High volatility in the financial markets continues during the European trading session on Monday (January 13, 2025). The release of U.S. labor market data, including non-farm payrolls (NFP) last Friday, has triggered significant volatility, which is expected to persist into tonight’s trading.
GOLD
As anticipated in the previous Macro Overview, gold prices dipped at the start of the European session, reaching a daily low of $2,679.16 per troy ounce. Compared to Friday’s closing, the price of gold fell by over $10 or 100 pips.
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Profit-taking activity triggered this decline, as gold had previously surged for four consecutive days, reaching a one-month high. Furthermore, the U.S. labor market data from last Friday led market participants to speculate that the Fed would likely only cut interest rates once this year.
This scenario has negatively impacted gold sentiment, and profit-taking could continue in tonight’s trading.
OIL
Oil prices (CLS10) retracted after touching $78.56 per barrel, marking the highest level in five months.
The sharp increase since last Friday, coupled with a relatively high position, triggered profit-taking on oil. Nonetheless, the sentiment toward oil remains positive following U.S. sanctions on the Russian crude oil industry. These sanctions target major oil companies like Gazprom Neft and Surgutneftegas, and also impact over 180 tankers and numerous Russian individuals linked to the energy sector.
This sentiment will likely continue to influence oil in tonight’s trading.
EURUSD
EURUSD plummeted to 1.01777 at the start of the European session before slightly cutting its losses. This pair is at its lowest level in more than two years, prompting technical corrections.
However, the sentiment remains negative for EURUSD after the strong U.S. labor market data indicated the Fed might only cut interest rates once this year. This negative sentiment is expected to persist tonight.
GBPUSD
GBPUSD experienced a steep drop to 1.21012 at the beginning of the European trading session. Compared to Friday’s closing price, GBPUSD fell by 1.055 points (105.5 pips) and is now at its lowest level since October 2023.
Similar to EURUSD, this currency pair is also under pressure due to the strength of the U.S. dollar following the NFP data release. This sentiment is likely to weigh on trading tonight.
USDJPY
Despite the strength of the U.S. dollar, USDJPY has fallen to 157.010 as European trading commenced.
This decline is a result of the slump in Asian stock indexes, prompting demand for the yen as a safe haven. This sentiment may continue during tonight’s trading, especially if U.S. stock indexes also decline.
Nasdaq
The Nasdaq index dropped to 20,693 at the start of the European session. Compared to Friday’s close, the Nasdaq is down by more than 300 index points, marking a five-week low.
The NFP release has led market actors to believe that the Fed will only reduce interest rates once this year, which creates a negative sentiment for Nasdaq that is expected to carry over into tonight’s trading.
