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EUR/USD Dips as Diverging Central Bank Policies Drive Market Sentiment In the ever-volatile currency markets, the EUR/USD pair demonstrated a downward trajectory on Wednesday, eventually stabilizing in a narrow band between 1.082 and 1.084. Despite Spanish inflation data for March meeting economists' expectations at 3.2% for the headline reading, the pair struggles to meaningfully extend it upsides. In this scenario, Tuesday's bearish reversal can be interpreted as a mere technical retreat from the psychological barrier of the 1.08 level, which swiftly lost momentum, reinstating the pair on its downward trajectory: EURUSD’s bearish trend underscores the contrasting stances of two major central banks: the US Federal Reserve and the European Central Bank, shaping investor sentiment and currency flows. The recent discourse among ECB officials suggests a growing likelihood of interest rate cuts in June. ECB Governing Council members, including Madis Muller and Fabio Panetta, hinted at an impending shift in monetary policy, emphasizing the emergence of a consensus favoring rate reductions. Moreover, ECB Chief Economist Philip Lane underscored that wage inflation is steadily converging towards normal levels, signaling a significant step toward removing the primary obstacle to ECB interest rate cuts in the near future. Conversely, the Federal Reserve's stance appears more divided. While Chairman Jerome Powell advocates for a June rate cut, dissenting voices within the Fed, such as Raphael Bostic and Lisa Cook, advocate for a cautious approach, emphasizing the need for sustainable inflation returns. The variance in viewpoints within the Federal Reserve underscores a heightened level of uncertainty regarding both the pace and magnitude of future interest rate adjustments, surpassing the level of uncertainty observed within the ECB's discussions. Looking ahead, market participants eagerly anticipate Friday's release of the Core Personal Consumption Expenditures Price Index, considered the Fed's preferred gauge of inflation. The result of this event is positioned to significantly impact the Fed's decision-making process regarding interest rates, as it will complement CPI data by offering a comprehensive view of inflation from the perspective of demand side (compared to supply side as in the case with CPI). In parallel, the gold market remains in a consolidative phase below the $2,200 mark, as traders await further clarity on the Fed's policy trajectory. The upcoming PCE release on Friday is expected to provide meaningful insights into USD demand dynamics, thereby impacting gold prices. Moreover, upbeat US economic indicators, such as Tuesday's Durable Goods Orders, coupled with persistent inflationary pressures, may prolong the Fed's stance on maintaining higher interest rates, bolstering US Treasury bond yields and the USD. Short-term price analysis in Gold reveals an initial failure to sustain a breakout above the $2200 level on March 21. Nevertheless, the price swiftly regained its upward momentum, positioning itself for a second attempt at testing this critical level. This resilience suggests robust demand near the all-time high, heightening the likelihood of a new record being established in the near future. A potential bullish target could reside in the mid-$2250 range, reflecting the market's underlying strength and upward trajectory: Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company. High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 72% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Dollar rally stalls as market participants wait for more signals of the strength of the US economy The EUR/USD pair is showing resilience, defending its near-term support level at 1.08. Broad, albeit slight dollar weakness contributed to the strength of the pair. However, recent economic data releases from both the United States and Europe have injected fresh dynamics into the forex landscape, influencing market sentiment and shaping expectations regarding central bank policies. The release of US Durable Goods Orders for February presented a positive surprise, with headline figures surpassing expectations. Headline Durable Goods Orders rose by 1.4%, exceeding the forecast of 1.3%. Moreover, various components, including Durable Goods Orders ex Defense and Nondefense Capital Goods ex Aircraft, outperformed market estimates. Furthermore, commentary from Federal Reserve officials, particularly from Raphael Bostic, President of the Federal Reserve Bank of Atlanta, has been notably hawkish. Bostic's assertion that the Fed is likely to cut interest rates only once in 2024 contrasts with the market's expectation of three cuts. Such comments temper the extent of dollar sell-offs and contribute positively to the upside potential of the currency. Conversely, European Central Bank officials have adopted a more dovish tone, signaling a potential shift towards earlier interest rate cuts. ECB Member Fabio Panetta's remarks regarding the emerging consensus for a rate cut, possibly as early as June, have weighed on the Euro's outlook. Additionally, ECB Chief Economist Philip Lane's confidence in wage inflation reaching levels consistent with the ECB's target suggests a forthcoming start of a policy easing cycle. The prospect of lower interest rates in Europe, coupled with the likelihood of a dovish stance from the ECB, rein in upward momentum in the pair. A rate cut in April, as hinted by Panetta, could further undermine the Euro's attractiveness, potentially leading to decreased inflows of foreign capital. Short-term technical analysis suggests that the resurgence of buying pressure, signaling a potential pullback, may occur specifically around the medium-support line, aligning with the 1.0750 level: Meanwhile, the Pound Sterling has exhibited strength against the US Dollar, extending its gains above 1.2650. Despite concerns regarding the Bank of England's (BoE) dovish stance, driven by lower-than-anticipated inflation data, the GBP/USD pair has shown resilience. The BoE's recent monetary policy statement indicated a reluctance to reduce interest rates immediately, although market expectations of rate cuts persist. Technically speaking, the recent price action has seen a breakdown below both the resistance line and the ascending support line, leaving the pair with limited prospects for an immediate recovery. Sellers are likely to target the 1.25 level before considering their triumph, potentially paving the way for bullish momentum thereafter: Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company. High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 72% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

EUR/USD Sees Modest Rise Amidst Dollar Weakness At the dawn of the trading week, the EUR/USD pair has started on a modestly positive note, edging higher by 0.2%, however remaining below the intraday resistance level at 1.0850. This upward movement comes against the backdrop of a weakened US Dollar, driven primarily by the surprising move from the Chinese central bank, which fixed the Renminbi higher on Monday morning, sparking broad-based USD selling. While today's uptick suggests a slight recovery, the pair remains ensnared within a new short-term downtrend, trying to regain ground above the critical 200-day SMA line. This downtrend was further exacerbated by last week's decline following the release of Eurozone and US flash PMI data, which underscored the resilience of the US economy, contrasting with Eurozone performance. The resilience of the US economy has reignited discussions regarding the Federal Reserve's monetary policy trajectory. Despite earlier expectations of three interest rate cuts this year, recent data indicating US economic strength has prompted reassessment. If the Fed opts for a slower rate-cutting pace, it could buoy the US Dollar, drawing increased foreign capital inflows seeking higher returns. Short-term technical analysis of the Dollar index (DXY) shows that the FOMC-induced decline towards 103 was followed by sharp rebound to 104 and breakout of the medium-term resistance line. This recovery occurred after Friday encouraging PMI data which could be a sign that the market cast doubts on the dovish Fed signals made during the FOMC meeting. In turn, this increases risk that the rally will continue after retest of the line which flipped into support level: Adding to the market's speculation, the surprise decision by the Swiss National Bank to cut interest rates has raised concerns that the European Central Bank might follow suit. Historically, the ECB and SNB have mirrored each other's policy moves, albeit with the SNB typically following the ECB. However, the recent SNB decision has flipped this narrative, prompting investors to anticipate potential ECB rate adjustments on signs of easing inflation pressures on the European continent, as indicated by the SNB move. The statements from ECB Chief Economist Philip Lane affirming confidence in wage inflation converging towards the 2% inflation target further underscore the likelihood of impending rate cuts, adding another layer of complexity to the currency markets. Wage pressures have often been cited by the ECB officials as the key variable that explains persistence of inflation due to the self-reinforcing “wage-consumption-inflation” cycle. Further complicating the currency landscape is the intervention talk emanating from Japan, with Masato Kanda, Japan’s currency chief, hinting at potential market operations to support the Yen. USD/JPY has dipped, hovering in the 151.300s, spurred by the historical precedent of Bank of Japan (BoJ) intervention when the pair breaches the 150.000 mark. This sentiment is bolstered by data from the currency futures market, revealing an increase in bearish bets on the Yen during the BoJ's March meeting week, despite rumors of a rate hike. The vicinity around the 150 level on USDJPY has consistently posed a formidable obstacle for buyers, with the pair failing to maintain any substantial upward momentum amid concerns of currency interventions. It seems probable that this scenario will persist, and any data indicating weakness in the USD is likely to trigger a surge in bearish momentum, pushing the pair towards levels more favorable for the Japanese government. From a technical standpoint, it appears that the near-term selling target for the pair could lie within the range of 148-148.50: In the realm of upcoming events, attention turns to the Federal Reserve Bank of Atlanta President Raphael Bostic's scheduled speech, which could offer insights into the Fed's policy stance. Additionally, US New Home Sales and the Chicago Fed National Activity Index releases are poised to influence market sentiment. Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company. High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 72% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

