Fundamental updates by Solid ECN

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Sweden's Producer Prices Drop Slows in January 2024​

Solid ECN – In January 2024, Sweden saw a 2.3% annual decrease in producer prices, which improved from the previous month's 7.7% decline. This falling price trend continues in its ninth month, but the decrease is the least since July 2023. The price drop for energy products was less steep (-10.9% compared to -37.6% in December 2023).

Meanwhile, prices for consumer and capital goods slowed to 1.5% and 4%, respectively, from higher rates the previous month. Ignoring energy products, producer prices fell by 0.5% in January, a change from a 1.4% increase the month before. Month-over-month, producer prices increased by 0.3%, recovering from a 1.6% drop.​

 

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Gold Rises Amid US Rate Cut Speculation; Eurozone Woes​

Solid ECN – Gold prices slightly increased to about $2,035 per ounce this Wednesday, influenced by the decline in yields. This change comes as traders evaluate the potential for more accessible monetary policies before releasing important US inflation data tomorrow.

Additionally, the financial community is keeping a close eye on the speeches from various Federal Reserve officials. Regarding broader economic indicators, the US economy expanded by 3.2% in the fourth quarter, a bit lower than the initially predicted 3.3%, demonstrating a robust financial framework.

Investors predict that the Federal Reserve will maintain the current interest rates in March and May, with a more than half likelihood of a rate reduction by June. In other news, the economic mood in the Eurozone has taken a downturn in February, falling below expectations and indicating a drop in consumer demand.​

 

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Crude Oil Prices Dip Amid Surging U.S. Stockpiles​

Solid ECN – On Thursday, WTI crude oil prices dropped to about $78 per barrel. This happened after reports showed U.S. crude stockpiles increased more than anticipated, leading to worries about demand. Specifically, the Energy Information Administration (EIA) reported a rise in U.S. oil stocks by 4.199 million barrels last week, exceeding the forecasted increase of 2.743 million.

The main reason for this rise is a deceleration in refinery activities, which turn crude oil into end products. Moreover, investors were cautious due to an upcoming U.S. inflation report. This report might support the Federal Reserve's plan to maintain tight financial conditions for longer. Despite these factors, ongoing tensions in the Middle East are expected to keep oil prices from falling too much.​

 

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Gold Prices Stable as US Inflation Data Looms​

Solid ECN – Gold's price hovered around $2,035 per ounce this Thursday, maintaining a consistent level all week as investors awaited an important US inflation update that might influence future interest rate decisions. The upcoming Thursday report on the US personal consumption expenditures (PCE) price index, the Federal Reserve's preferred measure of inflation, is expected to show a 0.4% increase in January, up from a 0.2% increase in December.

If the PCE deflator rises more than anticipated, it could further diminish the likelihood of the Federal Reserve reducing interest rates in the near term, which might negatively impact the price of gold. Meanwhile, in Japan, Bank of Japan board member Hajime Takata has suggested that it's time for the bank to start planning how to move away from its highly relaxed monetary policy, including ending negative interest rates and controlling the yield on bonds.​

 

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Silver Prices Surge Amid US Economic Updates​

Solid ECN – Silver's price rose above $22.5 per ounce, thanks to a weaker US dollar, as market players reacted positively to new economic data from the US. The Federal Reserve closely monitors the core PCE price index, which increased by 0.4% from January last month, aligning with analysts' predictions.

Furthermore, the year-on-year rates have hit their lowest point since 2021, reinforcing the view that inflation is staying on its expected path. In other developments, initial jobless claims were slightly higher than expected, reducing concerns over an overly tight job market. Market participants anticipate 79 basis points in Fed rate cuts in 2023, with expectations for the initial reduction in June. As borrowing costs fall, the attractiveness of non-income-generating assets like silver increases.​

 

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Gold Prices Stay High Amid Steady US Inflation Data​

Solid ECN – Gold prices remained above $2,040 an ounce last Friday, marking the second week of gains. This trend follows the latest U.S. inflation data, which met expectations and continued to support the anticipation of Federal Reserve interest rate reductions this year. The recent data revealed that core PCE prices in the U.S., an inflation measure closely watched by the Fed, increased by 0.4% month-over-month in January. This is a jump from the 0.1% rise seen in December, aligning with forecasts.

