The market experienced significant volatility on Wednesday’s trading, reacting to the release of inflation data (Consumer Price Index/CPI) from the United States, increased trade war risks, and the prospects of ending the Russia-Ukraine conflict.
Recent U.S. inflation data revealed a growth that surpassed the forecasts provided by Trading Central. Concurrently, President Donald Trump reaffirmed his intention to implement reciprocal trade policies; this means that if other countries raise tariffs on U.S. imports, he will respond by increasing tariffs on those countries. This stance poses a real risk of escalating trade wars.
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On another note, Trump indicated that he has already initiated discussions with President Vladimir Putin of Russia to commence negotiations aimed at halting the war with Ukraine.
Such sentiment is likely to influence market movements during Thursday’s European trading session (13/2/2025).
GOLD
Gold prices (XAUUSD) experienced a drop to $2,864 per troy ounce during Wednesday’s trading following the U.S. CPI data release. However, afterward, Gold rebounded and closed the trading session at $2,903 per troy ounce.
Today, Gold has continued to rise, reaching a daily high of $2,920.36 per troy ounce. Trump’s assertion to pursue reciprocal policies has bolstered Gold’s appeal as a safe haven asset. This development is expected to provide positive sentiment that will linger into the European trading session. Additionally, the pressure on the U.S. dollar due to hopes that the Russia-Ukraine conflict may soon end adds further positive sentiment for Gold.
OIL
Oil prices (CLS10) plummeted nearly $2 to $71.19 per barrel during Wednesday’s trading after previously recording three consecutive days of increases. Today’s trading sees Oil continuing its decline to $70.56 per barrel.
The rise in U.S. oil stocks over the past three weeks, particularly in significant quantities, has exerted downward pressure on Oil prices. This increase in stocks may indicate weak demand or rising production rates—both factors impart negative sentiment to Oil prices, suggesting further potential declines.
EURUSD
The EURUSD pair exhibited extreme volatility during Wednesday’s trading, ultimately strengthening to 1.03832. Today, EURUSD has surged 551 points (55.1 pips) to 1.04383.
The pair received a positive boost after Trump announced intentions to commence negotiations with Putin to end the Ukraine war. Hopes for an end to the conflict provide a favorable sentiment for EURUSD.
GBPUSD
GBPUSD exhibited volatility before settling at 1.24430 in Wednesday’s trading. Optimism regarding the resolution of the Russia-Ukraine war has enabled GBPUSD to rise by 52 pips to 1.24950 today.
Moreover, the upcoming release of the U.K.’s Gross Domestic Product (GDP) data at 14:00 WIB could act as a significant driver for GBPUSD in the European trading session. Forecasts from Trading Central indicate that GDP for Q4-2024 is expected to grow by 1% year-on-year (YoY), surpassing the previous quarter’s 0.9% YoY growth.
A higher-than-forecast GDP release could further bolster positive sentiment for GBPUSD.
USDJPY
USDJPY rallied, gaining 1.942 points (194.2 pips) to 154.400 on Wednesday following the release of U.S. core CPI data, which grew 3.2% YoY in January, exceeding the forecast of 3.1% YoY as well as the previous month’s figure of 3.2% YoY.
This data reinforces the Fed’s cautious stance on interest rate cuts. Consequently, the interest rate differential between the U.S. and Japan is likely to remain wide for an extended period, contributing positive sentiment for USDJPY that is expected to persist in the European trading session.
Nasdaq
The Nasdaq index briefly fell to 281 points yesterday before making a recovery, closing Wednesday’s trading at 21,861. The U.S. inflation data initially exerted pressure on the Nasdaq, but optimism regarding the resolution of the Russia-Ukraine war prompted a rebound.
This hope for an end to the conflict is expected to maintain positive sentiment for the Nasdaq in the European trading session.
