MORNING MARKET REVIEW
EUR/USD
The EUR/USD pair shows weak growth, developing upward dynamics in the short term, which leads to the renewal of local highs from February 2. The instrument is testing 1.0815 for a breakout ahead of tomorrow's publication of business activity statistics and updated January data on consumer price dynamics in the eurozone. Analysts do not expect any change in inflation dynamics from -0.9% month-on-month and 2.8% year-on-year, while the Core CPI could remain at -0.4% and 3.3%, respectively. Forecasts for business activity statistics suggest a weak increase in the index from S&P Global in the manufacturing sector in February from 46.6 points to 47.0 points, as well as maintaining the indicator in the services sector at around 48.4 points. Today at 21:00 (GMT 2) the minutes of the US Federal Reserve meeting will be presented, from which investors expect to receive new signals regarding the prospects of launching a program to reduce borrowing costs this year. Also, during the day there will be speeches by representatives of the American regulator, including Raphael Bostic and Michelle Bowman.
GBP/USD
The GBP/USD pair is slightly strengthening, trying to develop the "bullish" momentum formed the day before, as a result of which the instrument managed to briefly update the local highs of February 13. The positions of the American currency have been under moderate pressure over the past few days, despite the fact that macroeconomic statistics only increase the risks of a longer period of wait-and-see monetary policy by the US Federal Reserve. If in mid-January the market took into account that during 2024 the interest rate would be reduced by 2.0%, today this figure no longer exceeds 1.0%, and the trend towards adjusting expectations can continue. In turn, the position of the British currency was put under pressure the day before by statements from the Governor of the Bank of England, Andrew Bailey. Speaking at a hearing on inflation, the official said that to launch a monetary easing program it is not necessary to wait for a formal reduction in the indicator to the target level of 2.0%. Instead, Bailey called for a focus on assessing the rate of slowdown in services prices and wage dynamics, which would provide a more complete picture. On Thursday, February business activity data will be published in the UK: forecasts suggest a slight decline in the index in the services sector from S&P Global from 54.3 points to 54.1 points, and in the manufacturing sector, on the contrary, an increase is expected from 47.0 points to 47.5 points.
AUD/USD
The AUD/USD pair is showing active growth, developing a confident "bullish" trend in the short term and updating local highs from February 2. The instrument is testing the level of 0.6570 for a breakout, receiving support from the macroeconomic statistics from Australia. Wage Price Index in the fourth quarter of 2023 slowed down from 1.3% to 0.9%, which coincided with analysts' expectations, while in annual terms the indicator adjusted from 4.1% to 4.2% with neutral forecasts. A slower decline in wages could be a signal for the Reserve Bank of Australia (RBA) to maintain current monetary policy. At the same time, investors paid attention to the decrease in Westpac Leading Index in January by 0.1% after zero dynamics in the previous month. The Australian dollar continues to be moderately supported by the minutes of the RBA meeting, published the day before. According to the document, the Australian regulator was considering the possibility of raising the interest rate by 25 basis points or maintaining the value at the current level, while there is no talk yet of the imminent launch of a program to reduce the cost of borrowing.
USD/JPY
The USD/JPY pair is showing mixed trading, holding near the support level of 150.00. The positions of the American currency have been under moderate pressure since the beginning of this week, while trading participants expect the emergence of new drivers in the market. In particular, today the minutes of the US Federal Reserve meeting will be presented, which may clarify the prospects for a potential easing of monetary policy in May or June. Also, during the day, there will be speeches from representatives of the American regulator, who can give an assessment of the Fed’s next steps. Tomorrow at 16:45 (GMT 2) February business activity statistics from S&P Global will be published in the United States: the Manufacturing PMI is expected to decline from 50.7 points to 50.5 points, and the Services PMI may decline from 52.5 points up to 52.0 points. Meanwhile, the yen was moderately supported by data from Japan: Exports rose 11.9% in January after rising 9.7% in the previous month, while analysts had expected 9.5%, and Imports fell 9.6% after -6.9% with a forecast of -8.4%.
XAU/USD
The XAU/USD pair is showing active growth, developing a confident upward trend formed in the short term in the middle of last week. The instrument is testing 2030.00 for a breakout, updating local highs from February 13. The development of the "bullish" trend is facilitated by some calm in the market. The American currency has been under pressure since the beginning of the week, when markets in the United States were closed to celebrate Presidents' Day. Meanwhile, analysts expect new drivers to emerge that could affect the market situation. In particular, today the focus of trading participants will be the publication of the minutes of the latest meeting of the US Federal Reserve, which are likely to strengthen the "hawkish" sentiment regarding the imminent adjustment of borrowing costs. According to the Chicago Mercantile Exchange (CME Group) FedWatch Tool, the probability of an interest rate cut during the May meeting is estimated at 36.0%, while at the beginning of the month this figure was above 60.0%. Now more and more analysts are confident that changes to monetary policy will be made in June, although some of them do not rule out a later date. It is expected that in 2024 the American regulator will adjust the interest rate by a maximum of 1.0% in total. Tomorrow investors will monitor January macroeconomic statistics on business activity in the EU and the US. Forecasts suggest a decline in the US Services PMI from S&P Global from 52.5 points to 52.0 points, and in the Manufacturing PMI from 50.7 points to 50.5 points.
