XAU/USD Current price: 2,036.90 Financial markets completed bets on delayed rate cuts, USD demand eased. Federal Reserve speakers stand out in an otherwise quiet week. XAU/USD trimmed part of its latest losses, turned technically neutral. Spot Gold recovers ground on Monday as demand for the US Dollar receded. The XAU/USD pair trades near an intraday high of $2,038.17, recovering some of the ground shed in the last few days. Financial markets are all about delayed rate cuts following central bankers from around the globe pouring cold water on investors' expectations of tighter monetary policies. On Tuesday, it was the turn of the Reserve Bank of Australia (RBA) to join the cautious stance, as policymakers decided to leave the door open for additional hikes should conditions require it. Meanwhile, solid US macroeconomic data further undermined the odds of a Federal Reserve (Fed) cut. As a result, government bond yields rallied, backing the US Dollar. By Tuesday, it seems investors have completed repositioning in this new scenario. Bonds recovered, and yields retreated, limiting demand for the USD. Data-wise, the macroeconomic calendar has nothing relevant to offer these days, although multiple Fed speakers will be on the wires. Loretta  Mester, President and Chief Executive Officer of the Federal Reserve Bank of Cleveland, will be on the wires later in the day. XAU/USD short-term technical outlook From a technical point of view, the XAU/USD pair is neutral, according to the daily chart. Technical indicators have turned north, hovering around their midlines, without enough momentum to confirm another leg north. At the same time, the pair seesaws around a flat 20 Simple Moving Average (SMA), currently at around $2,030.40. On a positive note, XAU/USD develops well above its longer moving averages, with the 100 SMA advancing above the 200 SMA, suggesting the risk skews to the upside in the longer term. In the near term, the odds for another leg north seem more limited. XAU/USD recovered above a flat 100 SMA, but it's currently batting a bearish 20 SMA, unable to extend gains beyond the level. Finally, technical indicators are correcting oversold conditions, yet remain within negative levels. Gold could have better chances if the pair advances beyond $2,039.60, the immediate resistance level. Support levels: 2,022.75 2,009.10 1,988.90 Resistance levels: 2,039.60 2,053.10 2.065.60

EUR/USD Current price: 1.0734 The US Dollar pared its rally as the market sentiment marginally improved. European data was mixed but did not impact the Euro, still trading on sentiment. EUR/USD trades near its January low and is poised to break below it. The  EUR/USD pair bottomed for January at 1.0723 on Monday and trades nearby as the new day develops. The US Dollar retains its strength across the FX board, although the momentum eased alongside government bond yields' run. Financial markets are still digesting global rate cut delays, which won't come as soon as expected. Early in Asia, the Reserve Bank of Australia (RBA) announced its monetary policy announcement, leaving rates unchanged as widely anticipated. However, local policymakers joined the cautious train and said additional hikes could not be ruled out. Asian stocks traded mixed, with Chinese indexes backed by governmental intervention. Still, the mood seems to have improved in Europe, as local shares hold on to modest gains, underpinning Wall Street ahead of the opening. Currently, the 10-year Treasury note offers 4.16%, unchanged from Monday's close. On the data front, Germany reported that Factory Orders were up 8.9% MoM in December, beating the market expectations. On the contrary, the Eurozone informed Retail Sales fell 1.1% MoM in the same month, worse than anticipated. The upcoming American session will bring nothing of interest, although a few Federal Reserve (Fed) speakers will be on the wires and may introduce some noise. EUR/USD short-term technical outlook The EUR/USD pair trades near its monthly low, and the daily chart shows there's room for another leg south. The pair develops below all its moving averages, with the 20 Simple Moving Average (SMA) maintaining its bearish strength above directionless longer ones. Technical indicators, however, resumed their slides within negative levels, still far from oversold readings. In the near term, and according to the 4-hour chart, the risk also skews to the downside. The Momentum indicator heads firmly lower, well below its 100 level, while the Relative Strength Index (RSI) indicator hovers around 33 without directional strength. Finally, moving averages maintain their bearish slopes, with the 20 SMA providing dynamic resistance around 1.0795. Support levels: 1.0695 1.0650 1.0610 Resistance levels: 1.0760 1.0795 1.0840  

EUR/USD recovered above 1.0750 in the early European session on Tuesday. The pair's bearish bias remains intact despite the rebound. Buyers could show interest in case Euro stabilizes above 1.0800. EUR/USD staged a technical correction and rose above 1.0750 early Tuesday after touching its weakest level since mid-November near 1.0720 on Monday. The pair's near-term technical outlook is yet to point to a bullish tilt. The US Dollar (USD) continued to gather strength against its rivals on Monday as the benchmark 10-year US Treasury bond yield stretched higher on growing expectations about the Federal Reserve (Fed) delaying the policy pivot following the upbeat labor market data. The modest improvement seen in risk sentiment makes it difficult for the USD to outperform its rivals and helps EUR/USD edge higher. Meanwhile, the data from Germany showed that Factory Orders rose 8.9% (seasonally adjusted) on a monthly basis in December and further supported the euro.