Furthermore, New York Fed President John Williams commented that he anticipates the central bank will lower interest rates later in the year, driven by decreasing inflation and a stable economy. He also mentioned that he doesn't foresee circumstances requiring another Fed rate hike.

Currently, the market anticipates roughly a two-thirds likelihood of a Fed rate reduction in June, with expectations for no changes in March and May.​

 

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Gold Stabilizes as US Economic Concerns Mount: A Quick Overview​

Solid ECN – On Monday, the price of gold remained steady at around $2,080 per ounce, following a nearly 2% increase the day before. This was mainly due to a fall in both the US dollar and Treasury yields, which happened in response to disappointing economic indicators from the US. Specifically, recent reports revealed that the country's manufacturing sector has been shrinking for 16 months as of February.

Additionally, a survey from the University of Michigan indicated consumer confidence last month was lower than predicted. Regarding interest rates, John Williams of the New York Fed anticipates reductions later this year, although not all officials agree to such a change. Investors are now turning their attention to upcoming events: they are eagerly awaiting Federal Reserve Chair Jerome Powell's forthcoming testimony to Congress for any signs of changes in monetary policy. They are also looking for essential updates on US employment and manufacturing activity.​

 

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Stable Oil Prices Amid Global Economic Uncertainties and Supply Adjustments​

Solid ECN – Oil prices remained steady on Tuesday, with WTI crude futures holding at $78.8 per barrel. This stability comes as investors weigh OPEC+'s supply cuts against ongoing concerns about demand. Even though China set its economic growth target 2024 at 5%, the same as last year, skepticism persists due to the absence of significant stimulus plans.

Additionally, the possibility of interest rate changes in leading economies continues to worry the markets. In the meantime, key oil-producing countries like Saudi Arabia, Russia, Iraq, and the UAE have prolonged their voluntary reductions in oil production into the next quarter. Attention is now turning to the forthcoming US inventory data, which is anticipated to reveal a slight rise in crude oil stocks while showing decreases in distillates and gasoline supplies.​

 

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Euro Hits New High as ECB Meeting Nears Amid Slowing Inflation​

Solid ECN – The euro climbed to its highest point since February 1st, reaching $1.085, as the market focused on the European Central Bank (ECB) meeting. Investors are keenly waiting to understand the future direction of the ECB's monetary policies. Even though it's widely expected that interest rates will remain at their peak, the market is eager for any new economic forecasts and comments from ECB President Christine Lagarde about when interest rates might start to decrease.

Moreover, recent statistics indicate a reduction in the Eurozone's inflation for the second month, now at 2.6% for February, slightly higher than the predicted 2.5%. The core inflation rate also decreased to 3.1%, exceeding the expected 2.9%. This suggests that the ECB is cautiously proceeding before deciding to relax its monetary policy.​

 

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Euro Hits New High Amid ECB Meeting Anticipation and Inflation Data Insights​

Solid ECN – The euro rose sharply to $1.085, reaching its highest point since February 1. This spike was due to investors focusing on the European Central Bank's (ECB) next meeting about monetary policy later this week. They are looking for new information on the ECB's plans. Although the bank is expected to keep interest rates high, market participants are eager to hear any updates to economic forecasts and hints from ECB President Christine Lagarde about when borrowing costs might start to decrease.

Recent data showed that inflation in the Eurozone dropped again last month, making it the second month of decline, with a rate of 2.6% in February—a bit higher than the predicted 2.5%. The fundamental inflation rate also fell to 3.1%, which was also above the expected 2.9%. This information suggests that the ECB is careful before deciding to reduce monetary policy measures.​

 

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Australian Dollar Hits 7-Week High as Rate Cut Expectations Grow​

Solid ECN – The value of the Australian dollar has risen above $0.66, marking its highest level in more than seven weeks. This increase is primarily due to the belief that the US Federal Reserve might lower interest rates before other leading global banks. During his US Senate testimony, Fed Chair Powell hinted that the Fed might ease its tight monetary policy sooner if inflation continues to decrease. On the home front, recent figures revealed that Australia's economic growth in the last quarter was less than anticipated.