EUR/USD
The EUR/USD pair shows weak growth, developing upward dynamics in the short term, which leads to the renewal of local highs from February 2. The instrument is testing 1.0815 for a breakout ahead of tomorrow's publication of business activity statistics and updated January data on consumer price dynamics in the eurozone. Analysts do not expect any change in inflation dynamics from -0.9% month-on-month and 2.8% year-on-year, while the Core CPI could remain at -0.4% and 3.3%, respectively. Forecasts for business activity statistics suggest a weak increase in the index from S&P Global in the manufacturing sector in February from 46.6 points to 47.0 points, as well as maintaining the indicator in the services sector at around 48.4 points. Today at 21:00 (GMT 2) the minutes of the US Federal Reserve meeting will be presented, from which investors expect to receive new signals regarding the prospects of launching a program to reduce borrowing costs this year. Also, during the day there will be speeches by representatives of the American regulator, including Raphael Bostic and Michelle Bowman.
GBP/USD
The GBP/USD pair is slightly strengthening, trying to develop the "bullish" momentum formed the day before, as a result of which the instrument managed to briefly update the local highs of February 13. The positions of the American currency have been under moderate pressure over the past few days, despite the fact that macroeconomic statistics only increase the risks of a longer period of wait-and-see monetary policy by the US Federal Reserve. If in mid-January the market took into account that during 2024 the interest rate would be reduced by 2.0%, today this figure no longer exceeds 1.0%, and the trend towards adjusting expectations can continue. In turn, the position of the British currency was put under pressure the day before by statements from the Governor of the Bank of England, Andrew Bailey. Speaking at a hearing on inflation, the official said that to launch a monetary easing program it is not necessary to wait for a formal reduction in the indicator to the target level of 2.0%. Instead, Bailey called for a focus on assessing the rate of slowdown in services prices and wage dynamics, which would provide a more complete picture. On Thursday, February business activity data will be published in the UK: forecasts suggest a slight decline in the index in the services sector from S&P Global from 54.3 points to 54.1 points, and in the manufacturing sector, on the contrary, an increase is expected from 47.0 points to 47.5 points.
AUD/USD
The AUD/USD pair is showing active growth, developing a confident "bullish" trend in the short term and updating local highs from February 2. The instrument is testing the level of 0.6570 for a breakout, receiving support from the macroeconomic statistics from Australia. Wage Price Index in the fourth quarter of 2023 slowed down from 1.3% to 0.9%, which coincided with analysts' expectations, while in annual terms the indicator adjusted from 4.1% to 4.2% with neutral forecasts. A slower decline in wages could be a signal for the Reserve Bank of Australia (RBA) to maintain current monetary policy. At the same time, investors paid attention to the decrease in Westpac Leading Index in January by 0.1% after zero dynamics in the previous month. The Australian dollar continues to be moderately supported by the minutes of the RBA meeting, published the day before. According to the document, the Australian regulator was considering the possibility of raising the interest rate by 25 basis points or maintaining the value at the current level, while there is no talk yet of the imminent launch of a program to reduce the cost of borrowing.
USD/JPY
The USD/JPY pair is showing mixed trading, holding near the support level of 150.00. The positions of the American currency have been under moderate pressure since the beginning of this week, while trading participants expect the emergence of new drivers in the market. In particular, today the minutes of the US Federal Reserve meeting will be presented, which may clarify the prospects for a potential easing of monetary policy in May or June. Also, during the day, there will be speeches from representatives of the American regulator, who can give an assessment of the Fed’s next steps. Tomorrow at 16:45 (GMT 2) February business activity statistics from S&P Global will be published in the United States: the Manufacturing PMI is expected to decline from 50.7 points to 50.5 points, and the Services PMI may decline from 52.5 points up to 52.0 points. Meanwhile, the yen was moderately supported by data from Japan: Exports rose 11.9% in January after rising 9.7% in the previous month, while analysts had expected 9.5%, and Imports fell 9.6% after -6.9% with a forecast of -8.4%.
XAU/USD
The XAU/USD pair is showing active growth, developing a confident upward trend formed in the short term in the middle of last week. The instrument is testing 2030.00 for a breakout, updating local highs from February 13. The development of the "bullish" trend is facilitated by some calm in the market. The American currency has been under pressure since the beginning of the week, when markets in the United States were closed to celebrate Presidents' Day. Meanwhile, analysts expect new drivers to emerge that could affect the market situation. In particular, today the focus of trading participants will be the publication of the minutes of the latest meeting of the US Federal Reserve, which are likely to strengthen the "hawkish" sentiment regarding the imminent adjustment of borrowing costs. According to the Chicago Mercantile Exchange (CME Group) FedWatch Tool, the probability of an interest rate cut during the May meeting is estimated at 36.0%, while at the beginning of the month this figure was above 60.0%. Now more and more analysts are confident that changes to monetary policy will be made in June, although some of them do not rule out a later date. It is expected that in 2024 the American regulator will adjust the interest rate by a maximum of 1.0% in total. Tomorrow investors will monitor January macroeconomic statistics on business activity in the EU and the US. Forecasts suggest a decline in the US Services PMI from S&P Global from 52.5 points to 52.0 points, and in the Manufacturing PMI from 50.7 points to 50.5 points.
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