The ECB's tightening of monetary policy between the summer of 2022 and September 2023 continued to have its effects on euro zone bank lending in the fourth quarter of 2023. However, in the absence of a further turn of the screw since September 2023, these effects have not intensified further. Outstanding bank loans to the private sector even accelerated slightly, year-on-year, in the fourth quarter (up 0.5% in December 2023 compared to 0.3% in September) in line with GDP (up 0.1% in the fourth quarter from 0.0% in the third). The credit impulse remains negative but increased slightly for the first time since the ECB began to increase rates in July 2022. The 157 banks surveyed by the ECB between 8 December 2023 and 2 January 2024 indicated that they had slightly tightened conditions for loans to businesses. The main reasons cited were risk perceptions related to the economic outlook and the situation of firms. The deceleration in business lending outstanding (+0.33% y/y in December 2023, from +3.8% in December 2022) resulted from the delayed effects of cumulative rate rises since 2022 and a fall in demand. The latter particularly affected long-term loans and investment expenditure. Having hit bottom in October 2023, the credit impulse remained negative in December 2023, at -5.9, but showed a recovery compared to the previous months (August to November 2023), due to a largely technical improvement (favourable basis of comparison from late 2022). It is now above the level seen in 2009, in the aftermath of the financial crisis, and closing in on the levels observed in summer 2021 (-5.6 in August 2021). The banks surveyed indicated that they had also tightened lending conditions for households in the fourth quarter of 2023, to a limited degree for mortgage loans and more significantly for consumer credit. The increase in perceived risk, irrespective of the purpose of the loan, and lower risk tolerance for consumer loans were the main reasons given. Over and above the higher cost of borrowing, weak consumer confidence and the deterioration of real estate market prospects hit demand for credit. In line with the trend that began in the summer of 2022, growth in outstanding loans to households continued to decelerate in the fourth quarter (rising 0.3% y/y in December 2023, from 0.8% in September) whilst the credit impulse for household lending has remained fairly stable since August 2023 (-3.6 in December). The tightening of monetary policy and the heavy brake applied to outstanding loans to the private sector contributed to the sharp deceleration, beginning in the spring of 2021, and then contraction in year-on-year terms between July and December 2023 of M3 money supply. This contraction, the first since 2009, and more particularly the fact that it has been on a scale (-1.3% in August 2023) not seen since the beginning of the ECB's retropolated series (1981), has contributed to the fall in underlying inflation. According to the ECB's preliminary estimate, this measure of money supply more or less stabilised, year-on-year, in January 2024 (+0.1%). Over the same period, core inflation (excluding energy, food, alcohol and tobacco) continued to fall (+3.3%, from +3.4% in December), as did total inflation (+2.8%, from +2.9%). Download the Full Report!

The Fed, the ECB and other central banks have signalled that market expectations for rate cuts are too aggressive and, together with strong data for not least the US labour market, those expectations have calmed somewhat. Nordic economies are more or less stagnant but not in real decline, and job markets remain rather strong. Swedish inflation is coming down rapidly from its high levels. We are back to seeing a strengthening USD and weakening Nordic currencies, while the atmosphere is constructive among borrowers in the bond market and relating to equities The divergence in economic activity between the US and the euro area continued in the fourth quarter of 2023. The US economy grew 0.8% q/q while economic activity stagnated in the euro area. This brought the 2023 GDP growth rate to 2.5% in the US and to 0.5% in the euro area. One reason for the growth divergence last year was strong private consumption in the US. However, the labour markets are historically strong in both places. The unemployment rate in the euro area remained at 6.4% in December and the US nonfarm employment surprised all expectations in January by increasing 353k plus an upward revision of 126k in December. Moreover, wage growth increased in January and the participation rate declined. Both the ECB and the Fed pushed back against market expectations for large rate cuts this year and especially for the March meetings but otherwise delivered no new policy signals. The market is now pricing a 13% probability of a cut in March for both Fed and ECB compared to 66% and 52%, respectively one month ago. Especially the red-hot US labour market report pared US rate cut bets. The Bank of England shifted towards a more neutral approach to future monetary policy by removing its tightening bias. Inflation surprised slightly to the upside in both the US and the euro area as service inflation is still proving sticky especially in the US. US CPI came in at 3.4% y/y in December while euro area HICP increased 2.8% y/y in January. US core inflation picked up to 3.9% and the current momentum is still on the high side. In the euro area, there were a lot of one-offs affecting the January HICP print from different government measures that ended as well as the fact that companies tend to adjust prices in January. While these factors were visible in core services and energy inflation it was to a smaller extent than feared. Chinese data released this month rung the alarm bell with disappointing retail and housing sales. The housing market is in a bad state and continues to be a drag on activity. Business investments are still strong, and we expect the Chinese economy to muddle through with GDP increasing 4.5% this year as the government will likely increase stimulus. In other Asian countries activity is picking up in manufacturing exports which signals that the global manufacturing cycle is about to turn. This will help both the euro area and US manufacturing that struggled last year. Already, manufacturing PMIs increased significantly in January, although they are still below 50 and hence in contraction. The arrow points to higher levels soon, also supported by the fact that order inventory balances have increased lately, and financial conditions have eased Download the Full Report!

