Headlines:
- Decisive moment for gold as the recovery continues
- Gold remains in recovery mode as it halves the losses; risk of another flush still high
- USD/JPY continues to test the limits of Japan's patience this week
- GBPUSD trades near the 2025 highs as the focus turns to the US data and the BoE decision
- Eurozone January preliminary CPI +1.7% vs +1.7% y/y expected
- Eurozone January final services PMI 51.6 vs 51.9 prelim
- UK January final services PMI 54.0 vs 54.3 prelim
Markets:
- Gold up 2.1% to $5,052, silver up 5.4% to $89.89
- US dollar mixed across the board, Japanese yen lags although intervention risks remain
- European indices mixed as CAC 40 is up but DAX is down; SAP and Deutsche weigh on the DAX
- US 10-year yields flat at 4.273%
- WTI crude oil down 0.6% to $63.57, continues to hold above 200-day moving average
- Bitcoin up 0.5% to $76,060 after yesterday's plunge
It was a slower session as we settle into the start of February trading this week. Precious metals are continuing to see a solid recovery after the rout at the end of last week and on Monday this week. Meanwhile, the US government shutdown is over as well for now. And equities are also keeping somewhat steadier after the tech selloff yesterday.
In terms of headlines, we got euro area inflation data for January today and it reaffirmed some softer price pressures. There were some light methodological changes to the report but core annual inflation is still keeping above 2%. The 2.2% reading is the lowest since October 2021 but it doesn't mean that the ECB is on course to switch back to cutting interest rates just yet.
The market focus stayed on precious metals with gold and silver continuing to recover from the sharp pullback last week. Gold is moving back above the $5,000 mark and is starting to establish a more bullish near-term bias again on the day. Meanwhile, silver is flirting with a push back above the $90 mark as both precious metals are keeping up with the bounce from the past few sessions.
In FX, the dollar is holding steadier but a little mixed across the board. There were just some light changes overall with exception to USD/JPY, as the pair continues to drive higher and is up 0.6% to 156.65 currently.
In the equities space, US futures are also calming down after the rotational selloff yesterday. S&P 500 futures are up 0.1% but expect Wall Street to stay a bit more nervous amid AI concerns still. In Europe, major indices are mostly higher except for the DAX - which is weighed down by SAP and Deutsche.
Elsewhere, Bitcoin is finding some steadier footing after yesterday's selloff and will continue to remain a spot to watch in terms of overall risk sentiment in the market. The cryptocurrency is keeping around the $76,000 level but is eyeing a third straight weekly drop. The decline this week now threatens the April 2025 lows near $74,420. A break there will see it fall to the lowest since November 2024.
It's on to US data up next with the ADP employment report and ISM services PMI on the data docket.
