Financial markets analysis on January 27, 2025

Since the beginning of the week, AUD/USD has been showing moderate growth, continuing the bullish trend in the short term, updating the local highs of mid-December 2024. During the Asian session, the instrument is testing the level of 0.6370, trying to break higher, which is facilitated by technical factors and expectations of a peaceful settlement of the Russian-Ukrainian conflict, which, in turn, may contribute to lower energy prices.On the one hand, the Australian dollar is supported by favorable macroeconomic data. Tomorrow at 05:30 (GMT+2), market participants will be awaiting the outcome of the Reserve Bank of Australia meeting, where an interest rate cut of 25 basis points to 4.10% and a possible further easing of monetary policy are forecast. On the other hand, President Trump's aggressive tariff policy is putting pressure on Australian exports. So far, the introduction of some trade restrictions has been postponed, but it is expected that they will take effect as early as March, which may negatively affect the country's export potential. Earlier, tariffs of 25% were imposed in the United States on goods from Canada and Mexico, as well as on steel and aluminum imports, while products from China are subject to duties at a rate of 10%.Financial reports and corporate indicatorsCommonwealth Bank of Australia recently reported an increase in profit in the last six months to December 31: profit increased by 2.0% to $ 5.13 billion, which is 7.0% higher than in the second half of 2024, exceeding analysts' expectations of $5.06 billion. The company also announced an interim dividend of $2.25 per share, up 5% from last year. The bank's shares, which are key components of the ASX 200 index, rose 2.4% and reached a historic high of 165.98. At the same time, there is a decrease in the number of Australian households and businesses in need of financial support, and the rate of loan defaults is decreasing, which is associated with low unemployment.The upcoming publication, scheduled for Thursday at 02:30 (GMT+2), will present January data on the Australian labor market. Employment growth is expected to decrease from 56.3 thousand to 20 thousand units, and the unemployment rate may rise slightly from 4.0% to 4.1%. In addition, data on the wage index for the fourth quarter will be published the day before: annual growth is projected to slow from 3.5% to 3.2%, and an increase of 0.8% is expected in quarterly terms.AUD/USD technical analysis for todayOn the daily chart of the pair, the Bollinger band indicator shows an active range expansion, which indicates growth, although there is some delay after the last pulse. The MACD indicator continues to grow, confirming the buy signal. Stochastic shows an upward reversal again after a short-term declineIf the price confidently breaks up, then from the level of 0.6373, it is recommended to open long positions with a target of 0.6478 and a stop loss at 0.6330.Otherwise, upon a rebound from the 0.6373 level, the price will break down to 0.6330, short positions with a target level of 0.6250 and a stop loss at 0.6373 can be considered.

European leaders are meeting in Paris today to discuss the future of European security, support for Ukraine, and strengthen Europe's position in negotiations to end the war in Ukraine. This is happening against the background of US President Donald Trump's initiatives to start a negotiation process with Russia, while limiting the participation of European countries.Markets continue to monitor political developments, including a possible truce in Ukraine, upcoming elections in Germany on Sunday, and any signs of negotiations between Trump and Xi Jinping over the recent tariff hike.Economic data and market newsThe main event of the week will be the publication of PMI indices in most major countries, with the exception of China, on Friday. Special attention will be paid to data on the Eurozone to confirm whether the region's economy continues to recover due to rising real incomes and lower interest rates.Employment data for the month will be released in Sweden today. The labor market situation is expected to stabilize, but without a significant improvement in the unemployment rate. This is in line with last week's PES report, which showed a steady unemployment rate and a return of layoffs to historical averages.USA: Secretary of State Marco Rubio said that Ukraine and Europe will participate in any real negotiations to end the war. Peace talks will begin this week in Saudi Arabia between representatives of the United States and Russia. Ukraine's role in this process remains unclear.Japan: GDP for the fourth quarter exceeded expectations, reaching 2.8% (forecast: 1.0%), while consumption growth slowed less than expected, remaining at 0.1% (forecast: -0.3%). These data supported the yen and increased the likelihood of further rate hikes by the Bank of Japan.Eurozone: employment in the fourth quarter of 2024 increased by 0.1% in quarterly terms, which confirms the stability of the labor market. Spain showed strong employment growth of 1.0%, while in Germany the indicator remained at 0.0%.Norway: The Payroll Committee has published a report before the central negotiations. Inflation is expected to fall to 2.5% in 2025, which may limit the risks of wage growth. We expect four rate cuts in 2025.Stock, bond and currency marketsStocks: The U.S. and European stock markets were virtually unchanged on Friday, ending the week with gains of more than 1.5%. Europe has outperformed the United States in terms of dynamics (9% since the beginning of the year versus 4% in the United States). The VIX index fell below 15, which is the lowest since the end of January.Bonds: Global bond yields remain uncertain despite lower expectations for Fed rate cuts. The yield on 10-year US Treasury bonds is in the range of 4.4–4.6%.Currencies: The US dollar weakened last week as markets reduced their long positions on the greenback due to Trump's controversial policy. EUR/USD approached 1.05, while USD/JPY returned to the range of 152-153. The Scandinavian currencies also strengthened, with EUR/SEK below 11.25 and EUR/NOK near 11.65.

