There is a sense of hope in the market this Monday morning after Friday’s PCE data boosted the expectation that the Federal Reserve (Fed) is getting very close to signaling its first rate cut in September. The US yields and the dollar are under pressure this Monday morning, the euro and sterling are better bid, while tension among the Japanese yen bulls mount ahead of the Bank of Japan (BoJ) decision; the BoJ is expected to announce QT and lower rates this week.
In equities, Friday was a better day for the Big Tech stocks in the US. Roundhill’s Magnificent Seven ETF rebounded 1%. But overall, last week saw accelerated rotation flows as capital moved out of Big Tech and into smaller and non-tech sectors of the market, driven by rising Fed cut bets and disappointing earnings from Google and Tesla. 4 of Magnificent Seven companies : Microsoft, Meta, Apple and Amazon are due to announce their Q2 earnings this week. Their results should not only meet but also beat the sky-high expectations.
Elsewhere, crude oil is better bid this morning on mounting geopolitical tensions in the Middle East. OPEC+ will meet this and could announce a delay for scaling back of production cuts.
This report has been prepared by Swissquote Bank Ltd and is solely been published for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any currency or any other financial instrument. Views expressed in this report may be subject to change without prior notice and may differ or be contrary to opinions expressed by Swissquote Bank Ltd personnel at any given time. Swissquote Bank Ltd is under no obligation to update or keep current the information herein, the report should not be regarded by recipients as a substitute for the exercise of their own judgment.
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EUR/USD remains near 1.0400 post-US PCE
The US Dollar’s inconclusive price action allows some recovery in EUR/USD, keeping the pair around the 1.0400 region following the release of PCE inflation data for the month of January.
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Gold slumps to fresh multi-week lows below $2,840
Gold stays under bearish pressure and trades at its lowest level in three weeks below $2,840. The uncertainty surrounding the Trump administration's trade policy and month-end flows seem to be weighing on XAU/USD, which remains on track to snap an eight-week winning streak.
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GBP/USD clings to gains just above 1.2600 after PCE data
GBP/USD remains positively oriented in the 1.2600 neighbourhood as the Greenback is navigating a vacillating range following the PCE inflation release.
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The week ahead – US Payrolls, ECB rate meeting, ITV results – W/c 3rd March
Having seen the Federal Reserve keep rates on hold last month the US labour market continues to show remarkable resilience, despite seeing a slowdown in hiring in January, after a blow out December number.
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Weekly focus – Tariff fears are back on the agenda
While the timing of the EU measures remains still uncertain, Trump surprised markets on Thursday by signalling that the 25% tariffs on Canada and Mexico will be enacted when the one-month delay runs out next Tuesday.
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