Thread: Forex News from InstaForex

THE MARATHON CONTINUES: S&P AND DOW SET NEW RECORDS, NVIDIA STOCK KEEPS UP ITS MOMENTUM



According to the FedWatch Tool by CME Group, Fed funds futures show a 52.6% probability of rate cuts in June and a 35.5% probability of keeping them at current levels, which is a sharp change compared to the probability of cuts in March, which stood at 62%.

The pan-European STOXX 600 index (.STOXX) rose by 0.43%, continuing its fifth consecutive week of gains and reaching a new record closing level. The French CAC40 index (.FCHI) and the German DAX index (.GDAXI) also closed at new record levels. The dollar is poised for its biggest weekly decline in 2024 as investors slow their pace and await further cues regarding the global economy.

The dollar index increased by 0.029%, while the euro decreased by 0.03% to $1.082.

Regarding European data, sentiment among German businesses in the largest economy in Europe unexpectedly declined in December, according to a survey by the Ifo Institute.

Yields on German bonds continue to rise for the third consecutive week as economic data and statements from central bank officials undermine investors' hopes for a swift interest rate cut by the European Central Bank this year.

The Japanese stock market was closed due to a holiday on Friday, but Nikkei futures rose by almost 1%, suggesting that Japanese stocks will continue their record growth next week.

Chinese stocks fluctuate between gains and losses. The Shanghai Composite index (.SSEC) rose above the key psychological level of 3,000 points. For the week, it rose by 4.6%, climbing approximately 10% from a five-year low set over two weeks ago.

The Hang Seng index (.HSI) in Hong Kong fell by 0.1%.

Data released on Friday showed that new home prices in China declined in January for the seventh consecutive month, causing instability in sentiment as policymakers' efforts to restore trust in the debt-laden sector are slowly progressing.

The yield on two-year Treasury bonds, reflecting expectations regarding interest rates, fell by 2.2 basis points to 4.692%, while the yield on benchmark 10-year bonds decreased by 7.5 basis points to 4.252%.

10-year bond yields reached a three-month high at 4.3540% overnight. Futures for US crude oil fell by $2.12 to $76.49 per barrel, while Brent crude oil prices dropped by $2.05 to $81.62 per barrel. Gold prices are poised for a weekly gain, thanks to the weakening dollar. Futures for US gold rose by 0.9% to $2049.40 per ounce.

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EUR/USD OUTLOOK: DOLLAR MAY FALL INTO BULLISH TRAP

[IMG]https://forex-images.ifxdb.com/userfiles/20240228/analytics65df411e05da9_source!.jpgIMG]

Today's focus is on crucial economic indicators and events that could significantly impact the financial markets. The spotlight is on the US GDP data for the fourth quarter, providing insights into the country's economic performance. Additionally, preliminary statistics on the trade balance for goods and speeches by influential Fed representatives - Bostic, Collins, and Williams - are on the agenda. In the Eurozone, the economic sentiment index for February has been released, offering a comprehensive view of the current economic climate in the region. Looking ahead to the end of February, a meeting of finance ministers and central bank governors from G20 countries is scheduled for the 28th and 29th. This gathering will bring together global financial leaders to discuss key economic issues that could impact financial markets. On Thursday, attention will shift to the core US Personal Consumption Expenditures (PCE) price index, a pivotal measure for assessing inflation. Traders will carefully analyze this data to formulate potential trading strategies as the dollar index fluctuates. In Wednesday's trading, the dollar index regained control at 104.0, despite weak industrial orders data in the United States. Traders are eagerly anticipating new information on inflation, which could hint at the Federal Reserve's possible timeline for interest rate adjustments. The unexpected drop in US consumer confidence to 106.7 points in February, contrary to the expected rise to 115.0, has limited the dollar's strengthening. Additionally, statistics reveal a record monthly decline in new orders for durable goods in January, down 6.1% from December, surpassing analysts' expectations of a 4.5% decline. Bloomberg economists have revised their forecast for US economic growth in 2024 to 2.1%, reducing the likelihood of a recession to 40%. The US economic growth rate, updated on Wednesday, showed a year-on-year increase of 3.2% in the fourth quarter, slightly lower than the 3.3% advance estimate, with the downward revision attributed to rising private sector inventories. The dollar retreated from its intraday high following mixed second US GDP data, emphasizing the market's sensitivity to economic indicators and the potential impact on currency valuations. Technical outlook The dollar index surged, catching some bearish investors off guard. Despite this, the path to a substantial recovery appears challenging, given the hurdles posed by the latest US GDP data and its components. The Federal Reserve, led by Jerome Powell, has consistently emphasized its reliance on economic data. Presently, the data suggests a potential need for further rate hikes, a development conflicting with market expectations. This discrepancy may cool sentiment as the Fed evaluates the extent of potential disappointment. Examining the technical landscape, the 100-day simple moving average (SMA) near 104.00 has been tested, with its resistance being overcome. However, there is a looming risk of a bull trap formation. A breakthrough at 104.60 for the USD would pave the way to the next significant resistance levels at 105.12, followed by 105.88. Looking ahead, a shift in market expectations for a delayed Fed rate cut until late 2024 could bring the 2023 high at 107.20 back into relevance. In the face of sustained selling pressure, support may weaken, potentially leading to further declines to 103.16, marked by the 55-day SMA, before testing the crucial level of 103.00. Monitoring these technical and fundamental factors is essential for a comprehensive assessment of the dollar's trajectory in the current market environment.

