EUR/USD fluctuates near 1.0900 after failing to clear this level on Wednesday. ECB is widely expected to leave key rates unchanged. Investors will also pay close attention to US GDP data. EUR/USD gathered bullish momentum and advanced to the 1.0930 area on Wednesday. With the US Dollar (USD) staging a rebound later in the day, the pair erased a large portion of its daily gains and returned below 1.0900. Investors await the European Central Bank's (ECB) policy announcements and high-tier data releases from the US. Although the Composite PMI from the Euro area showed that the business activity in the private sector continued to contract in early January, the Manufacturing PMI recovered unexpectedly and helped the Euro find demand. Moreover, the improving risk mood made it difficult for the USD to stay resilient against its rivals. Nevertheless, upbeat PMI readings from the US supported the USD and forced EUR/USD to turn south later in the American session.

Gold price ticks higher on Thursday amid subdued USD demand, albeit lacks follow-through. The upbeat market mood caps gains for the metal amid rising bets for a delayed Fed rate cut. Traders look to the US macro data dump for some impetus ahead of the US PCE on Friday. Gold price (XAU/USD) ekes out small gains on Thursday and reverses a part of the overnight heavy losses to the $2,011 area, or a multi-day low, though the uptick lacks bullish conviction. In the absence of any fresh fundamental trigger, subdued US Dollar (USD) price action is seen as a key factor lending some support to the commodity amid worries about escalating geopolitical tensions in the Middle East. Any meaningful appreciating move, however, still seems elusive in the wake of growing acceptance that the Federal Reserve (Fed) will not rush to cut interest rates. The expectations were reaffirmed by the better-than-expected US data on Wednesday, which showed that the economy kicked off 2024 on a stronger note. The S&P Global flash US Manufacturing PMI rebounded from 47.9 to a 15-month high of 50.3 in January and the gauge for the services sector climbed to 52.9, or the highest reading since last June. Furthermore, the flash US Composite PMI Output Index increased to 52.3 this month, or the highest since last June. This reaffirms the view that the world's largest economy is in good shape and forces investors to further scale back their bets for a more aggressive Fed policy easing in 2024. This, in turn, allows the yield on the benchmark 10-year US government bond to hold steady near a more than one-month high touched last week, which favours the USD bulls and should cap gains for the non-yielding Gold price. Meanwhile, the global risk sentiment gets an additional boost after the People's Bank of China (PBoC) unexpectedly lowered the Reserve Requirement Ratio (RRR) for local banks by 50 bps starting from February 5 to boost the economy. This remains supportive of the upbeat mood across the global equity markets, which, in turn, suggests that the path of least resistance for the safe-haven Gold price is to the downside. Traders, however, seem reluctant to place aggressive directional bets and prefer to wait for the release of the Advance US Q4 GDP print. Thursday's US economic docket also features the release of Durable Goods Orders, the usual Weekly Initial Jobless Claims and New Home Sales. Apart from this, the European Central Bank (ECB) might provide some impetus to the XAU/USD ahead of the US Personal Consumption Expenditures Price Index on Friday. Technical Outlook From a technical perspective, the recent repeated failures near the $2,040-2,042 supply zone and the overnight downfall favour bearish traders. Moreover, oscillators on the daily chart have just started gaining negative traction and validate the negative outlook for the Gold price. That said, it will still be prudent to wait for acceptance below the $2,000 psychological mark before positioning for a slide towards the $1,988 intermediate support en route to the 100-day Simple Moving Average (SMA), currently around the $1,975-1,974 area, and the 200-day SMA, near the $1,964-1,963 region. On the flip side, the $2,025 zone, or the 50-day SMA, is likely to act as an immediate resistance, above which the Gold price could climb back to the $2,040-2.042 hurdle. A sustained strength beyond the latter might trigger a short-covering rally towards the $2,077 region. The momentum could extend further and allow bulls to aim back to reclaim the $2,100 round-figure mark.