EURUSD remains range-bound as markets look for fresh upside catalysts EUR/USD advanced slightly on Friday following strong bearish backlash after the pair tested horizontal resistance level on Thursday. Despite the intensive pullback, managed to sustain pricing above 1.08, with technical indicators signaling a lack of significant bearish momentum. The reversal was instigated by a weakening US Dollar fueled by improved risk appetite in the market. However, the US Treasury bond yields' upward trajectory, supported by favorable US data, limited bearish momentum in the greenback, restraining EUR/USD's bullish aspirations. Meanwhile, GBP/USD demonstrated resilience as it surged above 1.2700, marking its highest level in three weeks. The momentum, propelled by robust UK private sector activity, encountered headwinds in the American session on Thursday, leading to a partial retracement. Despite early stability above 1.2650, GBP/USD remains vulnerable to fluctuations, especially in the absence of significant data releases from both the UK and the US. Key economic data releases played a pivotal role in shaping market sentiments. Notably, the decline in first-time jobless claims in the US to its lowest level since early January, coupled with the S&P Global Composite PMI maintaining expansion territory, underscored the resilience of the US economy. Similarly, upbeat PMI data from the UK fueled optimism surrounding the Pound Sterling. However, the surge in the benchmark 10-year US Treasury bond yield to its highest level since late November acted as a catalyst for the US Dollar's resurgence, exerting pressure on GBP/USD's upward trajectory. Gold prices experienced a retreat from weekly highs, hovering around $2,025 during Friday's London session. The downward pressure stemmed from tempered expectations of imminent rate cuts by the Fed. As Fed policymakers express reservations regarding inflation reaching the coveted 2% target, gold struggles to significantly extend its upside momentum. The Fed's stance on interest rates, characterized by a preference for maintaining rates within the 5.25%-5.50% range for some time in order to properly assess monetary policy transmission, reflects a cautious approach towards monetary policy. Amidst January's persistent inflation figures, policymakers exhibit a reluctance to hastily implement rate cuts, fearing potential repercussions on consumer price inflation. This cautious demeanor underscores the Fed's commitment to a balanced approach in navigating economic uncertainties. Gold, often viewed as a safe-haven asset, faces headwinds as the opportunity cost of holding non-yielding assets escalates amidst the Fed's inclination towards prolonging higher interest rates. The diminished prospects of rate cuts diminish the attractiveness of gold as an investment avenue, prompting investors to reassess their portfolios. Consequently, gold prices experience downward pressure amidst the prevailing market sentiment favoring the US Dollar. Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company. High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 72% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

US Dollar Wavers as Disinflation Narrative Persists Amid Mixed Economic Signals The US Dollar (USD) finds itself in a precarious position, relinquishing its recent gains following a surge triggered by a red-hot inflation report earlier in the week. However Fed members are cautioning against overinterpretation of this singular CPI data point, emphasizing the broader disinflationary trajectory that persists. Austan Goolsbee, a member of the US Federal Reserve, echoed sentiments urging markets not to tether their expectations solely to the CPI figure, hinting at the underlying factors shaping monetary policy. Amidst a flurry of economic data releases, markets’ attention is fixated on Retail Sales figures, viewed as a litmus test for the resilience of consumer spending. Complementing this heavyweight data, Industrial Production and Import/Export Prices offer supplementary insights into the prevailing disinflationary undercurrents, reinforcing the notion that the recent CPI spike may indeed be an aberration. Additionally, market participants eagerly await remarks from Fed member Christopher Waller, slated to provide further clarity on the central bank's stance. The US Dollar Index now finds itself in a holding pattern, faltering in its attempt to breach the elusive 105 threshold. With expectations of imminent rate adjustments looming, the DXY is poised to retreat, potentially revisiting support levels at 104 or lower. Technical setup of DXY played out as expected: price recoiled from medium-term crucial resistance line, validating its importance. Potential selling target could be the support line that guided recovery of the USD since the start of the year, corresponding to 104 level on this instrument: The Pound Sterling (GBP) grapples with its own set of challenges, tumbling amid news of the United Kingdom slipping into a technical recession. Preliminary Gross Domestic Product (GDP) data from the UK Office for National Statistics underscored a contraction of 0.3% in the fourth quarter, marking the second consecutive quarterly decline—a telltale sign of recession. The bleak economic backdrop intensifies speculation of preemptive rate cuts by the Bank of England, aimed at resuscitating growth momentum. As economic indicators flash warning signals, the Pound Sterling braces for further downside pressure, exacerbated by foreign outflows amid mounting expectations of dovish policy maneuvers by the BoE. Despite steady consumer price inflation in January, diverging from investor projections of acceleration, BoE Governor Andrew Bailey remains sanguine about price pressures converging toward the target threshold by spring. Nevertheless, the specter of stubborn wage growth and service inflation poses formidable hurdles to achieving the coveted 2% inflation benchmark. The GBP/USD pair retraces from intraday highs, eyeing a downward trajectory towards the 200-day Exponential Moving Average (EMA) positioned around 1.2520. From there, however the pair has good chances to rebound on the back of broad weakness of the USD described in the previous paragraph: Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company. High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 72% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Selling risks persist for EURUSD as key bearish targets are yet to be met The EUR/USD pair isn't catching a break, heading south for the second day straight and hovering around 1.0790 during the European session on Thursday. The mighty US Dollar is gaining traction against the Euro, riding high on the words of Federal Reserve Chair Jerome Powell, who slammed the door on a rate cut in the upcoming March meeting. Powell's skepticism that the committee will be ready to slash rates by March is also giving a boost to US Treasury yields. However, the Euro attempts to make a comeback attempt following the release of mixed Eurozone inflation data. In the technical realm of EUR/USD, the setup signals that the selling pressure might stick around until the price hits the support area near December 2023's lowest point at 1.0740. Brace for a potential rebound from there, pushing the price towards the upper boundary of the current bearish channel: The Euro faced challenges after softer preliminary CPI data from Germany hit the wires on Wednesday. This has raised expectations of a potential interest rate cut by the ECB in June. However, ECB member Mario Centeno suggested that if inflation keeps heading in its current direction in the upcoming months, the ECB's next move might involve cutting rates, potentially marking the beginning of a cycle aimed at normalizing interest rates. ECB Vice President Luis de Guindos hinted that interest rate cuts would only be on the table when there's confidence that inflation aligns with the central bank's 2% goal. In terms of economic indicators, the Eurozone HICP showed a 3.3% increase in January, surpassing consensus estimate of 3.2%. The annual CPI met expectations at 2.8%, in line with the previous reading of 2.9%. The month-over-month report displayed a 0.4% decline, reversing the 0.2% rise observed in December: In Germany, the CPI for January showed a year-on-year increase of 2.9%, falling short of the anticipated 3.0% and marking a substantial drop from December’s 3.7%. Monthly consumer inflation, however, met expectations, rising to 0.2% from the previous 0.1%. The German HICP increased by 3.1%, lower than the previous figure of 3.8%. The US Dollar continues to flex its muscles amid a growing consensus that the Federal Reserve's policy easing action might not happen until May. Fed funds futures indicate an increased likelihood that the Fed will maintain its stance in March, with odds jumping from 45.5% before the FOMC meeting to over 65% on Thursday. Furthermore, the probability of a quarter-point rate cut in May exceeds 60%: Thursday's spotlight is expected to be on significant economic indicators such as US Initial Jobless Claims, Nonfarm Productivity, and ISM Manufacturing PMI. The recent report of a 107K jobs increase for January in the ADP Employment Change fell short of the expected 145K and marked a decrease from the previous reading of 158K in December. Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company. High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 72% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

