- Prior was -19.8
- Revenue index vs -0.6 prior
Articles
Gold Price Forecast: XAU/USD jumps above $1,920 after US data
287945 January 31, 2023 23:45 FXStreet Market News
- US Dollar weakens following Q4 US Employment Cost Index.
- Data points to more evidence of a slow down in inflation.
- XAU/USD erases daily losses with a rebound of more than $10.
Gold prices bounced sharply higher following the release of US labor costs data for the fourth quarter. More evidence of a slowdown in inflation pushed US yields to the downside and Wall Street to the upside, weakening the greenback.
The Employment Cost Index (ECI) rose 1% in the fourth quarter, below the 1.1% of market consensus and marked the third consecutive slowdown. Still the index is up by 4% compared to a year ago. The evidence of an improvement in the inflation outlook boosted US yields ahead of Wednesday’s FOMC decision.
Still the numbers are high, suggesting that inflation is still not consistent with Fed’s target. “Even as supply chain pressures ease, commodity prices cool and housing costs temper, we think the FOMC still wants to see a bit more slowing in wage growth before the Committee feels confident inflation is firmly headed to 2% over the medium term”, said analysts at Wells Fargo.
The greenback tumbled after the report and also did Treasuries, boosting gold. Also equity and crude oil price rose. XAU/USD erased all losses and it is hovering around daily highs at $1,927.
Earlier on Tuesday, gold bottomed at $1,900 a critical support. Now price is back above the $1,920 zone, another relevant technical area. If it remains above, a test of $1,935 will be on the cards.
Technical levels
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Eurozone HICP Preview: Forecasts from seven major banks, inflation behind us?
287944 January 31, 2023 23:45 FXStreet Market News
Eurostat will release the Eurozone Harmonised Index of Consumer Prices (HICP) data for January on Wednesday, February 1 at 10:00 GMT and as we get closer to the release time, here are the expectations forecast by the economists and researchers of seven major banks regarding the upcoming EU inflation print.
Headline is expected at 9.1% year-on-year vs. 9.2% in December, while core is expected at 5.1% YoY vs. 5.2% in December. On a monthly basis, the HICP in the old continent is expected to fall by -0.3% in the reported period while the core HICP is also down by -0.2%.
Commerzbank
“The ECB expects the rate to rise again in January. In fact, however, it is likely to remain at 9.2%. As is often the case at the beginning of a year, the inflation rate for January 2023 will also be influenced by a number of special factors. This time, various measures taken by governments to curb the rise in energy prices complicate matters further, in addition to the usual update of the goods basket. Although some effects dampening the rise in energy prices lost influence, the contribution of energy prices to the overall inflation rate is unlikely to increase much. The same applies to food prices. By contrast, the inflation rate excluding energy, food, alcohol and tobacco is likely to have fallen slightly from 5.2% to 5.1%. However, this decline is solely attributable to the change in the basket of goods. There can therefore be no talk of a weakening of underlying inflation.”
Danske Bank
“We look for an uptick both in headline (9.6%; from 9.2%) and core (5.4%, from 5.2%) terms.”
Nomura
“We forecast a large fall in the annual rate of euro area inflation in January from 9.2% to 8.4%.”
TDS
“New energy subsidies likely pulled down German headline HICP for the third consecutive month. Combined with further household support in the Netherlands and the impact of lower wholesale energy prices, this should push EZ headline inflation down to 8.4% YoY. Core is what will matter for the ECB though, and here we see no indication of a softening of the recent strong momentum.”
SocGen
“The euro area January flash HICP is likely to print down 0.4pp at 8.8% YoY, with core 0.2pp lower at 5.0% YoY, temporarily dragged down by the annual weighting changes.”
Citibank
“HICP Inflation, January: Citi Forecast 8.9% YoY, Prior 9.2% YoY; Core Inflation, January: Citi Forecast 5.3% YoY, Prior 5.2% YoY.”
Deutsche Bank
“We expect Eurozone HICP to decline to 8.4% in January and continue falling to c.3.5% in Q4 this year. Core inflation is seen staying in a 5.0-5.5% range throughout the first half of this year.”
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US: CB Consumer Confidence declines to 107.1 in January
287943 January 31, 2023 23:40 FXStreet Market News
- Consumer confidence in the US weakened modestly in January.
- US Dollar Index posts small daily gains above 102.30 after the data.
Consumer sentiment in the US deteriorated modestly in January with the Conference Board’s Consumer Confidence Index declining to 107.1 from 109.0 in December. This reading came in below the Reuters estimate of 109.0.
Further details of the publication revealed that the Jobs Hard-to-Get Index edged lower to 11.3 from 11.9 and the one-year consumer inflation rate expectations rose to 6.8% from 6.6% in December.
Market reaction
US Dollar Index gained traction with the initial reaction and was last seen posting small daily gains at 102.35.
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USD Index gives away earlier gains and returns to 102.30
287942 January 31, 2023 23:40 FXStreet Market News
- The index fades the initial spike to the 102.60 zone.