In recent developments, it's notable that negotiations in the US Congress aimed at preventing a government shutdown and providing assistance to Ukraine, Israel, and Taiwan did not yield an agreement between Republicans and Democrats. The potential for a government shutdown looms, which could trigger a decline in risk asset markets while bolstering the position of the dollar. Market sentiment is also influenced by the anticipated likelihood of a 25 basis point Fed rate cut to 3% at the March meeting, with a 21% chance of a similar decision at the April-May meeting. On the international front, Germany, France, and Spain are set to report inflation data on Thursday, preceding eurozone statistics scheduled for Friday. ECB officials remain cautious about rapidly easing monetary policy in the eurozone. Christine Lagarde highlighted stable wage growth in the region, and Yiannis Stournaras from the ECB's executive board ruled out interest rate cuts before June. In Germany, the GfK consumer sentiment index continues to show negative readings, reaching -29.0 in February compared to -29.6 in January. German citizens persist in viewing cost-saving as a prudent strategy in the face of rising prices and more pessimistic forecasts for the national economy this year. Furthermore, lending to households in the eurozone recorded a mere 0.3% year-on-year growth in January, marking the slowest pace since March 2015. This underscores a notable deceleration in economic activity in the eurozone amid ECB rate hikes. Monitoring these diverse factors provides a comprehensive understanding of the dynamic forces shaping the current economic landscape. Euro's weakness The EUR/USD pair declined to the psychological level of 1.0800 amid the dollar's uptrend and deterioration of the consumer sentiment in the euro zone. These signals indicate that the euro's recovery cycle may be completed.

The preceding day saw the currency pair reaching its peak at 1.0866, only to experience a subsequent decline to 1.0813, triggered by a dip in the European Commission's Economic Sentiment Index (ESI) for February to -9.5. This was against the forecast of -9.2 and the previous value of -9.3. The eurozone economy continues to grapple with challenges, and the decrease in economic sentiment indicators suggests that risks lean towards further deterioration in the short term. Although the euro has exhibited growth against the dollar since mid-February, primarily driven by the dollar's weakening due to early-year economic slowdown, the latest sentiment data emphasizes the challenging economic environment in the eurozone. This points to ongoing difficulties that may constrain the euro's potential for recovery. There is speculation that the ECB might opt for an interest rate cut earlier than June, which could limit the euro's growth prospects. Scotiabank observes a weakening of the euro around the 1.0850 mark, reinforcing bearish sentiment on short-term charts. A rebound above the 1.0835 resistance level could alleviate pressure on the euro, potentially guiding it towards higher ground around 1.0800. As the month concludes, additional pressure on the dollar is anticipated, confirming the technical nature of the recent dollar weakening rather than a shift in the fundamental trend, according to experts. Despite recent fluctuations, the prevailing trend suggests the dollar's upward trajectory. The dollar's downward trend is expected to be short-lived, considering the outperformance of the US economy and bond yields near three-month highs, which make the greenback appealing. Moreover, the Federal Reserve is not likely to implement interest rate cuts anytime soon, especially given the more accommodative policies pursued by other major central banks globally. Stronger-than-expected data from the US and the cautious stance of Fed officials against premature policy easing contribute to the likelihood of a revision in market expectations, potentially leading to further gains for the dollar following the ongoing consolidation period.

News are provided by
InstaForex.

