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Forex Week Ahead, 10 Feb 2025, Will US CPI and Trump’s Tariff Trigger Market Turmoil?

This week’s Forex market is poised to react to a confluence of factors, including ongoing trade dynamics, crucial economic data releases (particularly US CPI), and geopolitical uncertainties. While markets have shown a degree of resilience in the face of mild tariffs, underlying risks remain elevated. This analysis provides a detailed breakdown of these influences, offering insights into potential currency movements and highlighting key trading opportunities. We examine the performance of major currencies, assess the impact of upcoming economic events, and provide actionable trade recommendations to help you navigate the week ahead.

Key Insights

  • Tariff Threats: Watch for potential market-moving headlines from the Trump administration regarding tariffs on China, Mexico, and Canada.
  • US Economic Data: US CPI and PPI figures will be critical in shaping expectations for Federal Reserve policy.
  • Central Bank Actions: Monitor any shifts in expectations for rate cuts by the Federal Reserve and the Bank of England.
  • Safe-Haven Demand: Geopolitical risks may continue to support safe-haven currencies like the Swiss franc.
  • UK Economic Data: UK GDP and inflation data will be key for the pound.

Market Drivers

The Forex market enters the week of February 9, 2025, with a mix of optimism and caution. While markets have shown resilience in the face of mild tariffs, underlying risks remain elevated. The global economic outlook is still uncertain, with varying growth rates across different regions. This divergence is reflected in the performance of individual currencies, as central banks respond to their respective economic conditions.

The primary driver for the week will undoubtedly be the US CPI data. ​Inflation figures have been a key focus for the Federal Reserve, and any significant deviation from expectations could trigger a sharp reaction in the dollar.​ Beyond the CPI, traders will also be closely monitoring political developments, particularly those related to former President Trump. Any unexpected news or developments could inject volatility into the market, affecting risk sentiment and currency valuations.

Furthermore, global trade tensions and geopolitical risks will continue to play a role. While the initial market reaction to mild tariffs was positive, the potential for escalation remains a concern. Traders should also be aware of any unexpected events or announcements that could disrupt market stability.

Currencies Analysis

USD (U.S. Dollar)

The dollar’s strength is closely tied to U.S. economic data and Federal Reserve policy. Strong CPI and PPI figures could support the dollar by reducing expectations for rate cuts. Conversely, weaker economic data could lead to dollar losses. The Greenback has gained around 4% since the November election, mirroring its post-2016 election performance. However, it remains about 6% below its 20-year highs reached in 2022. A clear trade escalation and signs of globally rebounding inflation would be needed for the dollar to climb to its previous highs.

EUR (Euro)

The Eurozone is sensitive to US-China trade tensions. The euro remains weak on a longer-term basis, trading lower compared to both 12 months and five months ago. The broader economic environment, shaped by US policy and European inflation, will likely determine the euro’s performance in the near term. Easing by the ECB depends on US tariffs and European inflation. Stronger-than-expected Eurozone inflation suggests markets may have overestimated potential rate cuts. The delay in US tariffs on Mexico and Canada provided some relief, allowing euro buyers to re-enter the market.

GBP (British Pound Sterling)

Sterling’s low beta to tariff risks makes it a potential outperformer versus risk-sensitive G10 currencies while tariff risk premia are driving the market. Trade war scares are generally bad for GBP/USD due to risk sentiment, but positive for other sterling crosses. The UK’s weak domestic growth backdrop and fiscal concerns are limiting the pound’s recovery hopes. The Bank of England’s dovish rate cut triggered a sharp move in GBP/USD, but comments from Governor Bailey tempered the move. UK Inflation and GDP data could provide impetus for further gains. Any change in rhetoric from Trump regarding import levies on the UK could hurt sterling.

JPY (Japanese Yen)

The Yen has returned ~3% gains YTD. The Swiss franc is turning into the favored traditional safe haven of choice, beating the JPY of late as Trump’s tariff risks continue to unnerve investors globally. Comments from BoJ member Tamura about closing gaps between market and central bank views, along with his relaxed stance on rates, have helped ease some of the recent selling pressure. The pair is stabilizing around key technical support levels.

AUD (Australian Dollar)

The Australian dollar shows promising technical signals despite mixed domestic business confidence data and is near recent YTD highs. The AUD/USD shows a bullish pattern. Negative business confidence reflects ongoing cost pressures, while improved forward-looking indicators like capital expenditure plans and annual outlook provide some fundamental support.

CAD (Canadian Dollar)

The USDCAD experienced its most volatile week since the COVID-19 pandemic. Fear gripped the Loonie early in the week as Trump confirmed tariffs on Canadian imports. Hopes for an early deal and potential USMCA/CUSMA renegotiation are keeping the USDCAD below a certain level. Trade policy uncertainty is keeping the USDCAD below the 1.45 level.

CHF (Swiss Franc)

The Swiss franc is turning into the favored traditional haven of choice. The uncertain tariff, economic and geopolitical contexts, and associated market jitters make defensive FX views more compelling at this stage, which is supportive of the franc. Dovish SNB policy dynamics remain CHF bearish.

CNY (Chinese Yuan)

USD/CNH faces technical resistance. While trade tensions resurface with China’s WTO complaint against US tariffs, the yuan’s immediate direction appears more technically driven.

NZD (New Zealand Dollar)

Inflation expectations might sway rate-cut bets. Another 25-bps cut is highly likely, whether policymakers maintain an easing bias or turn more neutral will depend on what the next two CPI reports will point to.

Upcoming Economic Calendar

The US CPI release is the highlight of the week. Economists are forecasting an increase in the headline CPI and an increase in the core CPI (excluding food and energy). Any significant deviation from these forecasts could trigger a sharp reaction in the Forex market. Traders should be prepared for increased volatility around the time of the release. A higher-than-expected CPI reading would likely lead to a stronger USD, while a lower-than-expected reading would likely lead to a weaker USD. The market’s reaction will also depend on the underlying details of the report, such as the components driving the inflation increase or decrease.