EURUSD and USJDPY analysis: strong dollar caps any upside but situation could quickly change The Bank of Japan left the parameters of monetary policy unchanged at today's meeting. BOJ Governor Ueda adopted an ambiguous position regarding withdrawal from QE policy and interest rate hikes, even though in the last quarter of last year, the Japanese yen significantly strengthened on expectations that the BOJ would begin tapering its accommodative policy and 'catch up' with its counterparts in monetary tightening. Trying to explain the indecision, the BOJ chief referred to the uncertainty associated with negotiations on wage hikes by major Japanese companies. Without wage hikes, raising interest rates would be risky, as the BOJ could inadvertently trigger deflationary pressure in the economy and undermine all progress on inflation. Fragility of the situation is underscored by the fact that wage growth in Japan slowed to just 0.2% in November of last year after decent figures in several previous months: Societe Generale believes that, at the moment, USDJPY is overvalued, and alignment with current yield spreads between Japanese and American bonds (one of the main factors driving yen demand) would be achieved at a cheaper USDJPY rate. However, it is worth noting that current rates in the U.S. reflect the shift in market expectations that the first rate cut in the U.S. is being pushed from March to May, following a series of strong reports on the American economy in January. If the positive series of fundamental data on the U.S. is interrupted, USDJPY should move lower, aligning with the yield differentials. From a technical analysis perspective, the upward trend in USDJPY that started early last year was disrupted at the end of October when speculation arose that the Bank of Japan would begin unwinding its ultra-accommodative policy. The price broke the ascending channel, declined until the end of the year, but turned around at the beginning of the new year. The reversal zone was around 140 yen per dollar, where a long-term support line also passed (orange line on the chart): The fact that the price held above the long-term uptrend line and energetically began to rise after the New Year indicates that there are long-term investors in the market expecting the overall trend of yen depreciation to continue. Short-term and medium-term resistance levels for the pair will be 148 (where the price is currently) and the area of 152 yen per dollar. In case of a breakthrough and consolidation, the rally may only accelerate. The EURUSD pair continues to fluctuate in a narrow range of 1.085-1.09 on Tuesday, to which it shifted after the release of the U.S. inflation report and strong labor market data (initial unemployment claims) last week. The earlier range was 1.09-1.10. Interestingly, the pair still cannot determine its direction and simply moves from range to range. This indicates that both the ECB and the Fed have not formed a market consensus that they are transitioning to a policy easing cycle. This week, clarity is expected to come from the ECB on Thursday, as well as EU services and manufacturing PMI on Wednesday. These will be preliminary PMI readings from HCOB for the first month of this year. A slight improvement is expected for the EU and Germany (more precisely, the pace of activity deterioration will slow down slightly). As for the ECB meeting, the market will assess whose side Lagarde will ultimately take – the hawks or doves of the Governing Council. Unlike the Fed, where there is a relative consensus, ECB officials are divided – some are eager to cut rates, while others prefer to wait for more convincing signals from the inflation front before changing rates. From a technical point of view, short-term risks for EURUSD are tilted towards the downside, albeit slightly. Attempting to go long on the pair can be considered in the area of 1.08 (the December low of last year): Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company. High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 72% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Global Markets React to Economic Data and Central Bank Actions: EUR/USD, GBP, AUD in Focus The EUR/USD pair faced slight downward pressure during the European session, however later recovered to the equilibrium rate of 1.0950 which has been sustained by the market from the last week amid of lack of conclusive signals from the Fed or the ECB: Dollar index (DXY) rose amidst a thin-volume trading session marked by elevated volatility due to the extended weekend in the United States for Martin Luther King Birthday. US equity futures trade slightly in the red, signaling a risk-averse market sentiment. Investors remain wary about the risk that recent improvement in the US data (CPI, labor market indicators) will translate into inflation persistence in other economies, hence steering clear from aggressive dollar bids. The focus now shifts to the eagerly anticipated US monthly Retail Sales data for December, scheduled for Thursday. Analysts expect a 0.4% growth, surpassing the 0.3% increase recorded in November. The trajectory of the USD Index remains closely tied to market perceptions of March rate cut by the Federal Reserve. According to the CME Fedwatch tool, traders are currently assigning a 70% probability of a rate cut by the Fed in March. On the Eurozone front, Germany's preliminary GDP for the fourth quarter of 2023 contracted by 0.3%, in line with expectations. This comes after a notable 1.8% growth in the previous period. While market participants foresee the European Central Bank contemplating interest rate cuts, ECB Chief Economist Philip Lane downplayed the possibility, citing recent inflation data. Turning to the Pound Sterling, it faces a sell-off ahead of the United Kingdom labor market data for the three months ending November due on Tuesday. Soft wage growth data could potentially contribute to a decline in households' spending power, aiding in the gradual return of inflation towards the 2% target. The demand for labor remains vulnerable, with job postings in the UK declining by 32% in December compared to a year ago, according to the Recruitment and Employment Confederation (REC). Down under in Australia, higher TD Securities Inflation data indicates mounting price pressures in the coming months. Additionally, job advertisements increased in December after three consecutive declines. However, these positive figures failed to offer significant support to the Australian Dollar. The People's Bank of China's decision to leave its benchmark rate unchanged disappointed investors who were expecting a rate cut to bolster the country's economic recovery. Consequently, the China-proxy Australian Dollar is under increasing bearish pressure, with key supports at 0.6620 (50-day SMA) and 0.6580 (100-day SMA). The pair witnessed reversal of the bullish trend at the start of new year which adds to the view that pair might have entered medium-term downward trend. Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company. High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 72% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

US CPI: analysis of preliminary data points to potential upside surprise The currency market and the US bond market are in a bit of a pickle, prices moving in tight ranges or resembling fading oscillations. It seems like all the hot info that came out recently is already baked into the prices: Hopes for figuring out the next trend are pinned on today's US inflation report. Overall inflation is expected to pick up slightly, going from 3.1% in November to 3.2% in December. At the same time, core inflation (excluding food, fuel, and other volatile components), according to the consensus forecast, will continue to slow down, hitting 3.8% versus 4% last month. Markets are more sensitive to surprises in core inflation, as its changes have a stronger impact on the Fed's policy - central bank folks, including Powell, have pointed this out multiple times. The deal is, if you base monetary policy on highly volatile data, it's clear that the volatility of interest rates and other Fed policy parameters will increase. Clearly, this volatility will spill over into the economy and financial markets, which is definitely not in the interest of the central bank, whose task is to smooth out fluctuations. Check out the graph below showing overall and core inflation: the first one resembles swings around the trend, which is represented by core inflation. To understand what to expect from today's report, consider the following points: - The NFP report showed that wage growth exceeded expectations in December, coming in at 0.4% MoM compared to the forecast of 0.3%. Wage growth correlates with changes in consumer inflation. - The New York Fed, which weekly forecasts the quarterly GDP growth of the US based on incoming stats, raised the forecast for the fourth quarter from 2.26% in early December 2023 to 2.54% at the beginning of January 2024. Overall improvements in December data may indirectly suggest that inflationary pressure in the economy may have increased in December. - Initial claims for unemployment benefits in December (an employment indicator) again fell in December. - Consumer credit sharply increased in November - $23.75 billion (forecast $5.13 billion). This can be seen as a leading indicator of increased consumer spending in December. - The University of Michigan Consumer Confidence Index jumped to 69.7 points in December - the second-highest reading for 2023. Among the reports that could indicate a negative surprise in December inflation, only the US Services PMI stands out. The overall index dropped to 50.6 points, but a significant contribution to the decline came from the employment component, which plummeted to 43.7 points. In general, preliminary data and the seasonal surge in consumer spending at the end of November and in December tilt the risks for the CPI report towards a positive surprise. However, in my view, this won't significantly and for long change the market expectations for the March easing of the Fed's policy: the market will prefer to wait for data for January and February. If the report disappoints, an asymmetric reaction is likely: the market will be much more willing to factor in a Fed rate cut in March. In this case, the dollar could start to decline intensively along with bond yields, and the search for yield will sharply intensify, allowing the US stock market to refresh recent highs: the S&P could head towards 5000 points. Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company. High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 72% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