FOREX Fundamental analysis for EUR/USD on February 17, 2025The Fed, despite its reluctance to cut rates, only serves as additional support for the US dollar. The main force is the White House. With the arrival of the new president, forex trading on the news has started to play with new colors. However, as soon as the market stops taking Donald Trump's tariff threats seriously, and the Treasury announces a possible decline in 10-year bond yields, the EUR/USD pair begins to rise. The situation is aggravated by weak data on retail sales in the United States for January, which showed the worst dynamics in the last two years.Investors are tired of the constant uncertainty associated with tariff threats. Markets are increasingly inclined to believe that Trump's statements are more preparation for negotiations than real steps towards imposing duties. For the fourth week in a row, speculators have been reducing long positions in the dollar, which opens up the potential for further growth of EUR/USD.Market participants stop paying attention to the difference in the pace of monetary easing between the Fed and the ECB, believing that this factor has already been taken into account in current quotes. At the same time, a series of positive data on the Eurozone, including GDP growth of 0.1% in the fourth quarter, supports the "bulls" for EUR/USD.Markets are not afraid of the upcoming parliamentary elections in Germany on February 23. On the contrary, expectations of a victory for the opposition conservatives led by Friedrich Merz are seen as a positive factor for the euro, as this may lead to an expansion of government spending. In addition, rumors about the possible start of peace talks on Ukraine add to optimism, as the end of the conflict may contribute to the return of capital to the region.However, the euphoria may be short-lived. Donald Trump is not abandoning tariffs, but only postponing their introduction. The growth of GDP and business activity in the Eurozone is largely due to an increase in imports from the United States before the possible imposition of duties. In addition, peace talks between Moscow and Kiev are unlikely to end quickly, even with the participation of the United States.The Treasury's plans to reduce the yield on 10-year bonds by reducing government spending and changing the issue structure also look risky. Sooner or later, greed in the markets may give way to fear, which will return interest in the US dollar. This is likely to happen in the second half of March, so the euro bulls still have time to grow.Trading recommendationsLong positions on EUR/USD remain relevant. A confident breakout of the 1.0535 resistance will open the way to the targets at 1.0615 and 1.0710. However, the upward movement will be slower than in the second half of February, and as we approach these levels, the risks of a reversal and a return to a downward trend will increase.