US CPI and PPI Data (Wednesday, Thursday): These inflation readings will be closely watched. Strong figures could reinforce concerns about sticky inflation, potentially affecting Fed rate-cut expectations and supporting the dollar.

US Retail Sales (Friday): Flat or negative retail sales could signal consumer weakness and reinforce concerns about slowing demand

US Industrial Production (Friday): An expected improvement in industrial production could indicate sustained momentum in the manufacturing sector

UK GDP (Thursday): The first estimate of Q4 growth will be released, along with monthly readings on services, industrial, and manufacturing output

UK Inflation Data: The UK’s inflation data could provide the impetus for a move in GBP/USD

China CPI and PPI: China will publish its CPI and PPI data for January

Swiss CPI: Switzerland’s CPI data is due

📅 Ziwox Terminal, Economic calendar

Pairs of the Week

EUR/USD: This pair will be heavily influenced by the US CPI data and the ECB’s monetary policy stance. A strong US CPI could lead to a decline in the EUR/USD, while a more hawkish ECB could provide support for the pair.

× Fundamental Analysis: The Eurozone’s economic recovery is still fragile, while the US economy has shown more resilience. This divergence could favor the US dollar in the near term. However, any signs of improvement in the Eurozone or a more dovish Fed could shift the balance.

USD/JPY: This pair will be sensitive to risk sentiment and the BOJ’s monetary policy. Increased uncertainty could lead to a decline in the USD/JPY, as investors seek safe-haven assets.

× Fundamental Analysis: The BOJ’s ultra-loose monetary policy continues to weigh on the Yen. However, the Yen’s safe-haven status could provide support in times of market stress.

GBP/USD: This pair will be influenced by a combination of economic data and political developments in the UK.

× Fundamental Analysis: Brexit-related uncertainties continue to weigh on the British Pound. However, the UK economy has shown some resilience, which could provide support for the currency.

AUD/USD: This pair will be sensitive to global growth and commodity prices, particularly those of iron ore and coal.

× Fundamental Analysis: Developments in China, a major trading partner, will also influence the AUD. A slowdown in the Chinese economy could weigh on the AUD.

Suggested Trade:

EURUSD

Given the fragile Eurozone economy and the potential for a strong US CPI reading, a short EUR/USD position may be warranted. The Eurozone economy is facing several challenges, including high inflation, rising interest rates, and the ongoing war in Ukraine. These factors could weigh on the euro and lead to a weaker EUR/USD. A strong US CPI reading could further bolster the US dollar and exacerbate the downward pressure on the EUR/USD pair.

GBPUSD

Sterling’s Low Beta to Tariff Risks: The GBP appears to be an outperformer versus risk-sensitive G10 currencies when tariff risk premia are driving the market. UK Economic Data: Upcoming UK inflation and GDP data could provide impetus for a move in GBP/USD. Stronger-than-expected data could aid the pound’s rebound. Technical Levels: GBP/USD is testing the 1.25 level, where the 50-day moving average resides, which acts as a strong barrier to the upside. A hold above 1.2466 could provide a platform for further gains towards 1.26.

Conclusion

The Forex market is poised for an eventful week, with the US CPI data and political developments surrounding Trump taking center stage. Traders should closely monitor these events and be prepared for potential volatility. While the suggested trade offers a potential opportunity, it’s crucial to conduct thorough research and manage risk effectively. Remember that the Forex market is inherently unpredictable, and no analysis can guarantee profits. Stay informed, stay disciplined, and trade responsibly.

Forex Week Ahead – February 3, 2025 – Currency Insights and Economic Drivers

In the ever-evolving world of financial markets, staying informed about currency trends and economic indicators is crucial for traders. This week’s Forex analysis delves into the market’s behavior as we head into the new month of February 2025, assessing key currency pairs including EUR/USD, GBP/USD, and AUD/USD, among others. Traders should prepare for significant economic events that could impact market volatility, so let’s explore what to expect.

Key Insights

  • U.S. Economic Growth: The U.S. ended 2024 on a solid note, with a significant 2.3% increase in real GDP for Q4, largely fueled by fervent consumer spending
  • The U.S. Dollar has strengthened due to tariff announcements and increasingly hawkish economic indicators.
  • A dovish outlook from the European Central Bank (ECB) and the Bank of England (BoE) translates to anticipated rate cuts that could further weaken their currencies.
  • Inflation and Employment: Although inflation persists, the employment landscape exhibits stability, with upcoming reports expected to shed more light on the labor market dynamic.
  • Emerging markets exhibit varying monetary policies, with Brazil taking a hawkish stance despite general regional trends toward easing.

Market Overview

The Forex market is poised for significant movement as multiple central banks prepare to announce their monetary policy decisions. The U.S. Dollar has gained traction ahead of important economic data, while currencies such as the Euro and Pound face downward pressure from expected rate cuts. Furthermore, it is crucial for traders to stay informed about the economic events scheduled for the week, particularly those that will influence trading strategies. This week against a backdrop of economic uncertainty and shifting monetary policies. The following points elaborate on the trends and events that traders should monitor closely:

Tariff Announcements Impact

The recent U.S. tariffs on Canada, Mexico, and China have strengthened the Dollar, as evidenced by the downward pressure it has exerted on major currency pairs like EUR/USD and GBP/USD. Analysts are closely watching how these economic measures influence trade relations and currency valuations moving forward.

Central Banks Under the Microscope

The upcoming announcements from several key central banks, including the ECB, BoE, and Banxico, are set to play crucial roles in currency valuations.