AUDUSD: Potential U-Turn at the Start of the New Year Fueled by Continued CPI Slowdown The EURUSD's mid-term uptrend has hit the pause button, chilling in a tight range of 1.09-1.10 for the sixth day straight, hugging the lower edge of the trend channel: Last Friday's dollar-buying signal, triggered by a robust NFP report that outperformed expectations in job growth, unemployment, and wage increase, got dampened by a pretty weak US Services PMI, especially the hiring component. It plummeted below 50 to 43.7 points, raising concerns that official labor market stats in the early months of the new year might take a hit (as PMI indicators are forward-looking). This, in turn, cranks up the pressure on the Fed to ease policy in March. So, last Friday, EURUSD reacted with a 'sawtooth' pattern, dropping to 1.0880 and later bouncing back to 1.10. This week's consolidation likely stems from uncertainty ahead of Thursday's US inflation report (CPI), which could set the forex trend for several days or even a week. Technically speaking, the current EURUSD pattern – consolidation near the lower edge of a fairly lengthy uptrend (over two months) – often precedes a breakthrough below the lower boundary. A slightly wider range is still forming for GBPUSD – the price has been waltzing between 1.26 and 1.28 for almost a month. The preceding trend to this range, like with EURUSD, popped up in mid-November when the market started to factor in a change in the Fed's QE stance in Q1 2024: Today, the head of the Bank of England, Bailey, will speak, and the market will be watching to see if he leans towards taming inflation or preventing further economic slowdown. Recent economic output data showed that the UK teetered on the edge of a recession in Q3 2023 – GDP shrank by 0.1%. The BoE's latest communication expressed uncertainty about growth prospects in Q4, indicating rising pressure to shift the tone towards a more market-friendly monetary policy that boosts credit growth. However, compared to the EU and the US, inflation in the UK is higher, making the dilemma sharper for the BoE than for counterparts in other leading countries. Friday's data on monthly GDP changes, construction volumes, and trade balances in the UK should shed light on which alternative the BoE will ultimately lean towards. A more intriguing situation is unfolding on the AUDUSD chart – since the new year kicked in, the price has switched to a downtrend, bouncing off a long-term resistance line: Today, Australia's monthly CPI indicator was released – inflation continued to slow down in November, beating expectations at 4.3% on an annual basis against the forecasted 4.4%. In the recent RBA meeting, rate hikes were put on hold, citing the need to assess the effectiveness of the previous series of increases. The new price data increases the likelihood that the tightening pause will be extended, which should negatively impact the attractiveness of the AUD. Considering the technical aspect of the AUDUSD chart, the risks of further decline are growing. Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company. High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 72% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Mixed Signals in the Markets: US Employment and PMI Reports Shake Things Up The job report and Services PMI in the US gave the market a bit of a rollercoaster ride last Friday. The dollar flexed its muscles after the employment stats revealed the US added 216K jobs in December, beating the expected 170K. However, the November job figure got a downgrade to 173K. Unemployment held steady at 3.7%, defying expectations of a slight increase to 3.8%. The real surprise came with wage growth, shooting up by 0.4% for the month, outpacing the expected 0.3%. As we know, wage growth is a leading indicator for inflation, making the future outlook and the possibility of a Fed rate cut in March less clear-cut. Over the year, average wages in the US grew by 4.1%, beating the expected 3.9%. But the dollar rally on the report was short-lived. EURUSD briefly dipped to 1.0880, but within an hour not only recovered but also trended upward. The US Services PMI report played a part in this turnaround. Service sector activity is a key leading indicator for economic expansion, responsible for about 70% of the US GDP and employing around 70% of the workforce. The overall Services PMI dropped from 52.7 to 50.6 points, but the hiring sub-index plummeted from 50.7 to 43.3. In other words, a significant number of respondents reported sharp hiring cuts in December compared to the previous month. The component of new orders in the report also declined in December compared to November but remained in the expansion zone, i.e., above 50 points. Analyzing the overall market reaction to Friday's stats, it seems the market put more weight on the PMI report. This isn't surprising, considering labor market indicators are lagging indicators – they reflect peaks and troughs later than business cycle indicators. On the contrary, survey indicators like PMI can preemptively signal a shift in a business cycle. The mixed US stats were offset by Eurozone data. European inflation in December accelerated but less than expected – 2.9% against a forecast of 3.0%. Signs of slowing inflation increased the likelihood of the ECB adopting a softer policy earlier than anticipated, weakening the upward momentum of the euro. As a result, EURUSD continues to stabilize in the 1.09-1.10 range it occupied before the release of fundamental data. An important event this week will be the release of the US inflation report on Thursday. The consensus forecast anticipates a slowdown in core inflation from 4 to 3.8% and an acceleration in overall inflation from 3.1% to 3.2%. Also, on this day, we'll get a batch of labor market data – initial claims for unemployment benefits. In recent weeks, their behavior has become ambiguous again – the weekly increase has started to decline and is nearing the minimum of the current business cycle: As seen, US statistics remain quite contradictory, possibly because the disparity is evident when comparing leading indicators (survey data) and lagging indicators (such as labor market data). Therefore, markets are not rushing to reassess the chances of a Fed policy easing, which remains the main driver for all asset classes. The dynamics of the dollar this week will likely hinge on the inflation report. Until Thursday, we can expect stabilization in current ranges. The EURUSD retest of the 1.10 level and the subsequent pullback vividly show that the market is not ready to determine the trend for the main currency pair just yet. Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company. High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 72% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Weak US GDP data points to dovish surprise in Core PCE report The US dollar found itself on the back foot Thursday after a mixed bag of economic releases, including a downward revision to the third-quarter GDP growth estimate from 5.2% to 4.9%. The GDP Price Index also saw a downward adjustment, from 3.5% to 3.3%, indicating a smaller inflationary impact on growth than initially anticipated. While Initial Jobless Claims came in slightly below expectations at 205,000, the overall data failed to impress, contributing to a broad-based USD selloff in the afternoon. EURUSD seized the opportunity to extend its recent rally, soaring above 1.1000 for the first time since early November. The softer dollar, coupled with growing expectations for a dovish surprise in the upcoming PCE data, fuelled the euro's ascent. Markets anticipate a smaller-than-forecast rise in the core PCE Price Index, potentially paving the way for a slower pace of Fed tightening and further euro gains. Should the data confirm these expectations, parity could be within reach for the EUR/USD pair. GBPUSD fluctuated around 1.2700 after UK retail sales defied expectations with a 1.3% jump in November. This seemingly positive development was offset by a downward revision to Q3 GDP growth, which tempered sterling's enthusiasm. The pair's near-term direction likely hinges on the PCE data and broader risk sentiment. A dovish surprise from the data could lift the pound alongside global equities, while a hawkish tilt could trigger a pullback for GBPUSD. The Japanese yen weakened after minutes from the Bank of Japan's October meeting reiterated its commitment to ultra-loose monetary policy. This stance, coupled with a modest dollar uptick, pushed USDJPY higher despite speculation about a potential policy shift in early 2024. The divergence in Fed and BoJ policy paths could cap further gains for the USDJPY pair, with yen bulls awaiting any hawkish signals from the BoJ in the coming months. Gold prices climbed to a near three-week high above $2,055 before retreating slightly on a firmer dollar. However, the precious metal's appeal remains underpinned by the prospect of a global rate-cutting cycle in 2024, with the Fed potentially softening its hawkish stance after the PCE data release. Any dovish surprise could trigger a further rally for gold, while a hawkish tilt could lead to a temporary dip, presenting a buying opportunity for investors. The Personal Consumption Expenditures Price Index takes center stage later today, with investors dissecting every detail for clues about the Fed's future rate trajectory. A dovish surprise could send the dollar tumbling and propel risk assets higher, while a hawkish tilt could trigger a reversal of recent trends. With central bank policies and economic data taking center stage across major economies, buckle up for a potentially volatile ride in global markets. Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company. High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 72% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Central Bank Meetings Overview: Igniting the Chase for Yield This week saw a series of central bank meetings that delivered a plethora of surprises. In particular, the communication from both the Federal Reserve and the European Central Bank diverged from market consensus expectations. Strong data on the U.S. economy, including service activity indices (PMI), employment and wage growth in November, and changes in unemployment benefit claims in recent weeks, shaped expectations that the Fed would maintain a pause at its Wednesday meeting and initiate a discussion on monetary policy easing only in the first quarter of 2024. Additionally, there were hypotheses that the sharp decline in bond yields (risk-free rates, benchmarks for all other rates in the economy) in October-November would have a "heating" effect on the economy, delaying the onset of central bank rate cuts. However, the Fed didn't hold back; Powell, during the press conference, clearly stated that FOMC members had already begun contemplating and discussing how the rate would decrease in 2024. This became the first major surprise for the market. The updated central bank economic forecasts also worked against the dollar: Core PCE for 2023 and 2024 were revised downward compared to September, while real output increased for 2024. This provided an additional stimulus for market participants to increase demand for risk assets. The second surprise was the signal of resistance from the ECB to market expectations of aggressive easing of credit conditions in 2024. Although the European Central Bank left the main policy parameters unchanged yesterday, Lagarde's statement at the press conference that the members of the Governing Council had not discussed rate cuts at all was a surprise. The element of surprise here was that incoming data on the European economy for October-November seemed to indicate a much more significant slowing impulse than in the U.S. For example, core inflation sharply slowed from 4.2% in October to 3.6% in November (forecast 3.9%), and GDP contracted by 0.1% in the third quarter. Considering that the ECB's sole mandate is to maintain price stability (inflation targeting), the fact that the sharp decline in inflation in November did not prompt a change in rhetoric became an additional argument in favor of the strengthening of the Euro yesterday. One tangible result of the sharp shift in market expectations after the meetings of the two leading central banks was the decline in the spread in short-term bond yields between the U.S. and the EU, by more than 20 basis points over the last two days: The pound sterling strengthened on Wednesday and Thursday by more than two percent after the Fed signaled a softer stance on rates ahead, while the Bank of England, at Thursday's meeting, emphasized that inflation risks persisted, so ruling out further rate hikes was not possible. Three officials out of nine advocated for a rate hike on Thursday, which was also a rather hawkish signal for the market (especially against the backdrop of the Fed decision). Both the bond market and interest rate derivatives revised their expectations for central bank policy easing in 2024 by approximately 7-10 basis points. This was enough to attract investors to British fixed-income assets, triggering an upward movement in GBP: A highly successful combination for risk assets, particularly the U.S. stock market, was the combination of the Fed’s dovish signal and strong U.S. reports on Thursday. Retail sales in October grew by 0.3% for the month, beating the forecast of -0.1%, and initial jobless claims sharply fell again – to 202K against a forecast of 220K. The data unequivocally increase risk appetite in the market, and the prospect that this will be compounded by a chase for yield (i.e., speculative momentum) shifts short-term risks for the U.S. market towards further growth, at least until the end of the year. Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company. High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 72% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Eurozone Inflation Plummets: Euro and Pound Drop Amid Elevated ECB Rate Cut Expectations The Dollar Index rose at the beginning of the European session, gaining about 0.3% in a short period, attempting to consolidate above the 103 level. The primary surge was driven by a decline in the Euro – EURUSD depreciated by approximately 0.5%. The pair is approaching the 1.09 level, having tested the 1.10 level yesterday but failed to hold. In the short term, the downward momentum is likely nearing exhaustion, as the price approached the lower boundary of a recently formed channel. Additionally, the RSI momentum indicator dipped into oversold territory: However, upcoming reports from the U.S., particularly Core PCE and initial unemployment claims, could bring surprises given the recent increased volatility. It's advisable to await their release before relying solely on the technical picture. On Thursday, data on China's manufacturing sector activity was released. The PMI indicator fell, contrary to expectations, with a slight worsening in industrial conditions – the corresponding indicator dropped from 49.5 to 49.4 points against a forecast of 49.7 points. Data from the Eurozone on Thursday was mixed. Preliminary estimates for November showed a slowdown in inflation in France to 3.8%, below the forecast of 4.1%. However, October consumption dropped by 0.9%, contrary to the expected -0.2%. Unemployment in Germany increased by 0.1% to 5.9%, against an expected 5.8%. Headline inflation in the Eurozone slowed from 4.2% to 3.6%, and the core price growth decelerated from 2.9% to 2.4%, surprising the market with a lower-than-expected figure than 2.7% forecast. These inflation figures prompted a reassessment of expectations for the timing of the ECB's interest rate cuts, with the possibility of an earlier policy easing cycle. This, in turn, increased the attractiveness of the Euro against the Dollar, as expectations on Fed policy are a little bit less dovish. Some U.S. central bank officials even hinted yesterday at the possibility of another rate hike if incoming data necessitates it. The weakened Euro also affected the British pound, as expectations for the British economy shifted towards a faster slowdown in inflation. The pound fell against the dollar by approximately 0.5%. Later today, the Core PCE indicator will be released, and it could influence the position of European currencies if it indicates a faster-than-expected decline in inflation. The expected baseline is 3.5%, which is 0.2% lower than the previous value. The market should also pay attention to initial unemployment claims, a key U.S. labor market indicator at the moment. An increase from 209K to 220K is expected. Last week, this indicator sharply declined against expectations of further growth, supporting the dollar as markets factored in inflationary consequences and a slower shift in the hawkish stance of the Fed towards a more dovish one. This week's figure will show whether the surprise of the previous week was significant or if the trend of rising unemployment in the U.S. is gradually gaining momentum. During the New York session, Federal Reserve official Williams will attempt to influence the market, and increased volatility may be observed during the release of U.S. Pending Home Sales data, with an expected 2% decline in monthly terms. Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company. High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 72% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

US Dollar Under Pressure: Analyzing the Impact of the Fed Statements The statements made by the Fed officials on Tuesday prompted a mild sell-off of the dollar. At the beginning of Wednesday, the US Dollar Index (DXY) tested the 102.50 area, but during the day, it managed to recover from the decline, ending slightly positive. From a technical analysis standpoint, after breaking through the bearish channel, there could have been a speculative bearish momentum that is expected to dissipate near the 102 level: Several Federal Reserve officials stated yesterday that there are signs of an economic slowdown, particularly in the deceleration of consumer spending growth. Indicators of activity in the US services and manufacturing sectors are also declining. Additionally, inflation is decreasing, but it's not enough to assert that the Fed has reached the peak of tightening. Clearly, past incidents of a resurgence in inflation after periods of slowdown compel officials to be more cautious in their statements and actions. However, these comments seem to have been sufficient to trigger another reassessment of inflation expectations and Fed rate expectations. From the second half of yesterday, the yield on the 2-year bond fell by about 20 basis points, and the 10-year bond by 15 basis points: Powell's speech on Friday poses another bearish risk for the dollar and bond yields. Based on the tone of comments from other Fed representatives, it can be expected that Powell will also emphasize the need for a rate hike pause in December. Against the backdrop of falling bond yields, gold gained further, aiming to test the next round level of $2050 per troy ounce. The S&P 500 futures also rose on Wednesday, approaching the 4600 level, the highest since August. Lower bond rates force investors to accept a lower expected return on stocks, leading to an increase in market capitalization. The economic calendar on Thursday will be quite interesting: data on US inflation (Core PCE), Eurozone inflation for November, and Chinese PMI in the manufacturing sector will be released. The market will also pay attention to US unemployment claims data. Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company. High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 72% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Currency Market Analysis: Dollar Weakness, Bond Auction Strength, and Global Economic Signals The dollar index continues its search for lows this week; however, seller activity has diminished as the market overall remains relaxed, given that this week marks Thanksgiving in the United States: It is worth noting that the price has dropped below all three key moving averages (50, 100, 200-day), increasing the likelihood of a rebound next week. The auction of 20-year US Treasury bonds showed strong demand on Monday. The fact that investors have shown increased interest in these securities, even after a sharp decline in yields over a short period and despite the uncertainty related to partisan opposition regarding the government budget (which undermines the impeccable credit rating of the USA), has become a signal for the market to buy bonds across all maturity spectrums. As a result, almost the entire US yield curve decreased by an additional 4-5 basis points yesterday, weakening the dollar. Today, the market will trade the report on existing home sales in the US and the minutes of the FOMC meeting on November 1. According to the initial report, the consensus forecast is 3.88 million units, which, by the way, is the lowest value since 2010. The basis for such weak figures is the relatively high mortgage rate (around 8% for 30 years) and a low level of mortgage applications in October. Weak data will confirm that the high Fed rate is beginning to fully impact key macro variables. The market is also focused on the yuan's revaluation, actively supported by Chinese authorities. Although China is trying to avoid its excessive devaluation, the rapid strengthening of the yuan, in pure economic terms, will not necessarily be beneficial, given the significant role of exports in the economy. Nevertheless, authorities actively support its strengthening, and today they set the reference rate stronger than expected – close to 7.14. A strong yuan pulls up the entire Asian currency bloc, which, in aggregate, may also have a negative impact on the dollar. For EURUSD, today presents an opportunity to break through 1.10 on the potentially weak report on existing home sales in the USA, but consolidation is unlikely. To achieve this, we probably need to see a decisive reduction in the interest rate on the two-year US Treasury bond, which continues to stubbornly hold near 5%, even after a series of recent soft US data. Upward movement is also temporarily hindered by concerns that several European PMI indices due on Thursday will remind us that the weakness of the European economy has not disappeared and may have even intensified. The Canadian dollar is awaiting an inflation report. A slowdown in growth from 3.8% to 3.2% is expected. Today, USDCAD is slightly in the negative against the backdrop of calm trading in the currency market overall. On the daily chart, technical figures formed by the pair resemble preparation for a downward breakthrough – a triangle near the lower boundary of the main upward trend. The inflation report may well contribute to this today: Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company. High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 72% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

US Inflation Report for October Alters Dollar Outlook The latest US inflation report for October appears to have cast doubt on the prospects of a strengthening dollar in the medium term. Details from the report revealed that two crucial components of the index – the service sector and rental rates – experienced a sharp slowdown in price growth. Alongside the production price index, which indicated monthly deflation, these data significantly reduced the likelihood of a December Federal Reserve rate hike (futures are currently pricing in a 0% probability). Additionally, the market has begun factoring in the scenario that the Fed's rate cut in 2024 may commence earlier, with the overall size of cuts for the year exceeding previous expectations (now around 100 basis points). Despite a positive retail sales report, the situation failed to recover, leading to a dollar and Treasury bond yield collapse. The US dollar index has clearly formed resistance around the 104.50 level in the latter half of this week: Unexpectedly weak initial jobless claims data were released on Thursday – a high-frequency indicator allowing assessment of the weekly pace of layoffs in the US economy. The number of initial claims rose to 231K, while long-term unemployment claims also increased more than anticipated, indicating that the job search difficulty for the unemployed continued to rise: Following the release of weak labor market statistics, the dollar index fell to 104 but rebounded by the end of the day. Today, towards the end of the week, the downward movement resumed, though the 104 level is likely to hold. There was a surge in buying in both short-term and long-term Treasuries at the beginning of the European session, triggering dollar sales. However, closer to 104, selling pressure noticeably diminished. Today also saw disappointing retail sales data in the UK and the Eurozone's second estimate of inflation, which met expectations. Considering the openness and size of the US economy, markets are likely to begin factoring in deteriorating economic data in EU countries, the UK, Japan, and other developed nations. The ongoing downward trend of the dollar, without clear signals from the Fed indicating a pause, will likely need to be accompanied by stability in economic indicators in those countries or positive surprises in the data. In this regard, attention should be directed to next week's Eurozone PMI data, scheduled for Thursday, and Japanese inflation figures, set to be released on Friday. Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company. High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 72% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

US Market Rally Faces Crucial Test as S&P 500 Nears 4500 Points S&P 500 and other US stock indices closed with a solid gain on Friday. After breaking through the bearish channel last week, the SPX index spent most of the week consolidating near the 4350 level, but on Friday, it made a confident leap, surpassing the 4400 mark. The rally since early November has been quite impressive, with SPX showing intraday growth, resulting in a 6.5% increase in its market capitalization, excluding two trading days. Such episodes in the index's history have been no more than 10. The outlook for the continuation of the US market rally will depend on the upcoming economic data this week. Comments from Federal Reserve Chair Powell and other officials last week suggest that the Fed could raise rates again in December if the data indicates the need for such a move. Key reports this week include the Consumer Price Index on Tuesday, retail sales data on Wednesday, unemployment claims on Thursday, and housing construction data on Friday. Expectations for headline US inflation MoM in October are set at 0.1%, while core inflation is expected to be at 0.3%, following the previous 0.3% in October. The sharp drop in gasoline prices this month is likely to trigger a "domino effect," reducing inflationary pressure in other categories, potentially keeping the overall Consumer Price Index and Producer Price Index near the previous month's level: Preliminary statistics indicate a decline in car sales in October, and credit card spending has also fallen short of expectations, indicating a potential slowdown in consumer spending. US industrial production is also facing a downward impetus, as evidenced by the weak ISM index in the manufacturing sector, which is likely to impact the Producer Price Index (PPI) published on Thursday. Risks are also growing in the construction sector, considering that mortgage rates have risen to 8%, apparently acting as a catalyst for a significant slowdown in potential buyer traffic. Regarding core inflation, market participants are likely to focus on two main components: service inflation and rental inflation (Shelter). Despite moderate overall figures last month, markets viewed changes in the CPI as a hawkish risk, given the accelerated inflation in the services sector. As the SPX index approaches the key psychological resistance level of 4500 points, market participants may use the incoming data this week to secure profits, likely causing a slight correction before the market can readjust for a pre-holiday rally with a potential test of the 4500 level as a breakout point. A correction in the stock market would be a positive development for the dollar, which could strengthen up to the upper limit of the current bearish channel, corresponding to the 106.30 area: Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company. High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 72% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Market Update: Bond Yields Recede, Dollar Faces Downside Risks, and Labor Market Signals Bond Market Dynamics: Yields Retreat and Fed Speculation In the last couple of sessions, bond yields have been on a roller-coaster ride, witnessing declines both at the short and long end of the curve. The 10-year bond yield, which peaked at 5% last week, has now retreated to 4.62%, while the 2-year bond yield has fallen from 5.24% to 4.98%. These movements have significant implications, primarily due to their impact on the market's perception of the Federal Reserve's monetary policy. The market has effectively priced out the possibility of a rate hike from the Fed in December, while expectations for rate cuts in 2024 have increased. This shift is attributed to the market's dovish interpretation of the recent Fed meeting. Chairman Jerome Powell's stance during the meeting raised doubts about the need for further tightening, given the batch of weaker-than-expected fundamental data on the U.S. economy this week. Key data points from the first half of the week, such as Manufacturing PMI, ADP jobs data, and an unexpected uptick in initial claims data, have all added to the argument against imminent tightening. For instance, the unexpected cessation of the recent downward trend in unemployment claims data is noteworthy. The headline reading revealed 217K new claims, slightly missing the consensus estimate of 210K. The previous week's figure was also revised higher to 212K. Continued claims, an indicator of people remaining unemployed, ticked higher to 1818K, surpassing the 1800K estimate. Continuing claims has been on the rise from September indicating that difficulty in finding new job increases: This rising trend in unemployment claims may signify a deterioration in the labor market, which, in turn, could have a dampening effect on inflation. The link between rising unemployment claims and the labor market's health is crucial. As more people struggle to find employment, it can lead to reduced consumer spending and demand, thereby acting as a potential brake on inflation. Dollar's Bullish Momentum and Overbought Status The U.S. dollar has displayed bullish momentum, reaching its highest level since late November 2022. However, it's essential to consider that the dollar could be considered overbought, especially given the Federal Reserve's proximity to the end of a tightening cycle, as indicated by Powell during the last meeting. This scenario suggests that the risks for the dollar are currently skewed towards the downside: Non-Manufacturing PMI and NFP Today, essential reports to watch are the NFP and the PMI report for the non-manufacturing sector from the Institute for Supply Management (ISM). The services sector, accounting for nearly 70% of U.S. output, is a vital indicator for measuring the overall health and direction of the U.S. economy. The consensus estimate stands at 53 points, slightly lower than the September reading of 53.6 points. This report, along with two additional PMI reports from S&P Global, though less crucial than the ISM's report, will collectively provide investors with a clearer picture of the U.S. economy's performance in October. Consensus estimate for growth in jobs count is 180K, significantly less than stellar September print of 336K. The range of estimate is 125K – 300K. A reading below 100K should be the clear signal for dollar fall, however if jobs growth will be in line with estimates or slightly weaker, we are unlikely to see significant dollar downtrend. Wage growth is expected to decelerate from 4.2% to 4.0% and unemployment to remain unchanged at 3.8%. Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company. High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 72% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Global Economic Snapshot: China's Resilience, Surprising US Data, and UK Inflation Shockwaves Significant improvements were seen on the macroeconomic front on Wednesday following the release of data from China. The third-quarter GDP growth came in at 4.9% on an annual basis, surpassing expectations of 4.4%. Industrial production (4.5% versus a forecast of 4.3%) and even often-underperforming retail sales (5.5% versus 4.9%) also exceeded expectations. Official unemployment in China has dropped to 5%. Among the key implications for global markets, we can consider improved forecasts for energy consumption (China being the second-largest net oil exporter) and a revision of growth forecasts for all major economies. This is because the growth of the Chinese economy largely reflects external demand for Chinese goods and services. Following this news, oil prices rose by more than 1%, with Brent crude testing the $93 per barrel mark, its highest since early October. Since the escalation in the Middle East, prices have risen by nearly 10%, putting pressure on countries heavily dependent on energy imports: In the United States, retail sales figures released yesterday also exceeded expectations. September's growth compared to the previous month more than doubled forecasts. US industrial production also surprised on the upside, with a month-on-month increase of 0.3%. The Federal Reserve is striving to keep its policy flexibility, stating that more time is needed to assess the possibility of another rate hike this year. Richmond Fed Chief Barkin made this announcement yesterday. Meanwhile, US Treasury yields reached local highs today, with the yield on the 10-year bond reaching 4.85% and the 2-year bond hitting 5.24%, its highest level since 2006: Today's inflation data in the UK also surprised on the upside, increasing the likelihood of a tightening by the Bank of England in the upcoming meeting. Core inflation came in at 6.1% (forecast 6%), while headline inflation reached 6.7% against a forecast of 6.6%. The report prevented the British pound from falling, and GBPUSD is consolidating near the opening level (around 1.22). However, the price remains within a descending channel with attempts by buyers to take the initiative: From the chart, it's evident that the short-term resistance level for the pair will be around 1.2250. If it breaks and holds above 1.225 for at least a few days, the pound is likely to attract more buyers. However, if sellers manage to defend this level, pound weakness from a technical perspective may intensify, and the pair could head toward the recent low at 1.20. The dynamics of European currencies are now heavily influenced by the conflict in the Middle East. Markets vividly remember the recession in developed countries caused by the energy crisis of 1973 when Arab OPEC members sharply reduced production to influence global prices in their favor. The markets are likely to be inclined to consider this risk now, preparing for further rallies, and the likelihood of this scenario increases with each new escalation. Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company. High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 72% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Market Jitters, Surprising Retail Sales, and the Dollar's Rollercoaster Ride Events in the Middle East are keeping the market on edge. Stock markets, if they go up at all, are doing so with caution. There's a little bit of growth followed by some corrections. Today, the main European exchanges and U.S. index futures are down by about half a percent. Gold is hanging onto its gains from last Friday, thanks to the geopolitical tension, making it a hot item. The dollar is holding its ground. The big deal today in terms of economic news is the report on U.S. retail sales. This report is probably the third most important after the NFP (non-farm payrolls) and the inflation report. Despite a negative sign from household credit card spending, the report surprised on the upside. Retail sales for the month increased by 0.7% compared to the previous month, and core sales, which give a better idea of consumption trends, rose by 0.6%. These numbers are much higher than the expected 0.3% and 0.2%. Notably, the previous figures were also revised significantly upward, to 0.8% and 0.9% respectively. This data pulled the dollar out of the red where it started the session and put it on an upward trend: Yields on long-term bonds, like the 10-year Treasuries, shot up on the news, challenging recent highs around 4.90%. Verbal interventions from the central bank officials about high long-term bond yields having a tightening effect on the economy, reducing the need for tightening by the central bank, triggered a correction in Treasuries. This correction only lasted a week, and then rates started rising again, effectively ignoring the events in the Middle East: This week, on Thursday, Federal Reserve Chairman Powell is speaking. In light of recent comments from several Fed top brass that recent yield curve behavior might reduce the need for a rate hike, Powell has a tough task ahead. He'll have to somehow comment on the incoming data to give the impression that the Fed has everything under control. It's known that the effectiveness of the Fed's policy depends heavily on whether it influences market expectations. If the Fed 'misses the mark' by suggesting one thing and the economy requires another, market participants may start making their own forecasts about what the Fed will do. That's why the Fed's influence on their expectations will diminish, and the efficiency of monetary policy will take a hit. Also, today we'll get data on international capital flows into U.S. Treasury bonds (TIC Flow) for August. This publication updates us on what major foreign countries are doing with their U.S. debt. China's holdings of U.S. debt have fallen from $1.04 trillion at the beginning of 2022 to $821 billion. Further decreases could cause problems in the U.S. bond market and raise questions about whether rising U.S. bond yields due to an increase in the term premium are actually good news for the dollar. Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company. High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 72% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Markets React to Middle East Crisis: Dollar's Dive, Bond Yields, and Gold Stability The wave of risk aversion on Monday, following the tragic events in Israel, is gradually fading away. There appears to be a growing market consensus that the conflict will remain local, and third-party countries won't get involved. The market's reaction on Monday still lingers in the oil market; prices are hesitant to drop after surging by nearly 4%. Gold prices have also remained quite stable, consolidating near the $1950 level per ounce. The dollar index has dipped to the 106 level and is trading near the lower boundary of the upward trading channel: It's worth noting that along with the drop in the dollar, Treasury bond yields have also significantly retreated. This basically suggests that the reasons for the dollar's weakening can be attributed to a reassessment of market expectations, either related to inflation or the Federal Reserve's interest rate trajectory. Indeed, yesterday, we heard a rather unexpected comment from the head of the Dallas Fed, Logan, who mentioned that under certain conditions, the Fed's interest rate has varying effects on the economy, depending on the risk premium incorporated into long-term Treasury bond yields. This indirect change can be tracked through the yield spread between long-term and short-term bonds. For example, the spread between the yields of 10-year and 2-year Treasury bonds has increased by almost 50 basis points since the beginning of September: This increase in the yield spread means that the risk premium associated with longer-term investments in the economy has also risen, which, according to Logan, strengthens the 'cooling' effect of policy tightening. Ultimately, this could imply that fewer rate hikes may be needed. The markets have interpreted Logan's musings as a signal that the dynamics of yields are starting to concern the Fed and that Fed officials might lean towards eschewing further tightening. Long-term bond yields have dropped by nearly 15 basis points, from 4.80% to 4.65%: Other Fed officials haven't expressed similar speculations yet, so it's premature to talk about a change in the Fed's narrative. Consequently, the stability of yield decreases, spurred by Logan's comments, is in question. There's also a chance that market participants are factoring in a dovish surprise in the upcoming