Important calendar events
The dollar exhibited high volatility last week, with the index dropping from 109.8 to 107.5 mid-week, then paring some of the week’s losses on Friday and climbing back to 108.1. US treasury yields edged lower, with the US 10-year bond yield rising from 4.58% to 4.49%.
US President Donald Trump has been using threats of imposing trade tariffs as a negotiation tool to further his agenda with other countries. On Monday, Trump posted a new list of threats and grievances on his social media concerning Canada, China, and several other countries. Trump’s comments triggered a risk aversion sentiment boosting the safe-haven dollar last week. Later, however, Trump took back some of his tariff threats, demonstrating that they are used to intimidate other countries into submission. Trump stated that he would postpone imposing tariffs on Canada and Mexico for a month, still holding the tariffs as a threat against them.
On Tuesday, Trump stated that he is determined to impose a 10% duty on imports from China to the US. China, however, is retaliating in kind, imposing tariffs on US imports to China. The Chinese finance ministry said that it would impose levies of 15% on coal and Natural Gas and 10% on crude oil and other commodities. Trump hit the social media again on Friday, issuing new threats to a multitude of targets. Trump threatened to announce reciprocal tariffs on many countries this coming week. His remarks promote a risk aversion sentiment which is likely to cause turbulence in Forex markets this week.
Trump is imposing steep trade tariffs, which can potentially raise price pressures in the US. Concerns that US inflation will rise again are raising the likelihood that interest rates will remain at restrictive levels for longer, lowering expectations of future rate cuts.
The US Federal Reserve held interest rates steady at its January meeting after delivering three consecutive rate cuts in 2024. FOMC policymakers voted unanimously to maintain the federal funds range to a target range of 4.25% to 4.50%.
The Fed’s latest monetary policy statement did not include an earlier mention that US inflation is moving towards the central bank’s 2% target. Instead, the report stated that price pressures remain elevated, which points to a prolonged pause in rate cuts. The Fed’s statement highlighted that the US labor market remains robust and that the economy is expanding at a satisfactory pace.
Fed Chair Jerome Powell delivered a mildly hawkish message after the policy meeting, stating that the Fed’s approach will remain data-driven and stressed that the central bank needs to consider potential policy changes under Trump’s administration. Market odds of another rate cut before summer are declining, with markets pricing in a rate cut in June at the earliest.
Several Fed policymakers commented on Trump’s policies last week. FOMC member Susan Collins said the Fed should be patient on rate cuts due to tariff uncertainty. Fed’s Raphael Bostic stated that although the US labor market remains robust, tariff uncertainty may lead to uncertainty in inflation, which is likely to force the Fed to adopt a wait-and-see attitude. On a similar note, Fed policymaker Austan Goolsbee stressed that economic uncertainty will likely trigger a pause in rate cuts. On Wednesday, Goolsbee warned markets that trade tariffs may reignite inflationary pressures, complicating the Fed’s task to bring US inflation down. On Friday, Fed member Adriana Kugler noted that US growth and economic activity remain healthy overall but stressed that inflation remains elevated.
On Thursday, US Treasury Secretary Scott Bessent hinted that Trump's administration aims to boost the dollar, while at the same time lowering treasury yields. Bessent stated that he has met with Fed Chair Jerome Powell but stressed that the US administration was not concerned about the Fed's interest rates.
On the data front, the most highly-anticipated data last week were the US labor data on Friday and especially Non-farm payrolls (NFPs), which show the change in the number of employed people in the US. NFPs came in at 143K in January, missing expectations of 169K. In addition, December’s print was revised upward to 307K from 256K. Average Hourly Earnings grew by 0.5% in January, while analysts were expecting wage growth to stay at 0.3%. The US Unemployment Rate came down to 4.0% in January from 4.1% in December against expectations of a 4.1% reading.
ISM Services PMI declined to 52.8 in January from 54.2 in December according to data released on Wednesday, falling short of market expectations of 54.3. S&P Global PMI data, however, were revised slightly upward with Services PMI rising to 52.9 in January against 52.8 expected.
The ISM Manufacturing PMI index rose to 50.9 in January from 49.3 in December according to data released on Monday, beating market expectations of 49.8. The US Manufacturing sector is no longer in contractionary territory and has started to expand, as evidenced by a print above the threshold of 50.0. ISM Manufacturing Prices rose to 54.9 in January from 52.5 in December against expectations of a 52.6 print. This is a key inflation measure, indicating that price pressures in the US are rising.