  • The ECB recently cut its Deposit Rate, indicating a dovish stance that has kept the Euro under pressure.
  • The BoE is expected to follow suit with a rate cut of 25 basis points, reflecting soft economic data and consumer spending challenges.
  • Meanwhile, Banxico (Bank of Mexico) may reduce rates due to favorable inflation conditions, signaling an easing monetary policy trajectory.

Currencies Analysis

🇺🇸 US Dollar (USD)

The US dollar is poised for volatility as the Federal Reserve’s policy decision approaches. With inflation remaining stubbornly high, a dovish tone from the Fed could weigh on the dollar. However, stronger-than-expected GDP or PCE inflation readings could counterbalance any downside risks. Traders should watch for signals from Chair Powell regarding the Fed’s readiness to adjust policy in response to Trump’s trade rhetoric.

Suggested Pair

EUR/USD: Due to the ECB’s recent dovish actions and ongoing inflation concerns, the Euro has faced significant downward pressure against the Dollar. European CPI and core CPI readings set for February 3 will be crucial in shaping ECB’s strategies.

GBP/USD: The UK economy is facing challenges, with the BoE expected to announce a rate cut that may weaken the Pound further. Recent reports show a decline in retail sales, further solidifying the case for a dovish stance.

AUD/USD: The Australian Dollar has faced downward pressure amid weaker economic growth forecasts and expected easing from the Reserve Bank of Australia (RBA). The correlation between commodity prices and AUD remains crucial, as fluctuations can significantly impact the currency’s strength.

NZD/USD: The New Zealand Dollar is closely tied to global commodity markets, affecting its pairing with the U.S. Dollar. RBNZ monetary policy is also expected to weigh in on NZD performance.

USD/CAD: With the BoC recently cutting rates, the Canadian Dollar faces challenges against the increasingly strong U.S. Dollar. Traders should analyze USD/CAD performances relative to oil price shifts.

USD/JPY: The relationship between U.S. economic strength and the Japanese Yen continues to shape movements in the USD/JPY pairing. Broader risk appetite dynamics may further guide trading strategies.

USD/CHF: The Swiss Franc’s safe-haven status impacts its movements against the increasingly robust U.S. Dollar. The currency’s performance often tied to global economic stability.

Upcoming Economic Calendar

The following economic events are noteworthy for traders planning their strategies:

February 3, 2025

  • Eurozone CPI (YoY): Expected at 2.4%
  • Eurozone Core CPI (YoY): Expected at 2.6%
  • ISM Manufacturing Index: Anticipated at 49.5
  • Construction Spending (MoM): Forecasted at 0.3%
  • Total Vehicle Sales: Set at 16.2 million

February 5, 2025

  • Trade Balance: Expected at -$80.4 billion
  • ISM Services Index: Projected at 54.5
  • Nonfarm Productivity (QoQ): Forecasted at 2.0%
  • Unit Labor Costs (QoQ): Estimated at 3.5%

February 6, 2025

  • Bank of England Policy Rate announcement: Expected reduction to 4.50%
  • Banxico Policy Rate announcement: Anticipated reduction to 9.50%
  • Nonfarm Payrolls: Consensus at 185 thousand
  • Unemployment Rate: Expected to remain at 4.1%
  • Average Hourly Earnings (MoM): Projected at 0.3%

📅 Ziwox Terminal, Economic calendar

Conclusion

​As we navigate a week rich with economic events and central bank deliberations, a clear understanding of Forex market dynamics becomes critical.​ Key insights indicate a fortified U.S. Dollar responding to tariffs and policy changes, juxtaposed with weakening Euros and Pounds fueled by dovish central bank outlooks.

Focused analyses on major currency pairs such as EUR/USD and GBP/USD will provide traders with deeper insights necessary for informed decision-making. With upcoming economic events to watch, traders must remain agile, adapting strategies to address potential volatility across the market spectrum.

With foresight into these economic drivers and central bank actions, traders can position themselves strategically within the Forex market, optimizing opportunities while managing risks effectively. As the week unfolds, be sure to stay updated on developments that can shape trading strategies in this constantly evolving landscape.

Forex Week Ahead – Jan 29, 2025 – Central Banks in Focus Amid Tariff Tensions

Key Insights

  • 🇺🇸 Federal Reserve likely to pause rate cuts amid inflation concerns.
  • 🇨🇦 Bank of Canada expected to signal an end to aggressive rate cuts.
  • 🇪🇺 European Central Bank to continue gradual easing with potential rate cut.
  • 🇯🇵 Japanese yen may react to inflation data and BoJ policy.
  • 🇦🇺 Australian dollar under pressure from weak CPI data.

Market Overview

​As we head into the latest week of Jan 2025, the Forex market is poised for significant movements driven by key central bank meetings and economic data releases.​ The Federal Reserve is expected to maintain its current policy stance, pausing any further rate cuts as inflation remains a concern. This decision comes amid uncertainty surrounding former President Trump’s potential tariff policies, which could influence inflation and economic growth.

The Bank of Canada is anticipated to announce a 25 basis point rate cut, reflecting recent dovish trends in inflation and growth data. However, there are indications that the BoC may be nearing the end of its cutting cycle, which could stabilize the Canadian dollar in the medium term.

The European Central Bank is also expected to cut rates by 25 basis points, continuing its gradual approach to easing. Market participants will be closely watching President Lagarde’s comments for insights into future policy directions, especially in light of ongoing trade tensions.

In Asia, the Japanese yen remains steady following the BoJ’s recent rate hike, but its recovery is limited by the policy gap with the Fed. Key inflation data from Tokyo will be crucial in determining the yen’s trajectory.

The Australian dollar faces pressure from weak inflation data, which could prompt the RBA to consider rate cuts. Additionally, China’s manufacturing PMIs will be closely monitored for signs of economic recovery, impacting risk sentiment and the Aussie dollar.

