers to these questions matter for the real economy but are especially important for financial markets and the policy rate expectations. From a macroeconomic perspective, one of the defining characteristics of 2023 was the ongoing tightening of monetary policy, with the Federal Reserve and the ECB raising rates more than expected. These decisions, in combination with accumulating evidence in the latter part of the year of a clear downward trend in core inflation, changed the outlook for interest rates for 2024. 2022 was the year of the start of a tightening cycle, 2023 saw the… Read More »Global economy: Lower central bank rates and then what?

XAU/USD Current price: 2,029.15 Wall Street trades with a positive tone, shrugs off the sour tone of its overseas counterparts. The United States Consumer Price Index will likely take markets out of their lethargy. XAU/USD holds within familiar levels, risk skews to the downside. Gold trades within familiar levels on Wednesday, with a scarce macroeconomic calendar and upcoming first-tier events maintaining investors in cautious mode. Wall Street opened with a positive tone and holds on to modest gains, partially reverting its latest losses but also trading uneventfully. XAU/USD bottomed at $2,016.61 on Monday, falling from an early high of $2,046.55 and holding within such an area ever since. The lethargy is set to end on Thursday, when the United States (US) will release the December Consumer Price Index (CPI). The index is expected to post an annualized increase of 3.2%, slightly above the previous 3.1%. The core reading, however, is seen shrinking to 3.8% from 4% in November. Market participants are betting the US Federal Reserve (Fed) could start cutting rates as soon as next March. Indeed, easing inflationary pressures will confirm such an idea, regardless of the latest data showing the tight labour market. The CPI readings will likely impact… Read More »Gold Price Forecast: XAU/USD extends consolidative phase around $2,030

EUR/USD Current price: 1.0948 Easing government bond yields put a cap on the US Dollar’s advance. Stock markets trade mixed as market participants await fresh clues on US economic developments. EUR/USD remains confined to familiar levels, a directional breakout unlikely in the near term. The EUR/USD pair trades at the upper end of its latest range, still lacking directional momentum. Market participants stand cautious ahead of a United States (US) inflation update on Thursday, with no other relevant figures released so far in the US or the Eurozone (EU). Markets trade on sentiment, as reflected by stocks’ behavior, which trade mixed. Most Asian indexes edged lower, although the Nikkei 225 soared to a fresh multi-year high on speculation the Bank of Japan (BoJ) will not be able to drop the ultra-loose monetary policy anytime soon. In the meantime, European stocks trade mostly in the red, although not far from their opening levels. Meanwhile, softening US Treasury yields weigh on the US Dollar. The 10-year note currently offers 4%, while the 2-year note offers 4.34%, down 3 basis points (bps) ahead of Wall Street’s opening. On a positive note, the US published MBA Mortgage Applications for the week ending January 5.… Read More »EUR/USD Forecast: Holding within familiar levels ahead of fresh clues

EUR/USD stays below 1.0950 after closing in the red on Tuesday. Technical sellers could take action if the pair breaks below 1.0900. Markets will keep a close eye on the 10-year US Treasury note auction later in the day. EUR/USD edged lower on Tuesday as the risk-averse market atmosphere helped the US Dollar (USD) gather strength against its rivals. The pair struggles to stage a rebound early Wednesday and trades below 1.0950.

Good Morning! Dollar Index could continue to trade within 102-103 while Euro is headed towards 1.09 and should bounce back to head higher towards 1.10 as we have been expecting over the last few days. EURJPY and USDJPY have bounced back well yesterday and if the rise continues, we may soon see 159-160 and 145-146 soon in the next few sessions. This has been contrary to our earlier expected fall. USDCNY has been rising slowly and could test 7.20/22 on a break above 7.18. Aussie could be trading within 0.6650-0.6750 for the next few sessions while Pound has fallen and needs to remain above 1.26 to move back to higher level within the 1.26-1.28 range. USDRUB has broken below 90 and could now test 89-88.50 before again bouncing back to higher levels. USDINR can rise towards 83.20/30 again while above 83-82.90. EURINR can be ranged for a while. The US Treasury yields sustain higher but stable. There is room to rise further from here before the broader downtrend resumes. The US CPI data release tomorrow is important to watch. The German yields are moving up in line with our expectation. More rise is on the cards before a reversal is… Read More »Morning briefing: Euro should bounce back to head higher towards 1.1000

Gold has outperformed both stocks and bonds since the turn of the century. Gold was among the best-performing assets of 2023. According to analysis by the World Gold Council, gold outperformed emerging market stocks, U.S. bonds, the U.S. dollar, global treasuries, and commodities in general. The only asset classes that performed better than gold were U.S. stocks and developed-market foreign stocks.  But if we go back deeper in time to 1999, gold has narrowly outperformed stocks on an annualized basis as well. Dow Jones Commodity Index Gold (DJCI) tracks the gold market using the futures index. Dating back to the turn of the century, the DJCI has produced a 7.8 percent annualized return, according to S&P Dow Jones Indices head of commodities Brian Luke. That compares to a 7 percent return for the S&P500 over the same period. Bonds are even further behind in the race. The iBoxx USD Overall Index, measuring the performance of government and corporate bonds, has charted an average return of 4.1 percent since 1999. Adjusting for volatility, gold has also demonstrated better risk-adjusted returns than stocks in the 21st century, with a Sharpe ratio of 0.48 versus 0.45 for equities. The DJCI reached an all-time… Read More »Gold has outperformed the S&P 500 in the 21st century