US labor data released so far this week has been mixed. US Initial Jobless Claims released on Thursday for the week ending February 1 rose by 219K from 208K the previous week, exceeding forecasts of 213K. ADP Non-Farm Employment Change data on Wednesday showed that private sector employment increased by 183K in January, exceeding market estimates of 150K. In addition, December’s print was revised upward to 176K. JOLTS job openings data on Tuesday, however, showed that the US labor market is becoming tight, putting pressure on the dollar. The number of job openings in the US dropped to 7.60M in December, falling short of market expectations of 8.00M. In addition, November’s print was revised downward to 8.09M from 8.16M before.
Advance GDP data for the fourth quarter of 2024 showed that the US economy expanded by 2.3%, following a 3.1% expansion in the third quarter of 2024 and falling below market estimates of 2.7% growth. In addition, the US economy expanded by 3.0% in the second quarter of the year and by 1.4% in the first quarter of the year.
Disinflation in the US is progressing, which may affect the Fed’s rate outlook. Headline inflation rose by 2.9% year-on-year in December from 2.7% in November, which was in line with expectations. Monthly inflation rose by 0.4% in December against 0.3% in November, as expected. Core CPI, however, which excludes food and energy, rose by just 0.2% in December following a 0.3% rise in November and against expectations of a 0.3% print. Core CPI rose 3.2% year-on-year in December, below estimates for a 3.3% increase and November’s 3.3% gain.
This week we have major economic data coming up for the US, which are likely to affect the dollar. The US inflation report on the 12th is highly anticipated by traders and may determine the Fed’s rate outlook. Disinflation in the US is stalling and headline inflation is expected to stay at 2.9% annually in January. Producer Price Index data on the 13th will provide a more complete picture of the US inflationary outlook. Again, the prognosis is not optimistic and market analysts predict an uptick in Core PPI in January. Finally, Retail sales data on the 14th will provide information on the health of the US economy.
EUR/USD plummeted to 1.023 early last week as the dollar surged, then rose to 1.044 mid-week but dropped again on Friday, ending the week at 1.032. If the EUR/USD pair declines, it may find support at 1.017, while resistance may be encountered near 1.053.
The ECB lowered its benchmark interest rate by 25 basis points in January, bringing its main refinancing rate down to 2.90% from 3.15%. The central bank is currently expected to cut interest rates up to four more times in 2025, to a total of 125bps, until neutral policy settings are reached. Expectations that the ECB will return to a more normalized policy setting sooner than the Fed are putting pressure on the EUR/USD rate.
In her speech after the policy meeting, ECB President Christine Lagarde stressed that EU policymakers will not commit to a predefined rate cut path and that the central bank’s policy will remain data-driven.
Lagarde also commented on the Eurozone GDP data released earlier on Thursday that showed that the EU economy is stagnant, stating that the ECB expects the economy to remain weak for some time. She also hinted that the trade tariffs that the US might impose may hinder economic growth and warned that increased friction in global trade could weigh on the Eurozone’s economy. Lagarde, however, denied that there is a danger of stagflation, the toxic economic mix of stagnating economy and high inflation. Lagarde admitted that inflation in the Eurozone is expected to hover around the current levels in the short term but appeared confident that inflation will come down to the central bank’s 2% target within the year.
US President Donald Trump posted tariff threats on his social media last week and again on Monday, causing market turmoil. Trump has threatened to impose trade tariffs on the EU although he did not mention any specifics. Trump’s comments triggered a risk aversion sentiment and demand for safe-haven assets rose, boosting the dollar. German Chancellor Olaf Scholz stated on Sunday that the European Union is ready to act immediately if Trump imposes traded tariffs on the EU.
On the data front, German Factory Orders rose by 6.9% in December, after contracting by 5.2% in November and against expectations of a 2.0% growth. In addition, EU Final Manufacturing PMI data were optimistic, providing support for the Euro. The EU Final Manufacturing PMI index rose to 46.6 in January from 46.1 in December. The Euro Area Manufacturing sector remains in contractionary territory as evidenced by a print below 50.0 but the rate of contraction is slowing down.