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EUR/USD OUTLOOK: DOLLAR MAY FALL INTO BULLISH TRAP

Today's focus is on crucial economic indicators and events that could significantly impact the financial markets. The spotlight is on the US GDP data for the fourth quarter, providing insights into the country's economic performance. Additionally, preliminary statistics on the trade balance for goods and speeches by influential Fed representatives - Bostic, Collins, and Williams - are on the agenda. In the Eurozone, the economic sentiment index for February has been released, offering a comprehensive view of the current economic climate in the region. Looking ahead to the end of February, a meeting of finance ministers and central bank governors from G20 countries is scheduled for the 28th and 29th. This gathering will bring together global financial leaders to discuss key economic issues that could impact financial markets. On Thursday, attention will shift to the core US Personal Consumption Expenditures (PCE) price index, a pivotal measure for assessing inflation. Traders will carefully analyze this data to formulate potential trading strategies as the dollar index fluctuates. In Wednesday's trading, the dollar index regained control at 104.0, despite weak industrial orders data in the United States. Traders are eagerly anticipating new information on inflation, which could hint at the Federal Reserve's possible timeline for interest rate adjustments. The unexpected drop in US consumer confidence to 106.7 points in February, contrary to the expected rise to 115.0, has limited the dollar's strengthening. Additionally, statistics reveal a record monthly decline in new orders for durable goods in January, down 6.1% from December, surpassing analysts' expectations of a 4.5% decline. Bloomberg economists have revised their forecast for US economic growth in 2024 to 2.1%, reducing the likelihood of a recession to 40%. The US economic growth rate, updated on Wednesday, showed a year-on-year increase of 3.2% in the fourth quarter, slightly lower than the 3.3% advance estimate, with the downward revision attributed to rising private sector inventories. The dollar retreated from its intraday high following mixed second US GDP data, emphasizing the market's sensitivity to economic indicators and the potential impact on currency valuations. Technical outlook The dollar index surged, catching some bearish investors off guard. Despite this, the path to a substantial recovery appears challenging, given the hurdles posed by the latest US GDP data and its components. The Federal Reserve, led by Jerome Powell, has consistently emphasized its reliance on economic data. Presently, the data suggests a potential need for further rate hikes, a development conflicting with market expectations. This discrepancy may cool sentiment as the Fed evaluates the extent of potential disappointment. Examining the technical landscape, the 100-day simple moving average (SMA) near 104.00 has been tested, with its resistance being overcome. However, there is a looming risk of a bull trap formation. A breakthrough at 104.60 for the USD would pave the way to the next significant resistance levels at 105.12, followed by 105.88. Looking ahead, a shift in market expectations for a delayed Fed rate cut until late 2024 could bring the 2023 high at 107.20 back into relevance. In the face of sustained selling pressure, support may weaken, potentially leading to further declines to 103.16, marked by the 55-day SMA, before testing the crucial level of 103.00. Monitoring these technical and fundamental factors is essential for a comprehensive assessment of the dollar's trajectory in the current market environment.

In recent developments, it's notable that negotiations in the US Congress aimed at preventing a government shutdown and providing assistance to Ukraine, Israel, and Taiwan did not yield an agreement between Republicans and Democrats. The potential for a government shutdown looms, which could trigger a decline in risk asset markets while bolstering the position of the dollar. Market sentiment is also influenced by the anticipated likelihood of a 25 basis point Fed rate cut to 3% at the March meeting, with a 21% chance of a similar decision at the April-May meeting. On the international front, Germany, France, and Spain are set to report inflation data on Thursday, preceding eurozone statistics scheduled for Friday. ECB officials remain cautious about rapidly easing monetary policy in the eurozone. Christine Lagarde highlighted stable wage growth in the region, and Yiannis Stournaras from the ECB's executive board ruled out interest rate cuts before June. In Germany, the GfK consumer sentiment index continues to show negative readings, reaching -29.0 in February compared to -29.6 in January. German citizens persist in viewing cost-saving as a prudent strategy in the face of rising prices and more pessimistic forecasts for the national economy this year. Furthermore, lending to households in the eurozone recorded a mere 0.3% year-on-year growth in January, marking the slowest pace since March 2015. This underscores a notable deceleration in economic activity in the eurozone amid ECB rate hikes. Monitoring these diverse factors provides a comprehensive understanding of the dynamic forces shaping the current economic landscape. Euro's weakness The EUR/USD pair declined to the psychological level of 1.0800 amid the dollar's uptrend and deterioration of the consumer sentiment in the euro zone. These signals indicate that the euro's recovery cycle may be completed.