European markets saw a much more positive session yesterday, carrying over the momentum from a buoyant US market, but also getting a lift after China announced a 0.5% cut in the bank reserve requirement rate from 5th February. US markets finished the day mixed with the Dow finishing lower for the 2nd day in succession, while the S&P500 and Nasdaq 100 once again set new record highs, as well as record closes, although closing off the highs of the day as yields edged into positive territory. This divergence between the Dow and Russell 2000, both of which closed lower for the second day in succession, and the Nasdaq 100 and S&P500 might be a cause for concern, given how US market gains appear to be being driven by a small cohort of companies share prices. Today's focus for European markets which are set to open slightly lower, is on the ECB and the press conference soon after with Christine Lagarde, where apart from questions on timelines about possible rate policy, Lagarde could face some questions a little closer to home amidst dissatisfaction over her leadership style from ECB staffers. When looking at the economic performance of the euro area, we've seen little in the way of growth since Q3 of 2022, while inflation has also been slowing sharply. Yet for all this economic weakness, a fact which was borne out by yesterday's flash PMI numbers, especially in the services sector, the ECB has been insistent it is not close to considering a cut in rates, having hiked as recently as last September. Only as recently as last week we heard from a few governing council members of their concerns about cutting too early, yet when looking at the data, and the fact that the German economy is on its knees, the ECB almost comes across as masochistic in its desire to combat the risks of a return of inflation. In a way it's not hard to understand given that after November headline inflation slowed to 2.4%, it picked up again in December to 2.9%, while core prices slowed to 3.4%. This rebound in headline inflation while no doubt driven by base effects will be used as evidence from the hawks on the governing council that rates need to stay high, however there is already evidence that the consensus on rates is splintering, and while no more rate hikes are expected the economic data increasingly supports the idea of a cut sooner rather than later. Markets currently have the ECB cutting rates 4 times this year in increments of 25bps, starting in June, although given the data we could get one in April. This contrasts with the market pricing up to 6 rate cuts from the Federal Reserve despite the US economy being magnitudes stronger than in Europe. No changes are expected today with the main ECB refinancing rate currently at 4.5%, however Q4 GDP due next week, and January CPI due on 1st February calls for a March/April rate cut could start to get louder in the weeks ahead, especially since PPI has been in deflation for the last 6 months. US bond markets appear to be starting to have second thoughts about the prospect of 6 rate cuts from the Federal Reserve this year, although there is still some insistence that a March cut remains a realistic possibility. Today's US Q4 GDP numbers might bury the prospect of that idea once and for all if we get a reading anywhere close to 2%. This seems rather counterintuitive when you think about it, the idea that the Fed would cut before the ECB when Europe is probably in recession and the US economy is growing at a reasonable rate, albeit at a slower pace than in Q3. Expectations for Q4 are for the economy to have slowed to an annualised 1.9% to 2%, which would be either be the weakest quarter of 2023 or match it. Nonetheless the resilience of the US consumer has been at the forefront of the rebound in US growth seen over the past 12 months, with a strong end to the year for consumer spending. This rather jars against the idea that US GDP growth might get revised lower in the coming weeks as some have been insisting. If you look at the December control group retail sales numbers, they finished the year strongly and these numbers get included as a part of overall GDP. Weekly jobless claims are also at multi-month lows of 187k, and while we could see a rise to 200k even here there is no evidence that the US economy is slowing in such a manner to suggest anything other than a modest slowdown as opposed to a sudden stop or hard landing.  The core PCE Q/Q price index is expected...