Gold price treads water near $2,025 early Tuesday after hitting a weekly low on Monday. US Dollar, Treasury bond yields take a breather as risk sentiment improves. The tide seems to have turned against Gold buyers, as the daily RSI flips bearish. Gold price is keeping its tepid recovery mode intact near $2,025 in the Asian session on Monday, having hit a weekly of $2,015 on Monday. The US Dollar (USD) is seeing a pullback from multi-month highs alongside the US Treasury bond yields, allowing Gold sellers to take a breather. Fedspeak to steal the spotlight amid a data-light US docket  Strong US Nonfarm Payrolls report combined with the hawkish rhetoric maintained by the US Federal Reserve (Fed) Chairman Jerome Powell dialed back expectations of aggressive Fed rate cuts this year, propping up the US Dollar and the US Treasury bond yields at the expense of the non-interest-bearing Gold price. Friday's US labor market report showed that the US economy added a whopping 353K jobs in January, against the 180K expected. Fed Chair Jerome Powell, in an interview aired early Monday, dismissed a rate cut next month while pushing back against the timing of the rate cuts. Early Monday, Gold price did receive some support from escalating geopolitical tensions between the West and the Iran-back Houthi rebels but the sentiment around the Fed expectations outweighed in the latter part of the day after the US ISM Services PMI came in stronger at 53.4 in January, as new orders increased and employment rebounded. Gold price succumbed to fading hopes of early and steep interest rate cuts by the Fed, with markets now pricing in 115 basis points (bps) of cuts this year, compared with around 150 bps of reductions anticipated a month ago, per CME Group's FedWatch tool. So far this Tuesday's trading, Gold price is struggling to extend its recovery mode even though the US Dollar retreats with the US Treasury bond yields amid an improvement in risk sentiment. Gold traders remain wary, digesting the latest mixed messages from the Fed policymakers. Minneapolis Fed President Neel Kashkari argued on Monday that a possibly higher neutral rate means that the Fed can take more time to before deciding whether to cut. Meanwhile, Chicago Fed President Austan Goolsbee said late Friday, he does not take the strong January US job growth as a reason for waiting to cut interest rates. Fed Chair Jerome Powell said, "with economy strong, we feel we can approach rate cut timing question carefully. Confidence is rising, but want more confidence before taking 'very important step' of starting rate cuts." In the absence of top-tier US economic data in the day ahead, Gold traders will closely scrutinize the comments from Fed policymakers for fresh hints on the timing and the pace of Fed rate cuts. Market sentiment will also likely play a pivotal role, with the US earnings season underway and rife Middle East geopolitical tensions. Gold price technical analysis: Daily chart As observed on the daily chart, Gold price closed Monday below the critical support in the $2,030-$2,035 region. That level is the confluence of the 21-day and 50-day Simple Moving Averages (SMA). Further, the 14-day Relative Strength Index (RSI) indicator also pierced through the 50 level for the downside. These technical moves suggest that the tide has turned in favor of Gold sellers, reopening floors for a test of the $2,000 threshold if the $2,010 round figure gives way. On the upside, the immediate powerful resistance at the abovementioned confluence support now turned resistance near $2,030. Gold buyers need to find a strong foothold above the latter on a daily candlestick closing basis to initiate a recovery toward the $2,050 psychological level. Recapturing that level is critical to revisit the monthly top of $2,065, which could act as a tough nut to crack for Gold buyers.