Currencies Analysis

🇺🇸 US Dollar (USD)

The US dollar is poised for volatility as the Federal Reserve’s policy decision approaches. With inflation remaining stubbornly high, a dovish tone from the Fed could weigh on the dollar. However, stronger-than-expected GDP or PCE inflation readings could counterbalance any downside risks. Traders should watch for signals from Chair Powell regarding the Fed’s readiness to adjust policy in response to Trump’s trade rhetoric.

🇨🇦 Canadian Dollar (CAD)

The Canadian dollar faces pressure from political uncertainty and potential tariff threats from the US. The Bank of Canada’s anticipated rate cut could further impact the loonie, especially if wage growth and GDP data released later in the week disappoint. Traders should be prepared for increased volatility in CAD as the BoC’s tone may indicate an end to aggressive cuts.

🇪🇺 Euro (EUR)

The euro is likely to remain under pressure as the European Central Bank continues its gradual easing. The upcoming GDP data for Q4 will be crucial in assessing the Eurozone’s growth trajectory. Any new trade restrictions from the US could exacerbate the euro’s weakness. Traders should focus on Lagarde’s remarks for hints about future policy moves.

🇯🇵 Japanese Yen (JPY)

The yen’s recent stability is attributed to the Bank of Japan’s rate hike, but its recovery is limited by the ongoing policy divergence with the Fed. Key data releases, including Tokyo CPI and industrial output, will be critical in shaping expectations for further BoJ action. A strong inflation reading could bolster the yen, but sustained gains may require more aggressive moves from the BoJ.

🇦🇺 Australian Dollar (AUD)

The Australian dollar may face headwinds as weak CPI data could fuel expectations of an imminent rate cut by the Reserve Bank of Australia. Traders should monitor the upcoming CPI release closely, as it could significantly impact the AUD’s trajectory. Additionally, China’s manufacturing PMIs will provide insights into the broader economic recovery, influencing risk sentiment.

Upcoming Economic Calendar

The upcoming week is packed with high-impact economic events that traders should closely monitor. Key releases include the US GDP on Thursday, which is expected to show a slowdown to 2.6% q/q from 3.1%, and the PCE Inflation data on Friday, with core PCE forecasted to remain at 2.8% y/y. In Canada, wage growth and GDP data will be released, while the Eurozone will see preliminary Q4 GDP estimates. In Japan, Tokyo’s CPI and industrial output data will be crucial for gauging inflationary pressures. These events are vital for traders as they provide insights into economic health and potential central bank actions.

📅 Ziwox Terminal, Economic calendar

Conclusion

The upcoming week in the Forex market is set to be pivotal, with central bank decisions and key economic data releases shaping the landscape. Traders should remain vigilant, as the outcomes of these events could lead to significant market movements. Understanding the implications of these developments will be crucial for making informed trading decisions.

Weekly Gold Analysis: XAUUSD Price Movements and Forecast (January 20, 2025)

Key Points

  • Gold prices experienced fluctuations due to geopolitical tensions.
  • A weaker US dollar contributed to increased demand for gold.
  • Traders are optimistic about gold’s performance in the upcoming week.
  • Technical indicators suggest potential upward movement.

Overview of Gold Prices Last Week

Last week, gold prices (XAUUSD) exhibited notable volatility, primarily influenced by geopolitical developments and economic indicators. The week began with a slight decline as investors reacted to mixed economic data from the US, but prices rebounded mid-week as concerns over global stability resurfaced. By the end of the week, gold closed higher, reflecting a growing appetite for safe-haven assets amid uncertainty.

What Affected Gold Last Week?

  • Geopolitical Tensions: Heightened tensions in various regions led to increased demand for gold as a safe-haven asset.
  • US Dollar Weakness: A weaker dollar made gold more attractive to international buyers, driving up prices.
  • Economic Data Releases: Mixed economic indicators from the US created uncertainty, influencing investor sentiment.
  • Inflation Concerns: Ongoing inflation worries prompted investors to seek protection in gold.
  • Market Sentiment: Overall market sentiment shifted towards risk aversion, benefiting gold prices.

The most significant factor affecting gold last week was the weaker US dollar, which diminished the opportunity cost of holding non-yielding assets like gold. As the dollar weakened, gold became more affordable for buyers using other currencies, thus boosting demand.

Fundamental Analysis

Ziwox Gold Fundamental Analysis

From a fundamental perspective, gold’s performance is closely tied to macroeconomic factors. The recent fluctuations in gold prices can be attributed to the interplay between inflation expectations, interest rates, and currency strength. As inflation remains a concern, many investors are turning to gold as a hedge against rising prices. Additionally, the anticipation of potential interest rate changes by the Federal Reserve continues to influence market dynamics.

  • Geopolitical Stability: The recent ceasefire in the Israel-Hamas conflict has resulted in a decrease in safe-haven demand, leading to a sell-off in gold and other precious metals.
  • US Dollar Dynamics: The US dollar’s resilience in the face of global uncertainties has further pressured gold prices. The dollar’s value is inversely correlated with gold; as the dollar strengthens, gold tends to weaken. This week, the market sentiment has shifted to a more risk-on approach, reducing demand for gold as a protective investment.
  • Market Anticipations Around Trump’s Policies: With Trump’s upcoming inauguration, the anticipated implementation of tariffs and deregulations could influence inflationary pressures, causing investors to reassess the viability of gold as a hedge against inflation. Expectations of interest rate cuts by the Federal Reserve, in response to softer economic data, have buoyed gold in recent months, but the sentiment surrounding Trump’s policy outlook may introduce volatility into the gold market.

The overall fundamental landscape suggests that while short-term pressures are weighing on gold, longer-term prospects may remain favorable if inflationary concerns resurface driven by stimulus measures or geopolitical tensions.

📅 Economic Calendar

Trader and Institutional Expectations

Traders and institutions are generally optimistic about gold’s prospects in the coming week. Many expect that the combination of geopolitical uncertainties and a weaker dollar will sustain upward pressure on gold prices. Institutional investors are likely to increase their positions in gold, anticipating further price appreciation as market conditions evolve.