This has led to increased speculation that the Reserve Bank of Australia (RBA) might begin to cut rates this year. Market predictions suggest an almost 90% likelihood of the RBA reducing its cash rate by August, with expectations of a total ease of 45 basis points throughout the year. Following the disappointing GDP figures, the Commonwealth Bank of Australia has maintained its prediction of 75 basis points in rate cuts for the year.​

 

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Gold Prices Near Record Peaks Amid Anticipated Rate Cuts​

Gold prices were close to their all-time high on Monday, nearing $2,200 per ounce. This happened after a recent jobs report suggested that the Federal Reserve might cut interest rates by June.

Despite February's payroll numbers being higher than expected, revisions showed that job growth in January and December was much lower than initially thought. Additionally, the unemployment rate increased to its highest in two years at 3.9%, and the wage rise was less than expected, showing signs of a slowing job market.

As a result, traders believe there's a nearly 60% chance that the Fed will reduce interest rates by 25 basis points in June. Earlier, the Federal Reserve's Chair Powell and some European Central Bank members indicated they might start reducing monetary policy tightness this year.

This prospect has made gold, which doesn't yield interest, more attractive. Over the week, gold's price was on track for a 4.2% increase.​

 

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British Pound Dips, Wage Growth Slows, and Rate Cut Predictions​

Solid ECN – The British pound recently fell to $1.28, slightly down from its seven-month peak of $1.289. This change happened as investors took time to review the newest UK job figures and looked forward to important US inflation data expected later. In the past three months up to January, wages in the UK, not including bonuses, grew by 6.1% compared to last year.

This rate of increase is the smallest since the three months ending in October 2022 and was just under the 6.2% analysts had predicted. Moreover, the unemployment rate was slightly higher than expected at 3.9%, compared to the forecasted 3.8%. Also, there has been a consistent decrease in job openings for the 20th straight time.

Regarding future interest rates, market participants believe the Bank of England will probably lower rates in August. Meanwhile, they think the European Central Bank and the Federal Reserve might start cutting rates by June.​

 

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US Stock Market Sees Uplift After Dip​

Solid ECN – In the United States, the stock market experienced a slight increase on Tuesday, rebounding from two days of downturns. The S&P 500 and the Nasdaq saw improvements, each up by 0.2%, though the Dow Jones fluctuated close to its starting point. This positive shift in the market can offer a fresh perspective for investors following a period of losses.​

Inflation Data Influences Market Movements​

Recent inflation data captured traders' attention, with the headline inflation rate climbing to 3.2%, surpassing expectations. However, the monthly increase was as predicted, and the underlying inflation, which excludes volatile items, showed signs of slowing down. Despite this, the inflation report did not significantly alter the anticipated timeline for a decrease in interest rates by the Federal Reserve, which was expected around June.​

Sector Performance and Key Stock Movements​

Different sectors showed varying performances, with technology and communication leading the gains, whereas utilities and real estate did not do as well. Among individual companies, Nvidia enjoyed a nearly 2% increase, and Microsoft's stock increased by 1.2%. On the other hand, Apple saw a 1% drop, and Tesla's shares fell by 2.4%. These movements in key stocks highlight the diverse responses within the market to current economic conditions.​

 

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Canadian Dollar Dynamics: Economic Insights and Monetary Policy Updates​

Solid ECN – The Canadian dollar is currently valued at around 1.35 per USD, returning from a one-month peak of 1.345 USD recorded on March 7. This drop is primarily due to the stability and strength of the US dollar. Meanwhile, the Federal Reserve is expected to hold interest rates steady at its upcoming March 19-20 meeting, with predictions leaning towards a rate cut in June. This decision comes after the consumer price index indicated a slight increase beyond expectations. Specifically, the overall inflation rate went up to 3.2%, surpassing forecasts, while the core inflation rate decreased slightly to 3.8% from 3.9%, still over the expected 3.7%.

In February, the unemployment rate in Canada increased to 5.8%, aligning with analysts' predictions. The country also witnessed an addition of 42,000 jobs, exceeding the anticipated numbers and showcasing a solid job market. Consequently, this strength allows the Bank of Canada to keep its monetary policy tight, helping curb further drops in the value of the Canadian dollar, also known as the loonie.​

 

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Significant Silver Price Dip from Three-Year High​

Solid ECN – Silver's price fell to approximately $24 per ounce, a slight decrease from the three-year peak of $24.4 per ounce in the prior session. This change occurred as investors closely monitored the possibility of the Federal Reserve lowering interest rates following the latest U.S. CPI (Consumer Price Index) figures.