Markets US stocks relinquished earlier gains as traders tempered their earnings-related enthusiasm when caution set in after Tesla profits fell amid declining demand for electric vehicles, compressing margins. Tesla reported Q4 earnings that fell short of Street estimates and provided a pessimistic full-year production outlook, causing a further decline in the stock and continuing the downward spiral for the electric vehicle (EV) maker that began at the beginning of the year. With stocks sliding from the summit, there is even more anticipation ahead of a plethora of US economic data, including Gross Domestic Product, as traders continue drawing and discarding cards on the timing of a potential interest rate cut by the Federal Reserve. A policy trajectory that now heavily relies on incoming data where various permutations could swing the pendulum of a March rate cut in either direction. Currently, the Goldilocks nature of sustained growth and receding inflation, with the prospect of 75 basis points cut and potentially more by the Federal Reserve, presents a favourable scenario for the equity market. Preliminary data for January revealed that business activity in the US private sector expanded fastest since June, according to the flash print on S&P Global's composite gauge. The index rose to 52.3 from December's 50.9, marking the third consecutive month of expansion. The services print at 52.9 exceeded consensus expectations, while the manufacturing gauge surged to a 15-month high at 50.3, pushing both indicators above the 50 demarcation line for the first time since October. Despite manufacturers raising output prices at the quickest pace in nine months, the slow increase in services-side selling prices offset the inflationary impact, resulting in the overall rate of price increase across the US economy being the slowest since May 2020. Any way you want to slice and dice, this data screams a Goldilocks scenario for the US economy. But with the services print, where sticky inflation is hiding out, exceeding consensus expectations, it is not an ideal welcoming doormat for a March rate cut. US Bonds market  The recent 5-year auction in the United States experienced a significant tail, falling short by 2 basis points and concluding at a level slightly higher than subsequent market levels.  Following this auction disappointment, the 10-year yield rose above 4.15%, and there is a prevailing expectation that it might reach the 4.20-25% area as the anticipated March rate cut continues to diminish.  While advanced US GDP will carry some weight, the real challenge for higher yields lies in the spotlight on core Personal Consumption Expenditures (PCE) data. If the data aligns with or, more notably, falls below expectations, it can potentially prompt a significant decline in yields. Such an outcome would confirm the market's Goldilocks interpretation of inflation, offering positive prospects for stocks but potentially creating headwinds for the dollar. This is especially relevant in a market that remains vigilant about the potential for an upward drift in yields. China market Asian markets will be closely observed to determine whether the positive shift in investor sentiment towards China and Hong Kong persists. The recent action by the Chinese central bank, injecting liquidity and providing support for asset prices, has influenced the market dynamics and raised anticipation regarding its sustained impact. Pan Gongsheng pre-announced instead of surprising the markets with a forthcoming reserve requirement cut for banks a day before the official announcement.  The upcoming reserve requirement ratio (RRR) cut, the first since September, is set at 50 basis points, marking the first half-point reduction in over two years.  This move comes amid a persistent stock selloff, with H-shares reaching near two-decade lows and the Mainland benchmark hitting five-year lows. Rumours are flying that Beijing might assemble a two-trillion-yuan stock rescue package following unsuccessful measures in 2023.  But the RRR cut, aimed at increasing credit supply, drove a two-session surge in Hong Kong-listed Chinese shares, with A shares getting into the act yesterday. However, sentiment remains woefully poor, and credit demand is weak, reflecting lacklustre domestic consumption.  While the RRR cut addresses credit supply, it doesn't tackle the root issue; hence you can lead a horse to water, but you cannot make him drink. Fiscal stimulus in this context is crucial, emphasizing the need for government spending when the private sector is hesitant. The fundamental problem lies in the Party's confidence crisis with domestic and foreign investors. A good start would be to usher in a shift towards transparency. Although the RRR cut freed up a significant amount of liquidity, it remains uncertain whether these measures will have a substantial impact. A more comprehensive approach, combining fiscal stimulus with improved credibility, may be necessary to address the ongoing challenges in the Chinese market. The recent trend of pre-announcing critical data and policy decisions in China has raised questions about the unusual shift in communication strategy. The move...