Analysis of the macroeconomic situationKey data is being released in the United States today: January reports on retail sales and industrial production. Retail sales, which are the main driver of the country's economic growth, are of particular interest because they reflect the state of private consumption, which continues to play a crucial role in the economy.Industrial production will also be carefully analyzed by investors, as its dynamics will allow them to assess how stable the manufacturing sector remains in the current economic uncertainty.In addition to these data, investors' attention is focused on annual producer price figures, which exceeded expectations in January. The annual growth was 3.6% compared with the forecast of 3.3%, while the monthly figure coincided with the consensus and remained at 0.3%. These data have already had an impact on the bond market, contributing to lower yields.Updating the situation in EuropeIn the Eurozone, the focus has shifted to employment data for the fourth quarter of 2024. Employment is projected to show a slight increase of 0.1% in quarterly terms, with Spain playing a key role in maintaining positive momentum, which is important for the overall growth of the region. In the UK, data has been published indicating stronger–than-expected GDP growth in the fourth quarter of 2024 - 0.1% in the quarter, and the December figure was 0.4% month-on-month. The expansion in the industrial sector, services, and manufacturing had a positive impact, despite the downturn in construction. However, the decline in private consumption in the fourth quarter created additional pressure on the economy, although expectations for further recovery remain optimistic.In Switzerland, January inflation turned out to be higher than expected by the baseline indicator – annual growth was 0.9% instead of the projected 0.6%, while the overall consumer price index remained at 0.4%. These data may adjust the forecasts of the SNB, which at the last meeting expected inflation at 0.3% in the first quarter of 2025. In addition, new inflation statistics will be published in the coming days before the next SNB meeting, scheduled for March 20.In Norway, a survey on investment in the oil sector confirmed expectations of a gradual slowdown in investment in 2025, and a decline in investment is also forecast next year. This is important because the reduction in capital investment leaves room to stimulate economically sensitive sectors.Stock, debt and foreign exchange marketsStock markets continued to show moderate activity. On Thursday, there was a "risk-on" effect: US indices recovered due to the growth of technology sector stocks, and the VIX volatility index dropped to 15, reflecting an improvement in investor sentiment. In Europe, cyclical companies led the way in terms of growth, which supported both the S&P 500 and the Stoxx 600, increasing their performance by about 1.1%. However, small companies did not show significant improvement, and trading activity remained at the market level.In debt markets, global bond yields declined despite strong data on the US CPI. This is due to the fact that the expected increase in inflation rates and adjustments to statistical data did not have a significant impact on long-term indicators. The yield curve in the United States and Europe is showing moderate strengthening, and spreads between bonds of different countries have widened slightly.There have been significant fluctuations in the foreign exchange market. EUR/USD is gradually rising, thanks to reports of Zelensky's willingness to make territorial concessions to achieve peace, which supported the euro. The Swedish krona showed resilience, although it temporarily dropped to 11.22, then stabilized above 11.25. The Norwegian krone faced pressure due to weak internal data, which led to a temporary decrease in its ratio to the Swedish currency below 0.97. The Polish zloty continues to strengthen, reducing the euro's exchange rate against it to around 4.17.ConclusionToday's macroeconomic and market developments continue to have a significant impact on global financial markets. The publication of data on retail sales and industrial production in the United States, as well as updated inflation figures in Switzerland and survey results in Norway, create conditions for further monetary policy adjustments. At the same time, positive signals from the Eurozone and the UK indicate a possible recovery in economic activity. Investors should closely monitor data and geopolitical developments, as they will determine the dynamics of stock, debt, and currency markets in the coming weeks.

In Friday's morning trading session, USD/CHF is showing signs of recovery after yesterday's decline. At the moment, the pair is testing the 0.9045 level, trying to break up, while market participants are waiting for new drivers to arrive that can set the direction of movement.Today, investors will closely monitor a number of macroeconomic releases from the United States. At 15:30 (GMT+2), retail sales data for January is published, while it is expected that the overall figure may change from 0.4% to -0.1%, and excluding the automotive sector – from 0.4% to 0.3%. Then, at 16:15 (GMT+2), attention will be focused on statistics on industrial production, which is projected to slow down from 0.9% to 0.3%. Additionally, the markets continue to analyze inflation data: the producer price index rose from 3.3% to 3.5% year-on-year, exceeding expectations of 3.2%, and the monthly indicator changed from 0.5% to 0.4% compared with the forecast of 0.3%. Excluding food and energy products, the base index slowed from 3.7% to 3.6% (forecast – 3.3%), and the monthly index decreased from 0.4% to 0.3%. These figures correspond to the Fed's rhetoric, which is confirmed by Jerome Powell, noting that with signs of a recovery in inflation and positive economic activity, there is no need for urgent measures to lower rates.On Thursday, data on consumer inflation in Switzerland was published, where annual growth decreased from 0.6% to 0.4%, which is in line with expectations. The monthly indicator remained at 0.1%. Today, at 09:30 (GMT+2), it is planned to publish data on producer and import price indices, where analysts predict a slight increase of 0.1% after zero dynamics in December. UBS Group AG economists point out that if the United States imposes high customs tariffs on Swiss exports, the pharmaceutical sector could suffer the most, as it accounts for 60% of exports, which significantly exceeds the volume of imported products. In the long term, this may encourage the relocation of pharmaceutical companies' manufacturing and research facilities to the United States.USD/CHF technical analysis for todayOn the daily chart, the Bollinger Band indicator shows a transition to the horizontal phase, which indicates stable but not intense price movement within a fairly wide range. The MACD indicator continues to decline and retains a sell signal. Stochastic is rapidly approaching the lower levels, which indicates the risks of oversold US dollar in the short term.If the 0.9000 level breaks down, it is recommended to consider short positions with a target mark of about 0.8929, and a stop loss can be placed at 0.9037.If the price breaks through and fixes above 0.9075, a reversal towards growth is possible, and we will consider the formation of long positions with a target level of 0.9153 and a stop loss at 0.9037.