U.S. CPI report to be published on Thursday. Notably, weak wage growth in the U.S. in September is one sign that inflationary pressures in the economy continue to ease. Based on the expected bond market response to the Fed's comments, the downward correction of the dollar is likely nearing its end. The technical analysis presented at the beginning of the article on the dollar index also suggests that prices may have reached a zone where buyer interest will resurface. European currencies remain vulnerable to a decline, as markets, as we can see, are not rushing to price out the risks of negative consequences of the Middle East conflict on oil prices. Looking at the technical chart of EURUSD, a potential zone is evident where the upward correction could encounter seller resistance – 1.0630-1.0650: Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company. High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 72% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Middle East Crisis Spurs Market Volatility and Drives Oil Prices Higher Stock markets in Asia and Europe experienced a decline on Monday, while gold prices rose, and the dollar resumed its upward movement towards local highs amid a sharp escalation of tensions in Israel. The markets also took into account past experiences of conflicts in the Middle East, which, in one instance, led to a recession due to OPEC's decision to sharply limit oil supplies. These concerns drove oil prices up by nearly 4%: The focus of the markets this week will undoubtedly be on how events in the Middle East unfold. Investors will be monitoring the risk of a broader conflict involving primarily Arab nations, which could have serious consequences for destabilizing the oil market. Additionally, given Iran's open support for Palestine, markets are likely factoring in the potential risk of sanctions against Iranian oil, which could further exacerbate the market's supply shortage. Considering that developed countries are grappling with high inflation, a potential spike in oil prices could have a negative impact primarily on countries dependent on energy imports. The currency market, as we can see, is primarily factoring in this risk, with the European continent currencies and the Japanese yen being sold. The yield on US debt has decreased slightly as inflation risks offset the recession risk associated with the escalation of tensions into a more serious conflict. The yield on short-term bonds has barely changed since the start of trading today, while the yield on long-term bonds has decreased from 4.79% to 4.71%. The macroeconomic situation also favors the strength of the US dollar. A significant argument in favor of at least holding the dollar is the US unemployment report for September, released last Friday. Job growth totaled 336K, nearly double the forecast, and the figures for the previous two months were revised up by a total of 119K. The range of estimates for September's job growth had varied from 90K to 250K, so the surprise to expectations was significant. Furthermore, the official report's figures failed to predict both ADP and ISM hiring data, as well as NFIB small business data. However, it is worth noting that the JOLTS report on job openings and the series of data on initial claims for unemployment benefits surprised on the upside, steadily decreasing in September toward a cyclical minimum. Speaking of key events on the economic calendar this week, the Federal Reserve's meeting minutes and the Producer Price Index on Wednesday, US CPI for September, and the European Central Bank's meeting minutes on Thursday, as well as the University of Michigan's consumer sentiment data on Friday, should be highlighted. The US CPI is of particular interest to the market as the inflation trajectory currently holds the greatest importance for the Federal Reserve's policy, which is exerting all efforts to return it to the target level. A slowdown in overall inflation from 3.7% to 3.6% is expected, but labor market conditions suggest there are good chances of deviations towards higher values. Both this circumstance and the technical outlook for the dollar indicate that the risks are tilted towards further strengthening: Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company. High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 72% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Cautious Markets React to Disappointing Jobs Data and Oil Inventory Surge Oil prices resumed their downward trend on Wednesday following the release of employment data from ADP: Job growth was significantly lower than expected, with only 83K jobs added compared to the anticipated 156K. The accompanying commentary was equally disconcerting, highlighting a marked deceleration in job growth throughout September, primarily attributed to job reductions within large enterprises. The market correction gained momentum after the weekly EIA data on oil reserves were made public. These figures revealed a substantial surge in gasoline inventories, registering a substantial increase of 6.4 million barrels, in stark contrast to the forecasted 0.1 million. An uptick in gasoline inventories often signals reduced demand for fuel, a clear economic activity indicator. Within a span of just under two days, oil prices retreated by approximately 7%, breaching a critical upward trend: The tepid yet concerning signal from ADP raised concerns about the recent frenzy within the US Treasury bond market. This frenzy was sparked by a sudden realization of market participants that it may take a long time for high interest rates to do their job in suppressing inflation. In addition to oil, yields on Treasury bonds have also reversed their course, with ten-year bond yields decreasing by roughly 9 basis points to 4.71%. Nevertheless, other economic indicators released in the United States this week continue to point toward significant inflationary potential. The ISM report on service sector activity from yesterday met expectations, with headline remaining in expansion zone at 53.6 points. Initial claims for unemployment benefits, released on Thursday, saw an uptick of 207K, slightly surpassing the projected 210K. It is worth noting that the weekly increase in unemployment level, tracked by this measure, remains close to the lows of the current business cycle, suggesting that the labor market remains robust. The US dollar has also weakened against its major counterparts, although the correction appears to have stalled around the 106.70 level on the dollar index (DXY). The market is likely awaiting the official labor market report, scheduled for release on Friday, to determine direction. However, given the lackluster ADP report, the risks associated with a negative deviation in job growth in the NFP report are increasing. Consequently, we may witness tentative efforts to sell the dollar in anticipation of this risk materializing. In the event of a weak NFP report, there is a strong possibility that the dollar index will continue its descent towards the 106 level on the DXY index, where the lower boundary of the ascending corridor is situated: Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company. High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 72% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Dollar Retracement Amid Shifting Market Dynamics: A Technical Outlook On Thursday, the dollar finally took a step back, but the rebound of its major rivals looks more like a technical retracement, as the fundamental picture hasn't changed much. The American currency was weakened by a "relief rally" in risk assets, with the S&P 500 attracting buyers in the support zone we've been discussing since the beginning of the week - 4220-4270: The technical setup for the EURUSD pair worked almost flawlessly: the price reversed in the 1.05 area, where it had found support in January and March of this year. Market participants who bet on a false breakout of the lower bound of the bearish corridor in which the pair has been trading since mid-July of this year may have also contributed to the rebound: The USD/JPY pair is also trying to reverse, and there were strong technical reasons for it: approaching the "round" level (150 yen per dollar) and the upper boundary of the bullish channel: Since mid-August, USDJPY has clearly been pushing towards the upper bound of the channel, indicating that there was little resistance from sellers regarding the depreciation of the yen, despite approaching the round level. If this is indeed the case, the medium-term outlook for the yen is not particularly bright: it could easily reach a new low if the US Treasury market offers even higher yields than it does now. There are reasons to believe in such a scenario, as some US money managers are boldly assuming that the yield on the 10-year bond could reach 5% in the near future. For example, Bill Ackman. Yesterday, the 10-year bond was trading at 4.68%, and today the market is offering slightly less - 4.54%. Inflation data for the Eurozone released today exceeded expectations: core prices in September rose by 4.5% on an annual basis, compared to a forecast of 4.8%. Such price behavior is certainly favorable for the ECB, which would very much prefer not to tighten policy when real output growth is slowing down (which is happening now), thus further burdening the economy. Price data could also explain the strengthening of the European currency, although the behavior of the currency pair is currently mostly dependent on the dollar fundamentals, which, as mentioned earlier, has not changed in the absence of macroeconomic news from the US. There is a chance that today's Core PCE report will shift expectations for the dollar, but for this, we would need to see a strong deviation from the forecast (3.9%) towards lower values. The market may also be influenced by the U. Michigan consumer sentiment report, but again, the market will probably want to see a series of data indicating a negative impulse in the US economy before challenging the Fed's "higher for longer" narrative. Therefore, the risks of the S&P 500 returning to decline next week and the dollar rising remain high. Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company. High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 72% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.