Rate cut expectations weigh on the euro

Chris Beauchamp IG

While the Nasdaq 100 is surging again today, the euro is in retreat ahead of tomorrow’s expected ECB rate cut, says Chris Beauchamp, Chief Market Analyst at online trading platform IG.

Stocks rally following US inflation data

Risk sentiment had been kept in check ahead of the inflation print today, but the news has unleashed fresh buying. Technically the ‘Santa Rally’ doesn’t usually start for a few more days, but the Nasdaq 100 has got its gains in early, surging to a new record high. Interestingly, we have seen the dollar push higher too even though today’s figures are unlikely to mean the Fed will swerve from a rate cut next week. But looser rates should mean stronger economic growth, reinforcing the desire of investors to keep investing in the US.

Canada cuts rates, ECB’s turn next?

The euro is dropping against the dollar and sterling ahead of the ECB’s decision tomorrow. It will be the second bank to do so in 24 hours, following Canada’s lead this afternoon. While both the ECB and the Fed are in easing mode, they are conducting this policy for very different reasons – for the ECB, it’s a question of doing what it can to prop up an ailing economy whereas the Fed can enjoy gently easing policy to support more solid growth.

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Chris Beauchamp

EUR/USD: US Dollar to remain pressured until uncertainty fog dissipates

Unimpressive European Central Bank left monetary policy unchanged for the fifth consecutive meeting. The United States first-tier employment and inflation data is scheduled for the second week of February. EUR/USD battles to remain afloat above 1.1800, sellers moving to the sidelines.

GBP/USD reclaims 1.3600 and above

GBP/USD reverses two straight days of losses, surpassing the key 1.3600 yardstick on Friday. Cable’s rebound comes as the Greenback slips away from two-week highs in response to some profit-taking mood and speculation of Fed rate cuts. In addition, hawkish comments from the BoE’s Pill are also collaborating with the quid’s improvement.

Gold: Volatility persists in commodity space

After losing more than 8% to end the previous week, Gold remained under heavy selling pressure on Monday and dropped toward $4,400. Although XAU/USD staged a decisive rebound afterward, it failed to stabilize above $5,000. The US economic calendar will feature Nonfarm Payrolls and Consumer Price Index data for January, which could influence the market pricing of the Federal Reserve’s policy outlook and impact Gold’s performance.

Week ahead: US NFP and CPI data to shake Fed cut bets, Japan election looms

US NFP and CPI data awaited after Warsh’s nomination as Fed chief. Yen traders lock gaze on Sunday’s snap election. UK and Eurozone Q4 GDP data also on the agenda. China CPI and PPI could reveal more weakness in domestic demand.

Three scenarios for Japanese Yen ahead of snap election

The latest polls point to a dominant win for the ruling bloc at the upcoming Japanese snap election. The larger Sanae Takaichi’s mandate, the more investors fear faster implementation of tax cuts and spending plans.

XRP rally extends as modest ETF inflows support recovery

Ripple is accelerating its recovery, trading above $1.36 at the time of writing on Friday, as investors adjust their positions following a turbulent week in the broader crypto market. The remittance token is up over 21% from its intraday low of $1.12.