EU CPI Flash Estimate data released on Monday showed that Eurozone inflation remains above the ECB’s 2% target and may prevent the ECB from cutting interest rates further. Eurozone inflation rose to 2.5% year-on-year in January from 2.4% in December against expectations of a 2.4% print. Core CPI, which excludes food and energy, remained steady at 2.7% in January against expectations of a lower reading of 2.6%.
Preliminary Flash GDP data showed that the Eurozone economy remained stagnant in the final quarter of 2024 after expanding by 0.3% in the second quarter. Preliminary Flash GDP data disappointed expectations of 0.1% growth in Q4 of 2024, raising concerns about stagflation in the EU. The economic outlook of the EU remains fragile as prolonged tightening has brought the Euro area economy to the brink of recession.
GBP/USD opened at the low point of 1.228 on Monday as the dollar gained strength. The currency rate rose to 1.254 mid-week ahead of the BOE policy decision on Thursday but pared gains at the end of the week, closing at 1.238 on Friday. If the GBP/USD rate goes up, it may encounter resistance at 1.257, while support may be found near 1.209.
BOE policymakers decided unanimously on Thursday to cut interest rates and the Official Bank Rate was reduced by 25 basis points from 4.75% to 4.5%, which was in line with expectations. Seven out of nine MPC members voted in favor of a 25 basis point rate cut, while surprisingly, the other two members were more dovish, voting for a 50bp rate cut. One of the two MPC members who voted in favor of a larger rate cut was Catherine Mann, who had so far been known for her hawkish stance. Market expectations of future BOE rate cuts rose after the policy meeting, pricing in 65bps of easing by the end of 2025.
Bank of England Governor Andrew Bailey delivered a speech that had dovish undertones, hinting at further rate cuts. Bailey, however, stressed that the BOE will need to decide on its policy on a meeting-by-meeting basis and refused to commit to a timeline or magnitude of future rate cuts.
In addition, the BOE updated its economic forecasts after the policy meeting. The central bank currently anticipates that the British economy will grow by 0.75% by the end of 2025 and inflation will rise from 2.5% to 3.7%. Bailey stressed that even though the BOE anticipates a rise in inflation in the coming months, this does not warrant a more restrictive monetary policy. Bailey stated that the rise in inflation will be due to factors not directly linked to pressures in the UK economy and will be temporary.
The British economy expanded by just 0.1% in November, disappointing expectations of 0.2% growth and following contraction by 0.1% in October. Final GDP data for the third quarter of the year have previously shown that the British economy is stagnating. Earlier forecasts indicated slight economic growth by 0.1% in the third quarter of 2024, but the British economy is being stifled by high interest rates and cannot expand.
Price pressures in the UK are easing, raising the odds of a BOE rate cut in February and providing support for the Sterling. Headline inflation in the UK rose to 2.5% year-on-year in December, dropping from 2.6% in November, against expectations of a 2.6% print. Core inflation, which excludes food and energy, also came in lower than expected, rising by 3.2% annually in December, against a 3.5% reading in November and 3.4% anticipated.
USD/JPY moved in a downtrend last week, dropping from 155.7 to 151.5. If the USD/JPY pair declines, it may find support at 153.1. If the pair climbs, it may find resistance at 158.8.
Average Cash Earnings data released on Wednesday showed that wages in Japan are rising, indicating a rise in inflation. Average Cash Earnings rose by 4.8% year-on-year in December against the 3.6% expected, with November's data also revised higher to show a 3.9% rise.
The BOJ raised its interest rate by 25 basis points in January, from 0.25% to 0.50%, its highest level since 2008. In addition, the BOJ adjusted its inflation projections upward, to reflect the depreciation of the yen and rising oil prices, hinting at more rate hikes down the road. Policymakers expect Japan’s inflation to rise to 2.4% in 2025, up from previous estimates of 1.9%, and above the central bank’s 2% target.
BOJ Governor Kazuo Ueda hinted that the central bank will continue to raise interest rates if Japan’s economy continues to improve and the BOJ 2% inflation target is reached. Ueda emphasized, however, that the timeline of future rate hikes will depend on economic and inflationary conditions. Markets currently anticipate that the BOJ will raise interest rates to a peak interest of 1.00% over the next two years.
BOJ member Naoki Tamura delivered a hawkish speech on Thursday, stating that the central bank must raise interest rates to at least 1% by the second half of the fiscal year 2025, which is starting in April.
