EUR/USD remains below 100-day SMA despite hawkish ECB comments, softer USD ========== EUR/USD strengthens in reaction to hawkish comments by ECB Governing Council Member Isabel Schnabel, offsetting disappointing German macroeconomic data. The pair is also supported by hopes for a de-escalation of the crisis in the Middle East. However, the USD remains resilient due to expectations that the Fed will keep rates higher for longer. Traders are awaiting the release of US Trade Balance data and speeches by influential FOMC members for short-term impetus. #Eur/usd #Ecb #Usd #GermanMacroeconomicData #MiddleEastCrisis #Fed #UsTradeBalance https://www.fxstreet.com/news/eur-usd-remains-below-100-day-sma-despite-hawkish-ecb-comments-softer-usd-202402070953

EUR/GBP declines toward 0.8530 as ECB rate-cut bets deepen ========== The EUR/GBP pair falls sharply to near 0.8530 on December's downbeat German Industrial Production data. The industrial output of Germany was down at a sharp pace of 1.6% monthly, while market participants projected a decline of 0.6%. In November, the economic data was contracted by 0.2%. This has deepened the chances of early rate cuts by the European Central Bank (ECB). ECB Cos is confident about inflation declining towards the 2% target. However, ECB executive board member Isabel Schnabel warned that early rate cuts could flare up price pressures again. On the other hand, UK companies are becoming optimistic about the Bank of England's (BoE) rate-cut prospects amid easing price pressures. The Pound Sterling performs better against the Euro as the economic prospects of the United Kingdom's economy are improving again. #Eur/gbp #Ecb #RateCuts #GermanIndustrialProduction #Inflation #BankOfEngland https://www.fxstreet.com/news/eur-gbp-declines-toward-08530-as-ecb-rate-cut-bets-deepen-202402070841

Strong US data suggest EUR/USD could keep struggling in the near term – SocGen ========== The Eurozone economy is operating below potential, unlike the US. European rates have corrected with US rates, but to a lesser extent. The Euro 5y IRS is up 7 bps since Friday compared to 30 bps for the US. The widening of the spread is driving the new low in EUR/USD. It remains to be seen if the pair can reclaim 1.0780 and repeat the price action of last December when the Fed sparked Dollar profit taking. Strong US data suggest EUR/USD could keep struggling in the near term. #Eur/usd #ForexMarket #UsData #EurozoneEconomy https://www.fxstreet.com/news/strong-us-data-suggest-eur-usd-could-keep-struggling-in-the-near-term-socgen-202402070858

Pound Sterling revives on improved market sentiment ========== The Pound Sterling (GBP) shows some bullish moves in the European session on Wednesday as the appeal for risk-perceived assets has improved significantly. The GBP/USD rebounds strongly despite increasing prospects of early rate cuts by the Bank of England (BoE). The UK’s construction and service sectors have rebounded as prospects of rate cuts by the BoE have deepened amid easing price pressures. The US Dollar (USD) has come under pressure despite the Federal Reserve (Fed) now expecting not to rush rate cuts amid a resilient labor market and retail demand. Pound Sterling has extended its upside above 1.2600 as the United Kingdom's economic prospects improve despite the Bank of England (BoE) maintaining interest rates in the restrictive trajectory. The odds of early rate cuts by the BoE escalated after a dovish guidance on interest rates by Bank of England Chief Economist Huw Pill. The Pound Sterling is the oldest currency in the world and the official currency of the United Kingdom. The Bank of England's decisions on monetary policy have a significant impact on the value of the Pound Sterling. Economic data releases and the trade balance also influence the value of the Pound. The Pound Sterling is currently trading above 1.0750 against the Euro (EUR) and defending 1.2600 against the US Dollar (USD). #PoundSterling #BankOfEngland #UkEconomy #UsDollar https://www.fxstreet.com/news/pound-sterling-rises-amid-improvement-in-investors-risk-appetite-202402070800

Fed Chair Powell channels Ben Bernanke, assures us everything is fine! ========== During a 60 Minutes interview, Federal Reserve Chairman Jerome Powell assured that the problems in the commercial real estate market are manageable and not a risk to the broader banking system. This assurance is reminiscent of former Federal Reserve Chairman Ben Bernanke's statements in 2007 that the problems in the subprime mortgage sector were contained. However, the subsequent financial crisis proved otherwise. The article raises concerns about the potential for history to repeat itself. #FederalReserve #CommercialRealEstate #FinancialCrisis #JeromePowell #BenBernanke https://www.fxstreet.com/analysis/fed-chair-powell-channels-ben-bernanke-assures-us-everything-is-fine-202402062001

USD/INR trades flat on the weaker US Dollar, RBI rate decision eyed ========== The Indian Rupee (INR) is trading flat against the US Dollar (USD) despite the weaker USD. India's services sector expanded at its fastest rate in six months, with the S&P Global India Services Purchasing Managers' Index (PMI) surging to 61.8 in January. The Reserve Bank of India (RBI) interest rate decision on Thursday will be the highlight of the week. The RBI is expected to keep the repo rate unchanged at 6.5%. The Indian economy has shown resilience amid high inflation and geopolitical conflicts in the Middle East. The OECD raised India's growth outlook for 2024-25 to 6.2%. The Indian government plans to trim the budget deficit to less than 4.5% by FY26. Technical analysis suggests that the USD/INR pair is in a descending trend channel, with support at 82.70 and resistance at 83.20. The US ISM Services PMI rose to 53.4 in January. The US Dollar price today shows a mixed performance against major currencies. The key factors driving the Indian Rupee include the price of crude oil, the value of the US Dollar, and foreign investment. The decisions of the RBI and macroeconomic factors such as inflation, interest rates, GDP, and the balance of trade also influence the value of the Rupee. Higher inflation is generally negative for the currency, but higher interest rates can be positive. The US economic outlook continues to improve. #Usd/inr #IndianRupee #UsDollar #Rbi #InterestRateDecision https://www.fxstreet.com/news/usd-inr-trades-flat-on-the-weaker-us-dollar-rbi-rate-decision-eyed-202402060401

