Global stocks, precious metals and commodities started the new week mixed as investors continued to bet the Fed to make fewer interest rate cuts this year than originally anticipated after the latest comments from several Fed officials and stronger-than-expected US economic data.
Global markets started the new week on a flat note as there are no significant macroeconomic publications scheduled on Monday. For today, the market participants and Investors will be looking again at the comments from the FED and ECB policymakers. However, things get more interesting on Tuesday, when the US CPI inflation report for January will be published. Other than US inflation readings, investors should also closely monitor other key economic releases which include the US retail sales, Eurozone GDP, UK retail sales and CPI.
On the earnings front, the companies scheduled to release their last quarter financial results this week will be Airbnb, Shopify, Cisco, Coinbase, Roku, Lyft, Upstart and DraftKings.
Gold price bears are firmly in control. On the macro side, US Dollar strength and hawkish signals from US Federal Reserve officials were the main bearish factors impacting the safe-haven metal. Gold price traded mostly tight ranges last week, following comments from several FED policymakers who have been reinforcing the view the Fed will not cut interest rates as soon as next month. The US inflation data will set the tone for the gold price this week, as it will offer fresh cues on the Fed’s next policy move and any speakers from the Fed will also be closely watched.
For this week, the metal is supported at the $2008 level, any break below this level will open the doors to $2000 then $1995. Conversely, the bulls will try to move above the short-term resistance level at $2040. In case this attempt is successful, it will head towards the resistance which is located at $2048. A move above $2048 will push the metal towards the key resistance area of $2062/65.
The dollar index, which measures the currency against six major peers ended modestly lower on Friday after the U.S. Bureau of Labour Statistics positively revised its inflation figure for December. The index traded with bullish sentiment during the first half of the week but it failed to extend the rally later. Fundamentally the DXY is expected to be extra volatile this week due to a busy economic calendar and all eyes remain on Tuesday's CPI data. The USD traders will also be watching the latest US retail sales report set to be released on Thursday.
Considering the last few weeks' strong bullish momentum, last 3 trading sessions we witnessed the dollar index shy of breaking above the 104.60/70 zone. This week a move above 104.80 will drive the USD up to the next upside levels to watch 105.10 and 105.30. On the downside, any meaningful pullback now seems to find some support near the 103.80 zones, below which the slide could further get extended towards the 103.50/40 region.
The euro recorded modest gains in relation to the US dollar last week lifted by hawkish comments by the European Central Bank (ECB) policymakers. The sustainability of any gain in the currency pair in the coming days will largely depend on how the US dollar behaves. Looking ahead to the coming week, the economic calendar is relatively quiet for the EU. However, there are a few events that could inject some volatility into the pair which includes Eurozone GDP and German ZEW consumer sentiment numbers.
Technically the current price action signals suggest that the medium-term bearish trend remains intact despite the rebound. The currency pair needs to stay above 1.0840 to have a chance to develop upside momentum in the near term. If the price breaks and closes above 1.0840, the next upside level to watch is 1.0900 and 1.0930. On the downside, 1.0740 will act as an initial cushion, in case it breaks below this level, it will head towards the next support level which is located near 1.0720 then the critical zone 1.0700/1.0690.
Dow futures and major US indices are keeping steadier to start the new week as traders are gearing up for quite a number of key risk events in trading this week. The US CPI data is the key release this week for Wall Street, for more clues about the next moves of the Federal Reserve. Wall Street trader's focus will also turn to the focus on Wednesday‘s release of US retail sales and the ongoing Q4 earnings season, which should prompt even more volatility.
Technically the overall momentum remains bullish and a trade through 38,900 will signal a resumption of the uptrend. The main trend will change to down on a move through 38,400. On the upper side, the first major resistance is near the 38,780 level. The next main resistance could be near the 38,900 level, above which the price could start a steady increase towards the 39,200/250 level. On the downside, immediate support is near the 38,490 level. The next major support is near the 38,400 level, below which the price might decline towards the 38,200 support level in the near term.
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