AUD/USD advances further north of 0.6600. The resumption of the risk-on trade underpins the Aussie dollar. Auspicious PMI prints also bolster the upside in the pair. Bulls seem to have returned and pushed AUD/USD back above the key 0.6600 barrier on Wednesday, adding to the decent gains observed in the previous session. All in all, spot seems to have put some distance from last week's yearly lows around 0.6520 for the time being. This time, the renewed selling pressure around the greenback underpinned the upward bias in the Aussie dollar, while there was no news around China and its lagged economic bounce in post-pandemic life. The Chinese factor, in combination with the projected decision by the Reserve Bank of Australia (RBA) to maintain its current policy stance at its meeting in February, is still seen as limiting the upside potential of the pair in the next few weeks, allowing for extra retracements in the short-term horizon. The decline in inflation metrics observed in December, along with the continued moderation of the labour market (albeit still relatively tight), seems to have solidified the consensus among market participants that the RBA would keep its rates on hold, at least in February. Also weighing on the pair's price action and even tilting the scales to the bearish side aligns the likelihood that the Federal Reserve could continue to delay expectations of an interest rate reduction in the coming months, a scenario that should be dollar-supportive. Back to the positive zone, further strength in AUD came on the back of better-than-estimated flash Manufacturing and Services PMIs in Australia in January, at 50.3 and 47.9, respectively. AUD/USD daily chart AUD/USD short-term technical outlook If the recovery in AUD/USD gets more serious, the pair could confront the provisional 55-day SMA at 0.6627 prior to the December 2023 peak of 0.6871 (December 28), which is preceded by the July 2023 high of 0.6894 (July 14) and the June 2023 top of 0.6899 (June 16), all of which occur before the critical 0.7000 yardstick. The 4-hour chart shows the pair putting the upper end of the range to the test for the time being. Next on the upside now comes the 100-SMA at 0.6658 ahead of the 200-SMA at 0.6681. The surpass of this region exposes a probable move to tops near 0.6730. Looking south, remains a reasonable contention zone around 0.6525. If this zone is breached, no significant disagreement persists until 0.6452. The MACD flirts with the positive border, and the RSI hovers around 55. View Live Chart for the AUD/USD

Outlook: The Bank of Canada meets today but no change is forecast. We also get the US flash purchasing managers indices, but tomorrow is the big day, with the ECB meeting and the US releasing Q1 GDP, which will contain data on consumption and thus on inflation. You'd think it would be a tidbit, but we think this nugget from Bloomberg shows the disparity between euro bulls and euro bears. So far the bulls Are winning despite data that would fell a lesser currency. If the US had data as bad as the eurozone and especially Germany, the dollar would be in the tank. This time the evidence comes from the equity side: "Not everyone is on board with the rally in stocks though. The Qube hedge fund is making a billion dollar bet against German stocks as a downturn in global demand slows Europe's biggest economy. "The fund  has amassed a short bet of more than $1 billion against German companies after added to wagers against the likes of automaker Volkswagen over the last two weeks, and also disclosing a $131.8 million short against Deutsche Bank, according to data compiled by Bloomberg from regulatory filings. "The bets come even as the benchmark DAX stock index remains near its record high." This degree of strong opposing views has to come to a crash at some point. We may find out the outcome when the US reports GDP. If it's on the high side and traders fail to buy dollars, we will know a new type of market factors is driving. We saw this before during Grexit when the euro "should" have tanked but mostly did not and kept bouncing back. The implication is that the dollar is already overbought, especially because the early-rate-cut crowd has now been put in its place. But the cut is coming. We just don't know when. The FT reminds us  that "A hefty 71 analysts polled last month by Reuters predicted on average the dollar would ease about 3 per cent to $1.12 against the euro and about 8 per cent against the yen to ¥137. The two make up about 70 per cent of DXY, according to Bloomberg." Forecast: Given an ECB on hold and robust US data tomorrow and Friday, it's peculiar that the euro firmed, indicating vast uncertainty about what is driving and should be driving the rate. It looks like the dollar is not going to get a boost from hawkish data on Friday or hawkish noises from the Fed. Tidbit: As known beforehand, Trump won the New Hampshire primary but opponent Haley did so well (over 40% of the vote) that she is hanging around for the next one instead of bowing out. Reuters says Trump is "furious." We have no historical comparisons of a NH primary performance of a former president, but Trump's performance is definitely subpar. This doesn't help much because he is going to be the nominee no matter what, but it does show that not all Republicans are stuck to the party come hell or high water. It's a little interesting that US cable news is taking note of the views of European leaders, including at Davos.  This is an excerpt from "The Rockefeller Morning Briefing," which is far larger (about 10 pages). The Briefing has been published every day for over 25 years and represents experienced analysis and insight. The report offers deep background and is not intended to guide FX trading. Rockefeller produces other reports (in spot and futures) for trading purposes. To get a two-week trial of the full reports plus traders advice for only $3.95. Click here!