Inflation in Japan is on the rise, raising the odds of future rate hikes and providing support for the Yen. The headline Tokyo CPI inflation rose to 3.4% annually in January from 3.0% in December. Headline inflation in Japan rose by 3.0% year-on-year in December from 2.7% in November, which was in line with expectations. In addition, BOJ Core CPI rose to 1.7% year-on-year in November from 1.5% in October against expectations of 1.5%.
Final GDP data for the third quarter of the year showed that Japan’s economy expanded by 0.3%, exceeding initial estimates of 0.2%, but down from 0.7% in the second quarter. The Japanese economy is expanding, after shrinking by 0.5% in the first quarter of the year.
Gold prices moved in an uptrend last week, hitting an all-time high of $2,885 per ounce. If gold prices rise, they may encounter resistance at $2,900 per ounce, while if gold prices decline, support may be encountered near $2,616 per ounce.
Gold prices were on a bullish trend last week, reaching a new all-time high of $2,885 per ounce. Uncertainty over US President Donald Trump’s future policies and trade tariffs promotes a risk aversion sentiment, raising the appeal of safe-haven assets, such as gold. Concerns that Trump’s trade policies may ignite global trading wars are raising the appeal of gold.
Trump has been using threats of imposing trade tariffs as a negotiation tool to further his agenda with other countries. On Monday, Trump posted a list of threats and grievances on his social media concerning Canada, China, and several other countries. Trump’s comments triggered a risk aversion sentiment boosting gold prices to all-time highs last week. Later, however, Trump took back some of his tariff threats, demonstrating that they are used to intimidate other countries into submission. Trump stated that he would postpone imposing tariffs on Canada and Mexico for a month, still holding the tariffs as a threat against them. Gold prices retreated somewhat after Trump withdrew the tariffs.
In addition, Trump threatened to impose a 10% duty on imports from China to the US. On Tuesday, Trump stated that he is determined to impose a 10% duty on imports from China to the US. China, however, is retaliating in kind, imposing tariffs on US imports to China. The Chinese finance ministry said that it would impose levies of 15% on coal and Natural Gas and 10% on crude oil and other commodities. Trump hit the social media again on Friday, issuing new threats to a multitude of targets. Trump threatened to announce reciprocal tariffs on many countries this coming week. His remarks promote a risk aversion sentiment which is likely to cause turbulence in markets this week.
Gold prices have been typically directed by the dollar’s movement, as the competing gold loses appeal as an investment when the dollar rises. The dollar exhibited high volatility last week, with the index dropping from 109.8 to 107.5 mid-week, then paring some of the week’s losses on Friday and climbing back to 108.1. US treasury yields edged lower, with the US 10-year bond yield rising from 4.58% to 4.49%.
Gold prices are under pressure by decreased Fed rate cut expectations. The US Federal Reserve held interest rates steady at its January meeting after delivering three consecutive rate cuts in 2024. FOMC policymakers voted unanimously to maintain the federal funds range to a target range of 4.25% to 4.50%, which was in line with expectations.
Fed Chair Jerome Powell delivered a mildly hawkish message after the policy meeting, putting pressure on gold prices. Powell stated that the Fed’s approach will remain data-driven and stressed that the central bank needs to consider potential policy changes under Trump’s administration.
Oil prices remained bearish last week and WTI price dropped from $75.6 to $71.3 per barrel. If oil prices retreat, they may encounter support near $71.0 per barrel, while resistance may be found near $80.9 per barrel.
Oil prices were under pressure last week by an unexpectedly large US crude oil stock build. US crude oil inventories released on Wednesday showed that US crude stockpiles exceeded expectations. The US Energy Information Administration reported a weekly crude stockpile build of 8.7M barrels for the week to January 31st, against expectations of a more modest build of 2.4M barrels and following a rise of 3.5M barrels the week before.
Oil prices are under pressure by concerns over US President Donald Trump’s energy agenda. Trump has vowed to declare a national energy emergency and start drilling for oil immediately to build up US strategic reserves. On Thursday, Trump reiterated that he plans to boost US oil production to bring oil prices down. Trump’s comments had the desired effect and oil prices dropped on Thursday.