The preceding day saw the currency pair reaching its peak at 1.0866, only to experience a subsequent decline to 1.0813, triggered by a dip in the European Commission's Economic Sentiment Index (ESI) for February to -9.5. This was against the forecast of -9.2 and the previous value of -9.3. The eurozone economy continues to grapple with challenges, and the decrease in economic sentiment indicators suggests that risks lean towards further deterioration in the short term. Although the euro has exhibited growth against the dollar since mid-February, primarily driven by the dollar's weakening due to early-year economic slowdown, the latest sentiment data emphasizes the challenging economic environment in the eurozone. This points to ongoing difficulties that may constrain the euro's potential for recovery. There is speculation that the ECB might opt for an interest rate cut earlier than June, which could limit the euro's growth prospects. Scotiabank observes a weakening of the euro around the 1.0850 mark, reinforcing bearish sentiment on short-term charts. A rebound above the 1.0835 resistance level could alleviate pressure on the euro, potentially guiding it towards higher ground around 1.0800. As the month concludes, additional pressure on the dollar is anticipated, confirming the technical nature of the recent dollar weakening rather than a shift in the fundamental trend, according to experts. Despite recent fluctuations, the prevailing trend suggests the dollar's upward trajectory. The dollar's downward trend is expected to be short-lived, considering the outperformance of the US economy and bond yields near three-month highs, which make the greenback appealing. Moreover, the Federal Reserve is not likely to implement interest rate cuts anytime soon, especially given the more accommodative policies pursued by other major central banks globally. Stronger-than-expected data from the US and the cautious stance of Fed officials against premature policy easing contribute to the likelihood of a revision in market expectations, potentially leading to further gains for the dollar following the ongoing consolidation period.

News are provided by InstaForex

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AHEAD OF THE STORM: DOLLAR GAINS STRENGTH, STOCKS LOSE GROUND ON US INFLATION

[IMG]https://forex-images.ifxdb.com/userfiles/20240228/analytics65df411e05da9_source!.jpgIMG]

According to the latest data, economic growth in the United States for the fourth quarter of last year was revised slightly downwards, suggesting a possible weakening of economic momentum. This downturn could have long-term implications for overall economic stability and may influence policymakers' decisions regarding monetary policy.

During this period, Applied Materials, a leading supplier of equipment for semiconductor production, faced a decline in its stock value after receiving a subpoena from the Securities and Exchange Commission (SEC) of the USA. This highlights increased regulatory pressure on the technology sector, which could restrain investment potential and growth in this area.

Also noteworthy is the drop in shares of UnitedHealth, one of the largest providers of healthcare services in the U.S., following the announcement of an antitrust investigation. This event underscores growing concerns about market power concentration and its impact on consumers and pricing in key economic sectors.

Stock indices such as the Dow, S&P 500, and Nasdaq showed a decline, reflecting overall investor caution. This caution is intensified in anticipation of the release of key inflation data, which could significantly affect the future actions of the U.S. Federal Reserve System in regulating interest rates.

The Personal Consumption Expenditures (PCE) index, which is the preferred inflation indicator for the Federal Reserve, is expected to show an increase in prices, confirming the continuation of inflationary pressure in the economy. This, in turn, could lead to a reassessment of expectations regarding the pace and timing of changes in the Fed's key interest rate.

Stocks in the market have struggled to maintain an upward trend following a series of data publications, leading to a moderate decline after a prolonged period of growth based on optimism around the potential of artificial intelligence and outstanding quarterly performance by Nvidia. This period of growth was abruptly interrupted when data confirming the persistence of inflation began to emerge, causing investor concern and leading to a reassessment of their expectations regarding the future monetary policy of the Federal Reserve System.

Evidence of sustained inflation in recent reports on consumer and producer prices, along with statements from Federal Reserve officials, has led investors to contemplate the possibility of delaying the first rate cut to a later date, possibly until June instead of the previously expected March.

Keith Buchanan, a senior portfolio manager at GLOBALT Investments, expressed the opinion that the market may face a period of uncertainty as investors will need to closely monitor inflation trends and adjust to the Federal Reserve System's long-term policy and rhetoric. He emphasized that any signs of inflation resurgence would be met with particular caution by the market and could cause significant fluctuations in financial markets.

Against this backdrop, the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite demonstrated a decline, reflecting the general sentiment of uncertainty among investors. These data indicate that despite confident growth in the previous quarter, the beginning of 2024 may be marked by a slowdown in economic activity.