XAU/USD Current price: 2,014.40 Stock markets extend the rally after solid earnings reports and upbeat US data. The Bank of Canada kept its monetary policy unchanged, as widely anticipated. XAU/USD turned bearish in the near term, aims to test the $2.000 mark. The US Dollar surged in the American session, driving XAU/USD down to $2,011.72, a fresh weekly low. Upbeat United States (US) data boosted the local currency. S&P Global published the preliminary estimate of the January Producer Manager Indexes (PMIs), which showed manufacturing output improved to 50.3, much better than the 47.9 previous and the highest reading in over a year. The Services PMI came in at 52.9, beating the expected 51 and above the previous 51.4. According to the official report, business activity grew at the "sharpest rate in seven months." Meanwhile, the Bank of Canada (BoC) announced it left its key rate unchanged at 5% following the January policy. The statement was slightly more hawkish than anticipated, weighing down the odds for an April rate cut to around 40%. Still, stock markets maintain the positive tone, with Wall Street resuming its record rally on the back of better-than-anticipated earnings reports signaling economic health. XAU/USD short-term technical outlook From a technical point of view, XAU/USD is poised to extend its slump. The daily chart shows it met sellers around a bearish 20 Simple Moving Average (SMA), providing dynamic resistance at around the daily high of $2,036.80. At the same time, technical indicators resumed their declines within negative levels, gaining downward strength. Finally, the 100 and 200 SMAs remain below the current level, losing directional strength. The 4-hour chart shows a long bearish candle following a test of converging 100 and 200 SMAs, also around the intraday high, and XAU/USD accelerating the slide below a mildly bearish 20 SMA. Furthermore, technical indicators accelerated north, heading south almost vertically within negative levels, in line with another leg south. Support levels: 2,011.70 2,001.60 1,988.60   Resistance levels: 2,021.80 2,033.10 2,040.30  

EUR/USD Current price: 1.0895 Stock markets lead the way as earnings reports beat expectations, fueling risk appetite. Investors remain cautious ahead of first-tier events scheduled for Thursday. EUR/USD trades with a better tone, but buyers are unlikely to maintain the pressure. The EUR/USD pair flirts with the 1.0900 threshold ahead of Wall Street's opening as a better market mood plays against the US Dollar. Still, the pair trades within familiar levels as significant events loom and speculative interest saves its fire for after clearer clues. The Euro advances despite tepid local data. "Business activity in the euro area fell at the slowest rate for six months in January," according to the preliminary Producer Manager Index (PMI) survey conducted by the Hamburg Commercial Bank (HCOB), with the official report clarifying "downturns persists in both manufacturing and service sectors amid further falls in new business." In Germany, the Manufacturing PMI printed at 45.4, while the services index posted at 47.6. For the Eurozone, the Services PMI came in at 48.4, worse than the previous 48.8, while the manufacturing index improved to 46.6 from 44.4 in December. Later in the day, S&P Global will publish the January United States (US) preliminary PMIs, with manufacturing output expected to remain in expansionary territory.   The cautious stance will likely be dropped on Thursday, when the European Central Bank (ECB) will announce its decision on monetary policy, while the US will unveil the preliminary estimate of the Q4 Gross Domestic Product (GDP). EUR/USD short-term technical outlook The EUR/USD pair has trimmed its weekly losses but remains below the peak set on Tuesday at 1.0916. The daily chart shows it bounced once again from around a flat 200 Simple Moving Average (SMA), providing dynamic support around 1.0845. At the same time, the 20 SMA maintains its firmly bearish slope above the current level, developing at around 1.0945. Finally, technical indicators remain within negative levels without clear directional strength. The near-term picture is neutral. Technical indicators in the 4-hour chart have turned flat at around their midlines, suggesting easing buying interest. At the same time, EUR/USD recovered above a flat 20 SMA but trades below the 100 and 200 SMAs, both converging at around 1.0930. Overall, the risk of a steeper recovery seems limited, while a break below 1.0845 should trigger stops and anticipate another leg south. Support levels: 1.0845 1.0800 1.0760 Resistance levels: 1.0890 1.0945 1.0980  