Mexican Peso climbs against US Dollar, despite high US Treasury yields ========== The Mexican Peso (MXN) is climbing against the US Dollar (USD) despite high US Treasury yields. The USD/MXN is trading at 17.08, down 0.28%. Mexico's economic docket for the week includes inflation data and the upcoming rate decision by the Bank of Mexico (Banxico). Expectations lean towards Banxico holding rates at 11.25%. The US economy continues to show strength with the release of strong Services PMI and Nonfarm Payrolls data, indicating a soft landing for the Federal Reserve. Banxico meets eight times a year and its monetary policy is influenced by the decisions of the US Federal Reserve. The USD/MXN is currently neutral-biased, with resistance at 17.20 and support at 17.03. The Bank of Mexico's main tool to guide monetary policy is by setting interest rates, which can influence the value of the Mexican Peso. The rate differential with the USD is a key factor. The author of the article has no position in any stock mentioned and no business relationship with any company mentioned. #MexicanPeso #UsDollar #UsTreasuryYields #BankOfMexico #FederalReserve https://www.fxstreet.com/news/mexican-peso-slides-amid-powells-hawkish-comments-202402051707

GBP/USD falls amid Powell’s comments, strong US PMIs ========== The GBP/USD falls 0.74% to 1.2535 influenced by Powell's rate stance and strong US jobs data. Powell commented that it is premature to consider cutting rates, but left the door open to easing policy. US Nonfarm Payrolls showed substantial job growth, supporting the US economy and boosting the Dollar. Rising US Treasury yields and solid economic data prompt a reassessment of Fed rate cuts. The UK services sector's positive start is overshadowed by US monetary policy and economic outlook focus. The GBP/USD has fallen below the 200-day moving average and aims to extend losses further below 1.2500. US Dollar strength and positive economic data weigh on the pair. #Gbp/usd #Powell #UsPmis #UsNonfarmPayrolls #UsDollar #UkServicesSector https://www.fxstreet.com/news/gbp-usd-falls-amid-powells-comments-strong-us-pmis-202402051828

NFP surprises, META blows the roof off the place, US strikes back in the Red Sea ========== The Nonfarm Payrolls (NFP) report for January 2024 exceeded expectations, with 353,000 new jobs created, causing unemployment to remain steady at 3.7%. Wages also surged by 0.6% month-on-month and 4.5% year-on-year, raising concerns about inflation. The strong economic data challenges the narrative of potential rate cuts by the Federal Reserve. Meanwhile, META, a company that tripled its profits, announced a $50 billion stock repurchase plan and a quarterly dividend, leading to a surge in its stock price and the broader market. The dividend announcement also opens the door for more investors to own META. The S&P 500 index continues to be influenced by a few dominant stocks, known as the "Magnificent 7," which have a significant impact on the index due to their market capitalization. The market is pricing in the expectation of rate cuts, but the data suggests a strong economy, making rate cuts less likely. Oil prices fell due to the expectation that the rate cut narrative will dampen energy demand, while gold prices declined as the US Dollar strengthened. The US futures market is showing a lower opening, and the VIX volatility index is expected to rise. This week is the last big week of earnings reports, with several major companies reporting. The market may experience some consolidation as investors reassess their appetite for risk. #NonfarmPayrolls #Meta #UsEconomy #RateCuts #StockMarket https://www.fxstreet.com/analysis/nfp-surprises-meta-blows-the-roof-off-the-place-us-strikes-back-in-the-red-sea-202402050939

Pound Sterling slides further on US NFP-led risk-off sentiment ========== The Pound Sterling (GBP) continues to face the wrath of dismal market sentiment in the European session on Monday. The GBP/USD pair drops sharply as resilient United States Nonfarm Payrolls (NFP) data on Friday have dented expectations of a rate cut from the Federal Reserve (Fed) at March’s monetary policy meeting. The UK’s poor economic prospects could force the BoE to lean towards loosening policy. The UK Office for National Statistics (ONS) reported in its revised Q3 Gross Domestic Product (GDP) estimates that the economy contracted by 0.1%. The Pound Sterling falls to a near seven-week low of around 1.2600 as the appeal for risk-perceived assets has weakened. The outlook for risk-sensitive assets has worsened as the upbeat United States employment data forced traders to pare Federal Reserve’s rate-cut bets. The Pound Sterling has come under severe pressure despite the Bank of England seeming more hawkish on the interest rate outlook than the Fed. Investors hope that a subdued economic performance and increasing geopolitical tensions could force BoE policymakers to cut interest rates earlier than expected. The United Kingdom's economy is on the brink of a technical recession. The economy witnessed a GDP contraction of 0.1% in the third quarter of 2023, and a subdued performance is anticipated in the final quarter. The UK’s vulnerable economic prospects may force BoE policymakers to join Swati Dhingra and lean towards easing interest rates in upcoming meetings. #PoundSterling #Gbp/usd #FederalReserve #BankOfEngland #InterestRates #EconomicPerformance #GeopoliticalTensions https://www.fxstreet.com/news/pound-sterling-falls-further-as-fading-fed-rate-cut-hopes-dampen-market-sentiment-202402050748