The US dollar showed strength at the beginning of the European trading session on Thursday (February 6, 2024), recovering from a two-day decline. This suggests that market participants are still weighing the potential for a larger trade war between the US and China, as President Donald Trump and President Xi Jinping have not yet met or communicated.
This sentiment is likely to influence market movements during tonight’s trading session, alongside several economic data releases.
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Here are the updates from Trading Central:
- Bank of England (February) Interest Rate Announcement at 19:00 WIB: forecast 4.5% vs previous 4.75%
- US Unemployment Claims Data (February 1) at 20:30 WIB; forecast 215K vs previous 207K
GOLD
The resurgence of the US dollar and the elevated position of Gold resulted in profit-taking, causing Gold prices to decline to $2,848.73 per troy ounce. Compared to Wednesday’s market close, Gold fell by $18.28. Notably, Gold set a record high for five consecutive days, with the latest peak recorded on Wednesday at $2,882 per troy ounce.
Considering the US unemployment claims data due tonight, there is a potential for Gold to regain positive sentiment if the figures exceed the forecast.
OIL
Oil prices (CLS10) rose in early European trading, reaching $71.77 per barrel. This represents an increase of $0.64 from Wednesday’s market close.
The current low level in oil prices for five weeks suggests that today’s rise may be influenced by short covering. However, prevailing negative sentiment stems from a significant increase in inventory levels in the United States. Additionally, concerns over a potential trade war 2.0 could dampen global oil demand, making oil prices vulnerable to a downturn.
EURUSD
EURUSD experienced a decline in early European trading, hitting a daily low of 1.03559. This marks a drop of 466 points (46.6 pips) compared to Wednesday’s close.
Despite German factory orders and eurozone retail sales data being released better than forecast., EURUSD is still falling, indicating that market participants are perceiving substantial uncertainty ahead. Hence, there is a possibility that EURUSD will remain under pressure during tonight’s trading session.
GBPUSD
GBPUSD plummeted by 971 points (97.1 pips) to 1.24067 in the early European trading session, ahead of the Bank of England (BoE) interest rate announcement.
It is expected that the BoE will cut interest rates by 25 basis points to 4.5%, potentially applying further pressure on GBPUSD if the BoE indicates intentions to lower rates again soon.
USDJPY
USDJPY rebounded after reaching a six-week low of 151.808. On Wednesday, USDJPY fell more than 170 pips and remained under pressure today before starting to rebound.
The yen saw strength following significant wage growth data in Japan. Furthermore, BoJ officials suggested interest rates could be raised again, strengthening the yen and applying pressure on USDJPY. If tonight’s US unemployment claims data exceeds 215,000, there is a chance USDJPY will face renewed downward pressure.
Nasdaq
The Nasdaq index reversed direction after reaching 21,747 at the start of the European session, having previously climbed to 21,831.
As mentioned earlier, the market remains cautious regarding the potential for a larger trade war between the US and China. Hence, the Nasdaq is likely to remain volatile with the potential for a downturn after a substantial rise yesterday.