FOREX fundamental analysis for EUR/USD on February 14, 2025During the election campaign, Donald Trump often made loud statements that led investors to expect a full-scale trade war with the strengthening of the US dollar. However, in practice, the actions of the White House look more like preparations for negotiations than aggressive protectionism.Markets are increasingly convinced that there will be no serious import tariffs, which allows them to return to stock indexes, and through currency correlation to risky assets, including the EUR/USD pair.One of the steps confirming Trump's soft approach was the signing of a memorandum on mutual tariffs. The document instructs the administration to study unfair trade practices of other countries in relation to the United States and prepare a report by April 1. This means that no new tariffs will be introduced before that date, which has reduced market tensions.Interestingly, the largest tariffs against American companies were imposed not by China, Mexico, Canada or the EU, but by countries such as India, Brazil, Vietnam and Argentina. In addition, the investigation will also focus on non-tariff barriers such as value added tax, which may cause concern in the EU and Japan.Inflation risks and monetary policyThe lower the final tariffs, the lower the risk of accelerating inflation. However, the problem is that inflation in the United States remains high as it is. This was confirmed by the growth of the producer price index (PPI) in January by 0.4% on a monthly basis and 3.5% on an annual basis. Unlike in Trump's first term, when protectionism helped the Fed achieve its 2% inflation target, his policies may now complicate the central bank's task.The EUR/USD pair reacted positively to the US PPI data. Combined with the previously published consumer price Index (CPI), this allowed the market to form a clearer picture of the Personal consumption Expenditure Index (PCE). PCE is expected to slow down to 0.2–0.3% monthly and 2.5–2.6% annual in January. This increased the likelihood of two Fed rate cuts in 2025 from 30% to 38%, which weakened the dollar.EUR/USD prospects and trading recommendationsDonald Trump, in fact, gives the market a reprieve, which postpones the possible fall of EUR/USD to parity. The pair got the opportunity for a full-fledged correction, which is also facilitated by the improvement of the prospects for European business and public finances amid rumors of a possible end to the war in Ukraine.We continue to hold previously formed long positions on EUR/USD with targets at the levels of 1.0535 and 1.0610. Fundamental factors, graphical patterns, technical analysis and other conditions support the further growth of the pair.EUR/USD technical analysisThe short-term uptrend of EUR/USD continues, as a result of which buyers updated the maximum on February 5. Thus, all purchase targets from support 1.0304 - 1.0290 have been achieved. The next growth target is the upper Target zone of 1.0514 - 1.0486.We will consider new long positions on the correction from the support areas 1.0365 - 1.0354 and 1.0313 - 1.0297. We expect to fix the longs at today's maximum. To sell and change the trend, sellers need to break through the 1.0297 level and consolidate below.