Traders and institutions have exhibited cautious optimism regarding gold’s performance amidst the current volatility. Expectations centered around several key points:

  • Support for Gold in Uncertain Times: Despite recent declines, many traders still perceive gold as a reliable hedge against inflation. Institutional investors, particularly in regions facing political instability, continue to hold significant positions in gold to mitigate potential risks associated with economic downturns and currency fluctuations.
  • Rebounds Post-Correction: Expectations of a reversal in gold’s price trajectory remain, with many anticipating that after the current profit-taking period, demand will resurface as investors look to buy at lower levels. Analysts predict that renewed interest driven by both retail and institutional buying could stabilize gold prices in the upcoming weeks
  • Market Sentiment Following Economic Developments: Trader sentiments are heavily reliant on upcoming economic indicators and political developments in the US. Any signals indicating a shift in monetary policy from the Federal Reserve, particularly regarding interest rates, could fuel buying activity.

The collective sentiment suggests that while traders remain watchful of fluctuations, the underlying demand for gold is expected to bolster prices in the mid to long-term as purchasing power concerns persist.

Technical View and Analysis

From a technical standpoint, gold’s price charts present a mixed outlook following the recent corrective action. Traders are now closely monitoring the following key levels:

  • Support and Resistance Levels: Gold prices are currently testing support around $2,670, with a potential drop to the 21-day simple moving average (SMA) at approximately $2,653. Should this level hold, a rebound toward resistance at $2,726 might occur, with the potential to ascend to the psychological resistance barrier of $2,750.
  • Indicators Signifying Market Trends: The 14-day Relative Strength Index (RSI) currently rests at approximately 58, indicating a mildly bullish outlook, although it may suggest upward momentum is not overly strong. Should the RSI decline below 50, it could suggest increased selling pressure in the market.
  • Moving Average Patterns: The recent symmetrical triangle breakout suggests that gold may experience volatility in the upcoming trading sessions, with traders awaiting a definitive move above key levels to confirm the next directional trend.

Traders should remain vigilant of external factors, particularly statements emerging from Trump’s administration and any economic indicators that could influence market sentiment appreciably.

Conclusion

​In summary, gold prices faced significant challenges in the past week, influenced by geopolitical tensions, US dollar strength, and market reactions to upcoming political events.​ The preliminary outlook for gold remains cautiously optimistic, with expectations of stabilization in prices supported by ongoing demand as traders assess the evolving economic landscape.

As we approach the upcoming week, it will be crucial for traders to keep an eye on the critical technical levels highlighted above. A solid hold above $2,670 could pave the way for a retest of $2,726 and ultimately aim for higher resistance zones. However, should selling pressure continue to build, lower support levels must be closely monitored to navigate potential downturns in the gold market effectively.



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Forex Week Ahead – Jan 18, 2025 – Markets on Edge as Trump’s Inauguration and BoJ Decision Loom

Key Insights

  • 📅 Trump’s Inauguration is expected to create market volatility.
  • 🇯🇵 BoJ’s rate decision could significantly impact the yen.
  • 🇪🇺🇬🇧 Euro and pound under pressure from weak PMIs.
  • 🇨🇦🇳🇿 Inflation data to influence Canadian and New Zealand currencies.
  • 🇨🇦🇳🇿 Inflation data to influence Canadian and New Zealand currencies.
  • 📈 Netflix earnings may shape tech sector sentiment.

Market Overview

As we head into the week of January 18, 2025, the Forex market is poised for significant movements driven by key events. ​The upcoming inauguration of Donald Trump on Monday is expected to stir volatility, particularly in the US dollar, as traders anticipate his policies on tariffs and corporate tax cuts.​ Hawkish rhetoric could bolster the dollar and Treasury yields, while equities may face pressure due to the NYSE closure for Martin Luther King Day.

On Friday, the Bank of Japan (BoJ) is expected to announce its first rate decision of the year, with an 80% chance of a 25bps hike. This decision is crucial as it reflects the BoJ’s response to rising inflation and wages. A failure to meet hawkish expectations could lead to a significant drop in the yen, while a rate hike might strengthen it, albeit with intervention risks looming.

The Eurozone and the UK will also be in focus with the release of preliminary January PMIs on Friday. Weak data could exacerbate the existing monetary policy divergence with the Federal Reserve, leading to further declines in both the euro and pound.

Additionally, inflation data from Canada and New Zealand will be released, with implications for their respective central banks’ rate decisions. A hot CPI in Canada could reduce the likelihood of a BoC rate cut, while a weak CPI in New Zealand may heighten expectations for a significant cut.

Currencies Analysis

🇺🇸 US Dollar: The dollar is set to react strongly to Trump’s inaugural speech, particularly regarding tariffs and inflation expectations. Hawkish comments could lead to a rally in the dollar, while dovish tones may result in a pullback. Traders should monitor the speech closely for directional cues.

🇯🇵 Japanese Yen: The yen’s fate hangs on the BoJ’s rate decision. A 25bps hike is largely anticipated, but any deviation from this could lead to volatility. Traders should prepare for potential intervention risks that could arise if the BoJ fails to meet market expectations.

🇪🇺 Euro: The euro faces pressure from anticipated weak PMIs, which could deepen concerns about the ECB’s monetary policy. A further cut in rates is expected, and traders should be cautious of any negative surprises in the data that could lead to a sell-off.

🇬🇧 British Pound: Similar to the euro, the pound is under pressure from weak economic data. The divergence in monetary policy with the Fed is a significant concern, and traders should watch for any signs of economic resilience in the upcoming PMIs.

🇨🇦 Canadian Dollar: The loonie’s performance will hinge on the upcoming CPI data. A strong CPI could bolster the currency and reduce the likelihood of a BoC rate cut, while weak data could lead to a bearish outlook.