Trump has already issued a series of executive orders imposing tariffs on trading countries. On Monday, Trump posted a new list of threats and grievances on his social media concerning Canada, China, and several other countries. Later, however, Trump took back some of his tariff threats, demonstrating that they are used to intimidate other countries into submission. Trump stated that he would postpone imposing tariffs on Canada and Mexico for a month, still holding the tariffs as a threat against them. Oil prices retreated after Trump withdrew the tariffs against Canada.
On Tuesday, Trump stated that he is determined to impose a 10% duty on imports from China to the US. China, however, is retaliating in kind, imposing tariffs on US imports to China. The Chinese finance ministry said that it would impose tariffs on energy products, including levies of 15% on coal and Natural Gas and 10% on crude oil. Trump hit the social media again on Friday, issuing new threats to a multitude of targets. Trump threatened to announce reciprocal tariffs on many countries this coming week. His remarks promote a risk aversion sentiment which is likely to cause turbulence in global markets this week.
OPEC+ has announced that it will extend its voluntary production cuts until the end of the first quarter of 2025, however. Oil prices have been under pressure and the cartel is limiting production in an attempt to raise oil prices.
Oil prices are kept in check by high central banks’ interest rates. The US Federal Reserve held interest rates steady at its January meeting after delivering three consecutive rate cuts in 2024. FOMC policymakers voted unanimously to maintain the federal funds range to a target range of 4.25% to 4.50%, which was in line with expectations. Fed Chair Jerome Powell delivered a mildly hawkish message after the policy meeting, putting pressure on oil prices. Powell stated that the Fed’s approach will remain data-driven and stressed that the central bank needs to consider potential policy changes under Trump’s administration.
Bitcoin price dropped last week, failing to hold on to the key $100,000 level and dipping to $95,500 during the weekend. If BTC price declines, support can be found at $90,000, while resistance may be encountered at $106,970.
Ethereum price rose from $2,600 to $2,900 mid-week but pared gains towards the end of the week, dropping back to $2,600. If Ethereum's price declines, it may encounter support near $2,000, while if it increases, resistance may be encountered near $3,520.
Bitcoin price registered a new all-time high of $109,880 in January but has since been under pressure by increased risk aversion sentiment. Most major cryptocurrencies faced selling pressure last week, as US President Donald Trump’s trade policies may start global trading wars.
Trump has been using threats of imposing trade tariffs as a negotiation tool to further his agenda with other countries. The uncertainty over Trump’s future policies and trade tariffs is generating a risk aversion sentiment, putting pressure on crypto markets.
On Monday, Trump posted a new list of threats and grievances on his social media concerning Canada, China, and several other countries. Trump’s comments triggered a risk aversion sentiment putting pressure on cryptocurrencies over the weekend and early on Monday. Later, however, Trump took back some of his tariff threats, demonstrating that they are used to intimidate other countries into submission. Trump stated that he would postpone imposing tariffs on Canada and Mexico for a month, still holding the tariffs as a threat against them.
On Tuesday, Trump stated that he is determined to impose e 10% duty on imports from China to the US. China, however, is retaliating in kind, imposing tariffs on US imports to China. The Chinese finance ministry said that it would impose levies of 15% on coal and Natural Gas and 10% on crude oil and other commodities. Trump’s tariff threats are promoting a risk aversion sentiment which is likely to cause turbulence in crypto markets this week.
Trump’s proposed plans for building a Bitcoin strategic reserve have been boosting Bitcoin price. Donald Trump has openly declared his support of crypto markets, announcing that he will make the US ‘the crypto capital of the planet’. Growing expectations that the new government will adopt a pro-crypto regulatory and fiscal policy are boosting crypto markets and Bitcoin price registered a new all-time high of $109,880 in January.
Cryptocurrency prices are also affected by central banks’ interest rates. The US Federal Reserve held interest rates steady at its January meeting, after delivering three consecutive rate cuts in 2024. FOMC policymakers voted unanimously to maintain the federal funds range to a target range of 4.25% to 4.50%, which was in line with expectations.
Fed Chair Jerome Powell delivered a mildly hawkish message after the policy meeting. Powell stated that the Fed’s approach will remain data-driven and stressed that the central bank needs to consider potential policy changes under Trump’s administration.
BTC/USD 1h Chart
ETH/USD 1h Chart
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Written by:
Myrsini Giannouli
présence dans l'industrie en tant que fournisseur de liquidités
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