EUR/USD Current price: 1.0895 Stock markets lead the way as earnings reports beat expectations, fueling risk appetite. Investors remain cautious ahead of first-tier events scheduled for Thursday. EUR/USD trades with a better tone, but buyers are unlikely to maintain the pressure. The EUR/USD pair flirts with the 1.0900 threshold ahead of Wall Street's opening as a better market mood plays against the US Dollar. Still, the pair trades within familiar levels as significant events loom and speculative interest saves its fire for after clearer clues. The Euro advances despite tepid local data. "Business activity in the euro area fell at the slowest rate for six months in January," according to the preliminary Producer Manager Index (PMI) survey conducted by the Hamburg Commercial Bank (HCOB), with the official report clarifying "downturns persists in both manufacturing and service sectors amid further falls in new business." In Germany, the Manufacturing PMI printed at 45.4, while the services index posted at 47.6. For the Eurozone, the Services PMI came in at 48.4, worse than the previous 48.8, while the manufacturing index improved to 46.6 from 44.4 in December. Later in the day, S&P Global will publish the January United States (US) preliminary PMIs, with manufacturing output expected to remain in expansionary territory.   The cautious stance will likely be dropped on Thursday, when the European Central Bank (ECB) will announce its decision on monetary policy, while the US will unveil the preliminary estimate of the Q4 Gross Domestic Product (GDP). EUR/USD short-term technical outlook The EUR/USD pair has trimmed its weekly losses but remains below the peak set on Tuesday at 1.0916. The daily chart shows it bounced once again from around a flat 200 Simple Moving Average (SMA), providing dynamic support around 1.0845. At the same time, the 20 SMA maintains its firmly bearish slope above the current level, developing at around 1.0945. Finally, technical indicators remain within negative levels without clear directional strength. The near-term picture is neutral. Technical indicators in the 4-hour chart have turned flat at around their midlines, suggesting easing buying interest. At the same time, EUR/USD recovered above a flat 20 SMA but trades below the 100 and 200 SMAs, both converging at around 1.0930. Overall, the risk of a steeper recovery seems limited, while a break below 1.0845 should trigger stops and anticipate another leg south. Support levels: 1.0845 1.0800 1.0760 Resistance levels: 1.0890 1.0945 1.0980  

Gold price meets with a fresh supply amid reduced bets for a March rate cut by the Fed. Geopolitical risks, retreating US bond yields and a softer USD lend support to the metal. Traders now await this week's important macro releases before placing directional bets. Gold price (XAU/USD) comes under some renewed selling pressure on Wednesday, albeit lacks follow-through and remains confined in a multi-day-old trading range through the early European session. Traders have now pushed back bets for an early interest rate cut by the Federal Reserve (Fed) in the wake of the strong US macro data, which suggested that the economy is in good shape. In fact, the current market pricing indicates a greater chance of the first interest rate cut in May, which was initially expected in March. Adding to this, the recent hawkish remarks by a slew of Fed officials forced investors to further scale back their expectations for a more aggressive policy easing in 2024. This, in turn, is seen as a key factor driving flows away from the non-yielding yellow metal. The downside for the Gold price, however, remains cushioned amid the worsening geopolitical conditions in the Middle East, which tends to benefit the traditional safe-haven metal. The US carried out strikes in Iraq on Tuesday, targeting three facilities used by Iranian-affiliated militant groups in retaliation to missiles and drone attacks on American troops over the past several days. Apart from this, the emergence of some US Dollar (USD) selling, led by retreating US Treasury bond yields, helps limit losses for the commodity. Traders might also prefer to wait on the sidelines ahead of important macro releases – starting with the flash global PMIs on Wednesday, followed by the Advance Q4 GDP print and the Core PCE Price Index from the US on