🇳🇿 New Zealand Dollar: The kiwi is vulnerable to the upcoming Q4 CPI data. A weak reading could prompt expectations for a bold rate cut, pushing the currency lower. Traders should be prepared for volatility based on the inflation figures.

Upcoming Economic Calendar

The upcoming week features several high-impact economic events, including Trump’s inauguration on Monday, the BoJ’s rate decision on Friday, and preliminary PMIs for the Eurozone and UK on the same day. Additionally, inflation data from Canada and New Zealand will be released on Tuesday. These events are crucial as they will shape market sentiment and influence trading strategies. Traders should be vigilant and ready to adjust their positions based on the outcomes of these key releases.

📅 Ziwox Terminal, Economic calendar

Conclusion

The Forex market is gearing up for a week filled with potential volatility driven by significant events, including Trump’s inauguration and the BoJ’s rate decision. Traders should stay informed and prepared to react to the economic data releases that could impact currency valuations.

Forex Week Ahead – Jan 11, 2025 – U.S. Inflation Data and Global Growth in Focus

Key Insights

​The upcoming week is pivotal for the Forex market as key economic indicators from the US, China, and the UK are set to be released.​ The US CPI report will be a major driver for the dollar’s sentiment, while China’s GDP data will provide insights into global growth prospects. The UK’s inflation and GDP figures will also be crucial in shaping the outlook for the pound.

Market Overview

Last week, the Forex market experienced fluctuations driven by various economic data releases. The US dollar showed strength as investors anticipated the upcoming CPI report, which is expected to show a monthly increase of 0.3% and an annual rise to 2.9%. This data is critical as a higher-than-expected CPI could reinforce the Federal Reserve’s cautious easing stance, supporting the dollar. Conversely, a downside surprise could lead to a selloff.

In China, the focus will be on the Q4 GDP report, expected to show growth accelerating to 5.1% y/y. Stronger-than-expected growth could boost global risk sentiment, benefiting risk-sensitive currencies. Meanwhile, the UK faces challenges with inflation expected to rise, potentially impacting the Bank of England’s policy decisions.

Currencies Summary

🇺🇸 US Dollar (USD): The dollar’s strength is underpinned by expectations of a steady CPI report. Last week, the PPI data hinted at inflationary pressures, which could influence the Fed’s policy. The upcoming CPI report is crucial; a hotter print may support the dollar further, while a miss could lead to a selloff.

🇨🇳 Chinese Yuan (CNY): The yuan’s performance will hinge on the upcoming GDP data. Last week, trade figures indicated stable external demand. If the GDP growth exceeds expectations, it could bolster the yuan and improve risk sentiment globally.

🇬🇧 British Pound (GBP): The pound remains under pressure, hitting lows against the dollar. The upcoming CPI and GDP data are critical; strong figures could help the pound recover, while weak retail sales would exacerbate its challenges. The market is closely watching for signs of stagflation.

🇦🇺 Australian Dollar (AUD): The Australian dollar is sensitive to global risk sentiment. The upcoming CPI and employment data will guide RBA rate expectations. A strong performance could support the AUD, especially if global growth prospects improve.

🇯🇵 Japanese Yen (JPY): The yen’s outlook is influenced by global risk sentiment and domestic economic data. The upcoming wage data could impact BoJ rate hike expectations, with stronger wages potentially supporting the yen.

Upcoming Economic Calendar

The upcoming week features several high-impact economic events, including the US CPI on Wednesday, China’s Q4 GDP on Friday, and the UK CPI and GDP on Wednesday and Thursday, respectively. These events are crucial as they will provide insights into inflation trends and economic growth, which are vital for traders in making informed decisions.

Conclusion

​The upcoming week is set to be critical for Forex traders, with key economic indicators from the US, China, and the UK shaping market sentiment.​ The US CPI report will be a focal point for dollar strength, while China’s GDP figures will provide insights into global growth. The UK faces challenges with inflation and economic uncertainty, impacting the pound’s outlook. Traders should prepare for potential volatility as these data releases unfold.

Forex Week Ahead – Jan 6, 2025 – NFP and Eurozone CPI in Focus

Key Insights

​This week, the Forex market is set to react to significant economic data releases, particularly the US Non-Farm Payrolls (NFP) report and the Eurozone CPI figures.​ The NFP report is crucial as it may influence the US Dollar’s strength, while the Eurozone CPI could impact the Euro’s trajectory amid ongoing ECB policy discussions.

Market Overview

Last week, the Forex market experienced volatility as traders digested mixed economic signals. The US labor market showed resilience with November’s job additions at 227k, rebounding from a hurricane-impacted October. However, the December NFP report is anticipated to provide further clarity on the labor market’s health, with expectations of continued job growth. The Federal Reserve’s hawkish stance remains a focal point, with only two expected rate cuts in 2025, which could bolster the US Dollar if the NFP data supports this narrative.

In contrast, the Eurozone faces challenges with inflation cooling, as indicated by the upcoming CPI data. ECB President Lagarde’s comments on gradual rate cuts suggest a dovish outlook, which may weigh on the Euro. Political uncertainties in France and Germany further complicate the Euro’s outlook, with traders anticipating significant ECB rate cuts in 2025.

Currencies Summary

🇺🇸 US Dollar: The US Dollar is poised for potential strength as the NFP report is released. Last week, the ADP Employment report and Initial Jobless Claims indicated a robust labor market, which could support a strong NFP print. Traders should watch for any surprises in the data that could shift expectations for Fed policy.

🇪🇺 Euro: The Euro is under pressure as the Eurozone CPI is expected to show further cooling in inflation. This could solidify expectations for ECB rate cuts, leading to a bearish outlook for the Euro. Traders should be cautious of political developments that may exacerbate the Euro’s weakness.