FOREX fundamental analysis for EUR/USD on February 13, 2025More recently, the acceleration of consumer prices from 2.9% to 3.0% and the rise in core inflation from 3.2% to 3.3% were of concern to the Fed. This was reminiscent of the situation at the beginning of 2024, when an unexpected jump in the CPI and PCE indices forced the central bank to postpone plans to ease monetary policy. Then it played into the hands of the US dollar, but now the "bulls" of EUR/USD have become more active, hoping for the growth of the euro.US President Donald Trump said on his social media that lower interest rates should go hand in hand with the introduction of tariffs. However, this statement was made before the publication of the January inflation data. After the release of the report, US Treasury yields rose, and the futures market began to lean towards the fact that the Fed would make only one rate cut in 2025 instead of two.The dynamics of American inflationIt should be said that Donald Trump continues to exert a significant influence on the markets, putting the Fed's actions and macroeconomic statistics on the back burner. His threats to impose new tariffs and attempts to act as a peacemaker are exploding the volatility of currency pairs.At the same time, the markets reacted positively to the telephone conversation between the presidents of the United States and Russia, during which the possibility of a meeting in the near future was discussed.Dynamics of the expected scale of the Fed's monetary expansionEnding conflicts such as the war in Europe can be a boon for the region by reducing geopolitical risks and restoring oil and gas flows. This has already contributed to the growth of the EUR/USD pair above the 1.04 level.Trump has announced his intention to switch from universal tariffs of 10-20% to reciprocal tariffs, which may be less dangerous for the global economy. According to the White House, many countries "ripped off the United States like a stick," and now this must stop. Reciprocal duties will encourage U.S. trading partners to reduce their tariffs, which will be a positive factor for pro-cyclical currencies such as the euro.Prospects for the dollar and the euroBank of America believes that protectionism will eventually weaken the US dollar. Although other countries will initially suffer more, in the long run they will begin to trade more actively with each other, lower barriers and develop, which will undermine "American exceptionalism."Contrary to expectations, the market is showing optimism, which makes it possible for EUR/USD to continue its growth. A breakout of the resistance at 1.0445 will be a signal to strengthen long positions with targets at 1.0535 and 1.0615.EUR/USD technical analysisEUR/USD continues to grow within the framework of a short-term uptrend. and it is approaching the second target of buyers - the maximum on February 5. After updating the extremum, you can wait for the pair to consolidate higher. In this case, the short-term uptrend is likely to continue to the target zone of 1.0514 - 1.0486.If a downward momentum is formed during Thursday's European trading session, then the remaining purchases should be closed in the market. To change the direction of the trend and sell, the bears need to break through the support area 1.0304 - 1.0290 downwards.

USA: The Producer Price Index (PPI) for January and data on weekly applications for unemployment benefits are expected to be published today. I wonder if the PPI data will show an increase similar to yesterday's CPI, which turned out to be higher than expected.Eurozone: Industrial production data for December will be in the spotlight. A 0.6% monthly decline is expected, but the real drop may be more significant, given the 2.4% monthly decline in industrial production in Germany, which indicates weakness in the industrial sector.Sweden: Riksbank Vice Governor Per Jansson will deliver a speech on "Trust and flexibility in the future." The market will be watching to see if his statements coincide with the soft position of Aino Bunge, which she announced yesterday.Economic and market newsJapan: Wholesale prices rose 4.2% year-on-year in January (forecast: 4.0%), marking the fifth consecutive acceleration in inflation. This confirms the continued price pressure and strengthens the case for further rate hikes by the Bank of Japan this year.Geopolitics: Yesterday, a 90-minute telephone conversation took place between Donald Trump and Vladimir Putin, during which the parties agreed to begin negotiations to end the war in Ukraine. However, Ukraine's role in these negotiations remains unclear. U.S. Secretary of Defense Pete Hegseth said that restoring Ukraine's borders to 2014 or joining NATO is unlikely.USA: The consumer price index (CPI) for January turned out to be higher than expected, with an increase of 0.5% in monthly terms (forecast: +0.3%). Core inflation also accelerated to 0.4% in monthly terms. These data may affect expectations regarding future Fed rate cuts.Trump repeated his plans to introduce reciprocal tariffs in the near future, which could increase inflation risks.Eurozone: Bundesbank President Joachim Nagel said that the ECB should ease policy gradually, without seeking to achieve a "neutral" interest rate, which is estimated at 1.75–2.25%.Sweden: Riksbank Vice Governor Aino Bunge noted that inflation is close to the 2% target, but stressed the need for caution in interpreting individual data.Stock, bond, and currency marketsStocks: Stock markets reacted calmly to the inflation data. Global indexes declined slightly (MSCI World -0.1%), but European markets, especially Germany, showed an increase of 1%. The energy sector declined by 2%, while small companies continued to lag behind.Bonds: U.S. Treasury bond yields rose on the back of inflation data, leading to lower expectations for future Fed rate cuts. Currently, the market expects only one rate cut in 2025.Currencies: The EUR/USD pair showed sharp fluctuations, first falling to 1.03 against the background of CPI data, and then recovering to 1.04 after Trump's statement about negotiations with Putin. The euro gained support, while the Scandinavian currencies were unable to take advantage of this movement. The currencies of Central and Eastern Europe, such as PLN, CZK and HUF, showed growth relative to the euro.