- US Employment Cost Index disappoints at 1.0% in Q4.
- CB Consumer Confidence surprised to the downside in January.
The USD Index (DXY), which gauges the greenback vs. a bundle of its main rivals, comes all the way down to the 102.30 region after climbing to as high as the 102.60 area earlier on Tuesday.
USD Index surrenders gains post-labour data
The index saw its earlier uptick to multi-day highs around 102.60 suddenly trimmed after the US Employment Cost Index rose 1.0% QoQ in Q4, less than estimated and down from the previous 1.2%.
Indeed, that disheartening results seem to have given extra legs to the Fed’s pivot narrative and therefore forced the buck to give away almost all of the earlier advance to the 102.60 area.
Additional US data saw the House Price Index tracked by the FHFA contract at a monthly 0.1% in November, while the Chicago PMI receded to 44.3 in January (from 44.9) and the Conference Board’s Consumer Confidence retreated marginally to 107.1, also for the current month.
What to look for around USD
The dollar picks up pace and manages to leave behind the key 102.00 mark against the backdrop of persistent prudence ahead of the imminent FOMC gathering (Wednesday).
The idea of a probable pivot in the Fed’s policy continues to hover around the greenback and keeps the price action around the DXY somewhat subdued. This view, however, also comes in contrast to the hawkish message from the latest FOMC Minutes and recent comments from rate setters, all pointing to the need to advance to a more restrictive stance and stay there for longer, at the time when rates are seen climbing above the 5.0% mark.
On the latter, the tight labour market and the resilience of the economy are also seen supportive of the firm message from the Federal Reserve and the continuation of its hiking cycle.
Key events in the US this week: Employment Cost Index, FHFA House Price Index, CB Consumer Confidence (Tuesday) – MBA Mortgage Applications, ADP Employment Change, Final Manufacturing PMI, ISM Manufacturing, Construction Spending, FOMC Interest Rate Decision (Wednesday) – Initial Jobless Claims, Factory Orders (Thursday) – Nonfarm Payrolls, Unemployment Rate, Final Services PMI ISM Non-Manufacturing (Friday).
Eminent issues on the back boiler: Rising conviction of a soft landing of the US economy. Prospects for extra rate hikes by the Federal Reserve vs. speculation of a recession in the next months. Fed’s pivot. Geopolitical effervescence vs. Russia and China. US-China trade conflict.
USD Index relevant levels
Now, the index is up 0.04% at 102.27 and the immediate hurdle comes at the weekly high at 102.89 (January 18) followed by 105.63 (monthly high January 6) and then 106.47 (200-day SMA). On the flip side, the breach of 101.50 (2023 low January 26) would open the door to 101.29 (monthly low May 30 2022) and finally 100.00 (psychological level).
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Colombia National Jobless Rate rose from previous 9.5% to 10.3% in December
287941 January 31, 2023 23:35 FXStreet Market News
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Polygon Price Forecast: What crypto traders are looking for from Jerome Powell on Wednesday
287939 January 31, 2023 23:35 FXStreet Market News
- Polygon price ties up with gains after the doubtful start on Tuesday.
- MATIC recovers after a sharp decline of 7% on Monday.
- Traders are looking for clues from Jerome Powell on Wednesday.
Polygon (MATIC) price has received a firm rejection on the top side at $1.18, which triggered a massive wave of profit-taking as traders wanted to cash in on profits, not taking the risk of staying in the trade. With several central banks coming out this week, including the most important Federal Reserve interest rate decision on Wednesday at 19 GMT, violent swings look granted. Trying to create order in the chaos, only one message will be important for cryptocurrencies: the message from Fed chair Jerome Powell.
Polygon price sees traders on full alert for Powell’s words
Polygon price received a short but harsh rejection on Monday, which can be labelled profit-taking as a bunch of traders decided not to sit on the risk. Meanwhile, a new bunch of traders is eager to get in and try to play a pre-position trade in the idea that markets are selling the rumour and a dovish central bank will offer a buy-the-fact moment, with MATIC rallying higher. Markets will be hanging on Jerome Powell’s lips.
MATIC is set to jump higher in case Powell confirms the Fed hikes 25 basis points and possibly another 25 basis points after that and be done with it. Everything more dovish than that will be even more bullish for cryptocurrencies. A breakout trade looks to result in a break above $1.18 and open a new area for Polygon price to rally in the coming weeks, with $1.57 as the next profit target by the end of February.
MATIC/USD daily chart
As mentioned above, with already a few scenarios, a more hawkish scenario could be Jerome Powell delivering a 25 basis point hike with a very harsh hawkish comment or even a 50 basis point hike. That would mean markets have been blindsided and completely ignored the warning signs of the Federal Reserve being still hawkish, which would trigger a repricing of a risk premium. In that case, expect MATIC to tank towards $0.96 with even overshooting towards $0.90 towards the 55-day and the 200-day Simple Moving Averages.