Thursday and Friday, respectively. Apart from this, investors this week will take cues from the highly-anticipated European Central Bank (ECB) policy decision on Thursday, which might infuse volatility in the markets and produce short-term trading opportunities around the Gold price. Nevertheless, the aforementioned mixed fundamental backdrop warrants some caution before positioning for a firm near-term direction and ahead of the Fed's first policy meeting for 2024 on January 30-31. Technical Outlook From a technical perspective, the range-bound price action witnessed over the past few trading days points to indecision among traders over the near-term trajectory for the Gold price. That said, the recent repeated failures near the $2,040-$2,042 static resistance, along with the fact that oscillators on the daily chart have just started gaining negative traction, favour bearish traders. However, it will still be prudent to wait for some follow-through selling below the weekly low, around the $2,017-$2.016 area, before positioning for deeper losses. The next relevant support is pegged near the $2,000 psychological mark, or over a one-month low touched last week. A convincing break below the latter will set the stage for the resumption of a well-established downtrend witnessed over the past four weeks or so. The Gold price might then accelerate the fall towards the 100-day Simple Moving Average (SMA), currently around the $1,974-$1,973 zone, before dropping to the very important 200-day SMA near the $1,964-$1,963 region. On the flip side, the $2,040-$2,042 supply zone might continue to cap the immediate upside. A sustained strength beyond might trigger a short-covering rally and lift the Gold price to the next relevant hurdle near the $2,060-$2,062 region. The momentum could extend further, which should allow the XAU/USD to surpass the $2,078-$2,080 barrier and aim to reclaim the $2,100 mark for the first time since early December. Gold 4-hour chart

USD - Some headwinds for the dollar After strong gains from the summer, the dollar weakened again significantly from October. This continued a volatile sideways movement that began at the start of 2023. On the one hand, the markets reflected the high level of uncertainty regarding interest rate developments in both economic areas. On the other hand, however, the interest rate paths ultimately turned out to be similar. There is no clear preference for one of the two currencies this year either. Interest rate cuts are to be expected in both the eurozone and the USA. However, the timing and extent are uncertain, which speaks for volatility on the markets. We assume that the fundamental picture will shift slightly in favor of the eurozone, where the economy should improve somewhat. In the USA, on the other hand, we expect a slight weakening. All in all, this means some headwind for the dollar and therefore a slight weakening. JPY – BoJ remains cautious At its meeting in December, the Bank of Japan indicated that the sustainable and stable achievement of the inflation target is not yet foreseeable with sufficient certainty. For the time being, monetary easing will therefore be continued by controlling the yield curve. In our view, these statements have led to a slight weakening of the yen against the euro since the beginning of the year. The yen will therefore remain heavily dependent on the development of inflation and the Bank of Japan's reaction to it. In the event of an escalation of crises, the yen could quickly strengthen against the euro again at any time. CHF - Franc benefits from lower interest rate expectations Until recently, the franc had strengthened against the euro to a level of 0.94, probably triggered by a significant fall in yields on shorter-term German government bonds. The lower interest rate expectations on the market are obviously weighing on the euro against the franc. Inflation in the two currency areas should be close to each other in the coming months. From this perspective, there should therefore be little reason for the franc to strengthen further against the euro. In the coming weeks, it will therefore be important to keep a close eye on the bond market in particular for shorter maturities. In this context, the ECB will therefore play a decisive role with its further monetary policy decisions in the coming months. In the event of an escalation of geopolitical crises, the Swiss franc could continue to strengthen strongly against the euro at any time. Download the Full Report!