🇨🇦 Canadian Dollar: The Canadian Dollar’s outlook is clouded by rising unemployment, with the jobs report indicating a rise to 6.8%. Weak labor data could prompt further rate cuts from the Bank of Canada, putting additional pressure on the CAD. Traders should monitor the upcoming jobs report closely.

🇦🇺 Australian Dollar: The Australian Dollar may react to the CPI data expected this week. A higher-than-expected reading could dampen rate-cut expectations, providing support for the AUD. Traders should be prepared for volatility based on the CPI outcome.

🇯🇵 Japanese Yen: The Yen’s direction will be influenced by wage data released this week. Strong wage growth could increase expectations for a Bank of Japan rate hike, which would support the Yen. Traders should keep an eye on the wage data for potential market shifts.

Upcoming Economic Calendar

This week, traders should focus on high-impact events such as the US NFP report on Friday, Eurozone CPI on Tuesday, and various employment data from Canada and Australia. These events are crucial as they provide insights into labor market health and inflation trends, which are vital for monetary policy decisions.

Conclusion

The upcoming week is pivotal for Forex traders, with key economic data releases that could significantly impact currency valuations. The US NFP report and Eurozone CPI figures will be closely watched, as they hold the potential to shape market expectations for monetary policy in both regions.

Forex Week Ahead – Dec 28, 2024 – Dollar Set to Close 2024 Strong Amid Quiet Markets

Key Insights

​As the trading week of December 28, 2024, unfolds, the US dollar is poised to end the year robustly.​ This confidence comes amid rising Treasury yields and limited market impediments. Key economic indicators, such as the ISM Manufacturing PMI and S&P Global Manufacturing PMIs, will be closely watched as a drop in these indices could influence dollar strength. The market remains sensitive to potential policy developments under President-elect Trump’s incoming administration, notably concerning tariffs and fiscal policy.

Market Overview

This past week, the Forex market witnessed notable developments. The US Dollar Index (DXY) has managed to maintain its upward trend, supported by strong Treasury yields and a bullish outlook ahead of key upcoming economic releases. Overall, the market is currently experiencing lower trading volumes typical of the holiday season, resulting in heightened volatility.

Investors are particularly focused on the ISM Manufacturing PMI set to be released on Tuesday, where a forecasted decline to 48.3 could reinforce concerns regarding manufacturing in the US, impacting the dollar’s momentum. Additionally, the Prices Index is projected to rise slightly, indicating persistent inflationary pressures, which could lead to further Federal Reserve responses.

Moreover, weak manufacturing data in the Eurozone continues to undermine the Euro, while the Yen’s recent weakness raises concerns about possible intervention from the Bank of Japan given the widening policy divergence with the US Federal Reserve.

Currencies Summary

🇺🇸 US Dollar (USD): The dollar is anticipated to sustain its bullish trajectory, riding on strong economic data and rising yields. However, volatility may be expected if the ISM Manufacturing PMI surprises the market. Last week’s Chicago PMI reflected a cautious market sentiment, suggesting that traders should prepare for possible adjustments.

🇪🇺 Euro (EUR): The Euro remains under pressure, exacerbated by disappointing manufacturing outputs. The looming threats from trade tariffs under the incoming US administration add to the Eurozone’s troubles. The market must monitor how upcoming Eurozone data, such as PMI indicators, may further influence the Euro’s standing.

🇬🇧 British Pound (GBP): The Pound is cautiously trading as UK data releases have been sparse. The exposure to US inflation rhetoric and potential tariffs remains a concern. As the market moves forward into the next week, GBP’s trajectory will heavily depend on sentiment from broader market developments.

🇦🇺 Australian Dollar (AUD): The Australian dollar faces challenges meted out by the anticipated economic indicators in China. Diverging data trends can have significant repercussions on the AUD, making it critical for traders to remain alert to any surprises from the Chinese PMIs.

🇯🇵 Japanese Yen (JPY): Continued yen weakness could prompt intervention from the Bank of Japan, especially with USD constraints tightening. The upcoming economic prints from Japan will be crucial while traders monitor policy shifts amidst the backdrop of growing fiscal pressure.

Upcoming Economic Calendar

In the upcoming week, traders should focus on various significant releases as the ISM Manufacturing PMI in the US can potentially shift market sentiment. Alongside the US data, traders should watch the S&P Global Manufacturing PMIs and various Japanese economic metrics, including the Tokyo CPI and jobless rate. These events are critically important as they hold the power to spring market surprises that could affect both currency valuations and trader strategies.

Conclusion

In conclusion, as we approach the new year, the market will continue to navigate through a mixture of economic indicators and geopolitical developments. The outlook for the US dollar appears strong, but traders should remain vigilant in their strategies, particularly with the slew of upcoming data that is likely to influence sentiment and market movements.

Forex Week Ahead – Dec 23, 2024 – A Volatile Holiday Season Awaits

Key Insights

​As we advance into the last week of 2024, the forex market is set to experience heightened volatility influenced by the US Federal Reserve’s hawkish stance and persistent inflation concerns.​ The US Dollar’s strength is expected to continue, supported by key economic data releases, including the Consumer Confidence Index and Durable Goods Orders. Investors should prepare for potential market swings, especially with major economic prints from Japan and central bank insights from Canada and Australia on the horizon.

Market Overview

The forex market enters a critical week with significant events that could shape trading dynamics. The Federal Reserve’s recent decision to lower interest rates by 25 basis points amid sticky inflation has established a hawkish sentiment among investors. The US Dollar has remained dominant throughout 2024, reflecting a robust economic performance, which might be challenged by thinner holiday trading conditions. Central to the market focus will be the upcoming consumer confidence data and durable goods reports, anticipated to provide insights into the US labor market and manufacturing sector. In Japan, the expected high CPI figures could trigger potential policy adjustments from the Bank of Japan, thereby influencing the yen’s performance.