These figures, which showed that the annual and core consumer inflation rates were slightly higher than expected, have significantly influenced the market's anticipation of the Federal Reserve cutting interest rates by June. Earlier, officials from the Federal Reserve and the European Central Bank hinted at potential rate decreases in 2024, which further increased the attractiveness of safe-haven assets like silver.​

 

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NZDUSD Stability Amid Global Economic Shifts​

Solid ECN—The New Zealand dollar stabilized at around $0.616 after experiencing significant fluctuations due to unexpectedly high US inflation figures. This complicates predictions regarding the timing of the Federal Reserve's interest rate cuts. However, the expectation is that the Fed will begin reducing rates before other central banks are still bolstering the currency.

In local news, Paul Conway, the Chief Economist at the Reserve Bank of New Zealand, mentioned last week that the New Zealand dollar might get stronger if the US Fed cuts rates by year-end while New Zealand's rates stay high. He also noted this could lower inflation pressures, possibly prompting the RBNZ to reduce its monetary settings earlier than expected.

At its February policy meeting, the RBNZ maintained its cash rate at 5.5% for the fifth consecutive time and slightly reduced its maximum rate forecast from 5.7% to 5.6%.​

 

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Recent Trends in the GBPUSD​

The value of the British pound has been fluctuating. Recently, it stayed under $1.28, slightly decreasing from its highest point in over seven months, which was $1.289 on March 8th. This change happened after the UK announced its Gross Domestic Product (GDP) figures, which were as expected.

At the same time, the US revealed its Consumer Price Index (CPI), which was slightly higher than what people thought it would be. This made the US dollar stronger compared to the British pound.​

UK Economic Growth and Employment​

In the UK, the economy grew a bit in January, by 0.2%. This growth came after a slight decline in December. The increase was mainly because more people were shopping and houses were being built. Also, wages in the UK have been increasing, but not as fast as before. In the three months leading up to January, wages increased by 6.1% compared to last year. This is the smallest increase since last autumn and was slightly less than people expected.​

Future Monetary Policies and Market Expectations​

Investors are watching what the central banks will do next. They think that the Bank of England might lower interest rates in August—the first time they've done this in a while. Traders also believe that the central banks in Europe and the US might lower their rates as soon as June. This is important because it can affect how much things cost and how the economy does.​

 

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Gold Price Stability Amid Federal Reserve Rate Cut Speculation​

Solid ECN – On Friday, the price of gold remained stable, hovering around $2,160 per ounce. This marks its first decrease after three weeks of gains. The change comes amid uncertainties surrounding the Federal Reserve's interest rate cuts. This uncertainty is due to unexpectedly high Consumer Price Index (CPI) and Producer Price Index (PPI) data, coupled with a decrease in initial jobless claims.

These factors made investors rethink their previous expectations for more accessible monetary policies. Consequently, the likelihood of the Fed reducing rates in June has fallen to about 60% from the 74% estimated just last week. This shift has made gold, which does not yield interest, less attractive to investors.

However, gold's price is still near record highs, as it serves as a protective investment against inflation and increasing geopolitical tensions, especially after Russia decides to position its tactical nuclear weapons closer to NATO territories.​

 

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Oil Prices Surge Amid Geopolitical Tensions and Economic Indicators​

Solid ECN – WTI crude futures increased to over $81 per barrel on Monday, building on the previous week's growth as ongoing geopolitical tensions fuel worries about oil supply. In the past week, Ukraine intensified its drone attacks on Russian oil facilities, causing a shutdown of approximately 7% of Russia's refining capabilities in the first quarter, as per a Reuters report.

Furthermore, Israeli Prime Minister Benjamin Netanyahu announced intentions to expand into the Gaza Strip's Rafah region, diminishing the likelihood of reaching a peace deal. Additionally, this week, investors are keenly observing the decisions on monetary policy by leading central banks for signs that might indicate when interest rate reductions will occur. Last week saw a near 4% rise in oil prices following an optimistic demand forecast by the International Energy Agency, which also anticipates a minor shortfall in supply for the year.​