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Dallas Fed January service sector outlook -15.0 vs -19.8 prior
287937 January 31, 2023 23:33 Forexlive Latest News Market News
- Data from the Federal Reserve Bank of Dallas
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GBP/USD plunged below 1.2300 post US data amidst a buoyant USD
287936 January 31, 2023 23:33 FXStreet Market News
- The Pound Sterling continued to soften vs. the US Dollar ahead of the Fed’s decision.
- US inflation continues to grind lower as the Employment Cost Index drops.
- The International Monetary Fund expects the UK economy to hit a recession in 2023.
The Pound Sterling (GBP) extended its losses to three straight days against the US Dollar (USD), albeit a report from the Commerce Department showed that inflation continued to ease, incrementing expectations that US Federal Reserve’s (Fed) rate hikes would moderate. At the time of typing, the GBP/USD is trading at 1.2291.
US data slightly weakened the US Dollar, though it remains stronger than the GBP
Wall Street advances after employment costs data cooled down. The US Department of Labor (DoL) revealed that the Employment Cost Index (ECI) used by Fed officials as a measure of inflation in the labor market eased from 1.2% to 1% QoQ. Today’s data added to last week’s US Core Personal Consumer Expenditure (PCE), another inflation indicator used by the Fed, edged lower by the fourth straight month, from 4.7% YoY to 4.4%. All that said, speculations had mounted that the Fed will increase rates by 25 bps at its two-day meeting, which begins today and finishes on Wednesday when the US central bank releases its monetary policy statement.
In the meantime, the US Dollar Index, a measure of the American Dollar (USD) value versus its peers, has paired some of its losses and is up 0.08%, at 102.316, a tailwind for the GBP/USD.
Across the pond, the UK’s economic docket was absent. However, newswires reported that the International Monetary Fund (IMF) revealed that Britain’s economy would slide into a recession. The IMF foresees the economy to shrink 0.5% between the 2022 Q4 and the final quarter of 2023.
It should be said that the IMF updated its forecasts and expects the global economy to grow by 2.9% compared to its last projections of 2.7%, citing economic resilience and China’s reopening.
Given the backdrop, the GBP/USD would be greatly influenced by monetary policy decisions by the Federal Reserve and the Bank of England (BoE). On Wednesday, the Fed would be the first to act, while the BoE is estimated to raise rates by 50 basis points (bps), leaving the Bank Rate at 4%. Most analysts expect this would be the last increase by the BoE, which could lead to some Sterling weakness, as rates in the US are expected to peak at 5%.
GBP/USD Key Technical Levels
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Gold Price Forecast: XAU/USD’s upside hinges on Fed and NFP
287935 January 31, 2023 23:33 FXStreet Market News
Gold price registered gains in the first three days of the last week. However, the yellow metal lost its traction and erased its gains to close the week virtually unchanged. The Federal Reserve’s (Fed) policy announcements and January jobs report this week could help investors decide whether the XAU/USD’s bullish rally has more legs.
Fed policy announcements and US January jobs report could ramp up volatility
“The Fed is widely expected to raise its policy rate by 25 bps to the range of 4.5-4.75%. In case Powell continues to push back against the ‘Fed pivot’ narrative and tries to convince markets that they have no plans of cutting the policy rate before 2024, US T-bond yields could edge higher and weigh on XAU/USD. However, investors are unlikely to bet on a steady USD rebound before seeing the employment and inflation figures for January.”
“On the last trading day of the week, the wage inflation of the labour market data could influence the US Dollar’s valuation. If the data reveals a further softening of wage inflation in January, the greenback could come under selling pressure and help XAU/USD push higher.”
“Finally, the Prices Paid sub-index of the ISM’s PMI report will be watched closely. The component is expected to decline to 65.5 from 67.6 in December. A lower-than-consensus print should hurt the USD and provide a boost to XAU/USD and vice versa.”
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US January Conference Board consumer confidence 107.1 versus 109.0 expected
287933 January 31, 2023 23:02 Forexlive Latest News Market News
- US Conference Board consumer confidence for January 2023
- Prior report was 108.3
- Present situation index vs 147.2 prior
- Expectations index vs 82.4 prior
- 1 year inflation 6.8% vs 6.7% prior (prior revised to 6.6%)
- Jobs hard-to-get 11.3 vs 11.9 prior
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United States Chicago Purchasing Managers’ Index came in at 44.3, above forecasts (41) in January
287932 January 31, 2023 22:56 FXStreet Market News
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
More pressure on SEK if economic data disappoints – Commerzbank
287931 January 31, 2023 22:56 FXStreet Market News
EUR/SEK challenges critical levels around 11.30. If Swedish economic data disappoints, the Krona could come under further downside pressure.
The Riksbank’s work is not getting any easier
“Some important economic data, such as the PMI tomorrow or household consumption next week, is on the agenda ahead of the rate decision next week, and the Riksbank is going to keep a close eye on it too.”
“For now, the market is pricing in a 50 bps rate step. If the data disappoints it might lower its expectations though, putting pressure on SEK as a result.”
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