Additionally, the upcoming GDP data from Canada and revisions in the UK’s Q3 GDP could introduce further volatility as traders assess each currency’s respective strength against the USD.

Currencies Summary

🇺🇸 US Dollar (USD): The USD continues to capture attention as it remains bolstered by the Federal Reserve’s hawkish outlook amidst persistently high inflation. This week, investors anticipate the Consumer Confidence Index and Durable Goods Orders, with a strong reading likely to support the dollar further.

🇯🇵 Japanese Yen (JPY): The yen may face challenges, but upcoming data, such as Tokyo’s CPI and the Bank of Japan’s policy minutes, could provide essential insights into future interventions or policy shifts. An acceleration in inflation could prompt the BoJ to reconsider its current stance.

🇬🇧 British Pound (GBP): The pound stands on a precipice as traders await the release of revised Q3 GDP data. A positive revision could provide upward momentum, wherein the BoE’s hawkish signals may strengthen the outlook for the pound amidst volatile market conditions.

🇨🇦 Canadian Dollar (CAD): The loonie is at risk of experiencing upward pressure if the data from Canada’s October GDP exceeds expectations. Traders will look closely at the Bank of Canada’s policy minutes for hints at future rate changes that may impact the CAD’s trajectory.

Upcoming Economic Calendar

Next week’s economic calendar is packed with high-impact events. On Monday, the US Consumer Confidence Index and Canada’s GDP for October will be released, with insights into labor market confidence and economic growth. On Tuesday, investors will focus on Durable Goods Orders and New Home Sales, scrutinizing any declines to gauge consumer spending. Additionally, the release of the Bank of Japan’s policy minutes and CPI data will be crucial for determining potential shifts in Japanese monetary policy.

Conclusion

The upcoming week holds significant potential for currency traders, with key data releases and insights from central banks poised to influence market movements. As the holiday season approaches, monitoring these economic indicators and policy signals will be essential for making informed trading decisions amidst heightened volatility.

Forex Week Ahead – Dec 15, 2024 – Anticipating Central Bank Decisions and Key Economic Indicators

Key Insights

​This week is crucial for Forex market participants as major central banks finalize their year-end policy decisions.​ Anticipated moves from the Federal Reserve, Bank of Japan, and Bank of England will significantly impact currency valuations. The U.S. Federal Reserve is expected to implement a 25 basis point rate cut, reflecting a cautious approach amid persistent inflation and a solid labor market. Traders should also monitor the upcoming Purchasing Managers’ Index (PMI) releases and inflation data across several economies, as these will provide insight into economic health and central bank strategies.

Market Overview

Last week’s Forex market saw the U.S. Dollar Index (DXY) gain about 1.3%, reflecting a robust market response to ongoing economic data releases. The prevailing sentiment was supported by sticky inflation figures that complicate the Fed’s rate-cut plans. Key reports showed the U.S. Consumer Price Index (CPI) rose by 2.7% year-on-year, slightly surpassing forecasts and reinforcing the narrative of sustained inflation pressures. The Euro faced headwinds, remaining under 1.0500 against the Dollar due to uncertain economic conditions in the Eurozone, while the British Pound showed resilience amid better-than-expected economic data, supported by a hawkish stance from the Bank of England.

In global contexts, the Japanese Yen saw mixed reactions ahead of the BoJ’s decision, which is expected to maintain a dovish approach despite some upward pressure from strong domestic consumption data. The outlook for the Canadian Dollar is contingent on inflation reports following the Bank of Canada’s aggressive rate cut. Overall, the Forex market is likely to experience heightened volatility as investors digest the ramifications of central bank announcements and incoming economic data.

Currencies Summary

🇺🇸 U.S. Dollar (USD): Last week, the DXY posted steady gains bolstered by inflation data showing a 2.7% rise in CPI, thereby adding doubts to the possibility of aggressive rate cuts. The upcoming Fed meeting is crucial, as a dovish tone could lead to a pullback in USD momentum, presenting opportunities for currency traders.

🇬🇧 British Pound (GBP): The GBP remained strong as UK economic data outperformed expectations, particularly in labor market statistics. Market sentiment suggests that the BoE will likely maintain rates, providing the pound with ongoing support. The upcoming CPI and labor data this week will be vital in gauging the economic trajectory and the pound’s resilience.

🇪🇺 Euro (EUR): The Euro struggled against the advancing USD, maintaining pressure below the 1.0500 mark due to ongoing challenges within the Eurozone economies. Preliminary PMIs this week could signal further economic deterioration, impacting the Euro’s stability against the Dollar and other currencies.

🇯🇵 Japanese Yen (JPY): With expectations for no rate changes from the BoJ, the Yen faces a crucial period that may see further weakening unless there are unexpected hawkish signals from policymakers. The strength of the Yen remains intertwined with global economic trends and local inflation metrics.

🇨🇦 Canadian Dollar (CAD): The CAD is under scrutiny following a significant rate cut from the BoC last week. The Friday release of inflation data will be critical, as continued inflation could mitigate prospects for further rate cuts, affecting CAD valuations through investor confidence.

Upcoming Economic Calendar

The upcoming economic calendar features critical data releases such as the U.S. Core Personal Consumption Expenditures (PCE) Price Index on Friday, which is closely watched by the Fed. Additionally, preliminary PMIs from the Eurozone will be released on Monday, UK job data on Tuesday, and UK CPI on Wednesday. These events are essential as they provide insights into economic health and inflationary pressures, helping traders make informed decisions about their positions and strategies based on central bank outlooks.

Conclusion

This week’s Forex market is poised for significant movements due to central bank decisions and pivotal economic data releases. Traders should focus on how these factors will shape currency valuations and the broader economic landscape. Engaging with these insights can help traders navigate the potential volatility and make strategic trading decisions in a dynamic market environment.

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