After an initially positive start European markets finished the day lower after as the sugar rush from reports of a large-scale Chinese stimulus plan, gave way to scepticism that it would be enough to deliver the help needed when what is needed is proper economic reforms as opposed to more liquidity. US markets underwent another record-breaking session with the Nasdaq 100 and S&P500 securing new record highs, while the Dow finished the day lower, as Netflix beat expectations after the closing bell on its Q4 numbers. Last night's positive finish in the US looks set to see markets in Europe open higher again today, though we could well struggle to hang onto the gains if recent experience is any guide.    If the ECB ever had a reason to think about cutting rates, then today's manufacturing and services PMIs would offer a compelling reason but for the fact that headline inflation is at 2.9% and core inflation is at 3.4%, and policymakers have insisted that tackling prices is their priority. Let's see how if that consensus holds out tomorrow when the ECB meets for the first time this year. Over the last 15 months both the French and German manufacturing sectors have been very much in recessionary territory when it comes to economic activity. Last month France manufacturing hit its lowest levels since the Covid lockdowns at 42.1, while in Germany we saw a modest improvement to 43.3 from 42.6, having been as low as 38.8 in July last year. We are expected to see modest improvements in today's January flash numbers but nothing to suggest a significant uptick with expectations of an improvement to 42.5 and 43.7 respectively. Service sector activity hasn't been much better with France edging up to 45.7 in December having been as low as 44.4 in September. German services activity does appear to be showing a little more resilience but was still subdued at 49.3 in December and is expected to come in unchanged. The UK economy on the other hand despite its many challenges has shown slightly more resilience but has struggled as far as manufacturing is concerned, sliding to 43 in August last year, although we have seen a slight improvement since then, although we did slow to 46.2 in December. The whole of Europe and the UK has been in a manufacturing session for over a year now, while the services sector has also struggled. On services the UK has shown slightly more resilience rising sharply at the end of last year to 53.4 from 50.6. While welcome, this somewhat jars against what we saw in December retail sales which plunged -3.2%. Today's January services flash PMI is expected to show a slowdown to 53. We also have the Bank of Canada rate decision which is expected to see the central bank keep rates unchanged at 5%, with the likelihood we could see a hawkish bias, after headline inflation in December ticked up to 3.4% and hourly wages for permanent employees jumped from 5% to 5.7%.. EUR/USD – At risk of sliding towards the December lows at 1.0720, having slipped below the 200-day SMA at 1.0830. Currently capped at the 50-day SMA with main resistance up at 1.1000.  GBP/USD – Pushed up towards 1.2750 yesterday before slipping back with support at the 50-day SMA as well as the 1.2590 area needed to hold or risk a move lower towards the 200-day SMA at 1.2540. We need to get above 1.2800 to maintain upside momentum. EUR/GBP – Still finding support at the 0.8540/50 level which has held over the last 2-months. A fall through here could see further falls towards the 0.8520 area. We still have resistance at the 0.8620/25 area and the highs last week. USD/JPY – Edged beyond the 148.50 area towards 148.80 as it looks to close in on the 150.00 area. Pullbacks likely to find support at the 146.25 level cloud, as well as the 50-day SMA. FTSE100 is expected to open 24 points higher at 7,509. DAX is expected to open 108 points higher at 16,735. CAC40 is expected to open 34 points higher at 7,422.