In addition to PCE data, this week is also expected to see other important economic reports, including weekly data on unemployment claims and manufacturing activity indices. These reports will provide a more complete picture of the economy's state and help assess further interest rate dynamics.

Statements by the president of the Federal Reserve Bank of Boston, Susan Collins, and the president of the Federal Reserve Bank of New York, John Williams, indicate the Federal Reserve System's cautious approach to changing monetary policy. Both leaders highlighted the importance of careful analysis of economic data before making decisions that could affect the goals of maximum employment and price stability.

In summary, global stocks have shown a decline, the yield on treasury bonds has fallen, and the dollar has strengthened its positions ahead of the publication of key inflation data, which could significantly impact the future policy of the Federal Reserve System. These events highlight the complexity of the economic landscape and the importance of careful monitoring by investors and policymakers to adapt to changing conditions.

News are provided by
InstaForex.

Read More

AHEAD OF THE STORM: DOLLAR GAINS STRENGTH, STOCKS LOSE GROUND ON US INFLATION





According to the latest data, economic growth in the United States for the fourth quarter of last year was revised slightly downwards, suggesting a possible weakening of economic momentum. This downturn could have long-term implications for overall economic stability and may influence policymakers' decisions regarding monetary policy.


During this period, Applied Materials, a leading supplier of equipment for semiconductor production, faced a decline in its stock value after receiving a subpoena from the Securities and Exchange Commission (SEC) of the USA. This highlights increased regulatory pressure on the technology sector, which could restrain investment potential and growth in this area.


Also noteworthy is the drop in shares of UnitedHealth, one of the largest providers of healthcare services in the U.S., following the announcement of an antitrust investigation. This event underscores growing concerns about market power concentration and its impact on consumers and pricing in key economic sectors.


Stock indices such as the Dow, S&P 500, and Nasdaq showed a decline, reflecting overall investor caution. This caution is intensified in anticipation of the release of key inflation data, which could significantly affect the future actions of the U.S. Federal Reserve System in regulating interest rates.


The Personal Consumption Expenditures (PCE) index, which is the preferred inflation indicator for the Federal Reserve, is expected to show an increase in prices, confirming the continuation of inflationary pressure in the economy. This, in turn, could lead to a reassessment of expectations regarding the pace and timing of changes in the Fed's key interest rate.


Stocks in the market have struggled to maintain an upward trend following a series of data publications, leading to a moderate decline after a prolonged period of growth based on optimism around the potential of artificial intelligence and outstanding quarterly performance by Nvidia. This period of growth was abruptly interrupted when data confirming the persistence of inflation began to emerge, causing investor concern and leading to a reassessment of their expectations regarding the future monetary policy of the Federal Reserve System.


Evidence of sustained inflation in recent reports on consumer and producer prices, along with statements from Federal Reserve officials, has led investors to contemplate the possibility of delaying the first rate cut to a later date, possibly until June instead of the previously expected March.


Keith Buchanan, a senior portfolio manager at GLOBALT Investments, expressed the opinion that the market may face a period of uncertainty as investors will need to closely monitor inflation trends and adjust to the Federal Reserve System's long-term policy and rhetoric. He emphasized that any signs of inflation resurgence would be met with particular caution by the market and could cause significant fluctuations in financial markets.


Against this backdrop, the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite demonstrated a decline, reflecting the general sentiment of uncertainty among investors. These data indicate that despite confident growth in the previous quarter, the beginning of 2024 may be marked by a slowdown in economic activity.


In addition to PCE data, this week is also expected to see other important economic reports, including weekly data on unemployment claims and manufacturing activity indices. These reports will provide a more complete picture of the economy's state and help assess further interest rate dynamics.


Statements by the president of the Federal Reserve Bank of Boston, Susan Collins, and the president of the Federal Reserve Bank of New York, John Williams, indicate the Federal Reserve System's cautious approach to changing monetary policy. Both leaders highlighted the importance of careful analysis of economic data before making decisions that could affect the goals of maximum employment and price stability.


In summary, global stocks have shown a decline, the yield on treasury bonds has fallen, and the dollar has strengthened its positions ahead of the publication of key inflation data, which could significantly impact the future policy of the Federal Reserve System. These events highlight the complexity of the economic landscape and the importance of careful monitoring by investors and policymakers to adapt to changing conditions.


News are provided by
InstaForex.


Read More

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