EUR/USD continues to edge higher following Thursday's rally. Nonfarm Payrolls in the US are forecast to rise by 180,000. The pair could encounter stiff resistance at around 1.0900. After touching its lowest level since December 13 at 1.0780 in the European session on Thursday, EUR/USD reversed its direction in the second half of the day and closed in positive territory. The pair holds comfortably above 1.0850 early Friday and the near-term outlook points to a bullish tilt. The US Dollar (USD) came under selling pressure in the American session on Thursday as US Treasury bond yields continued to push lower following disappointing employment-related data releases. Weekly Initial Jobless Claims rose to 224,000, the highest reading since early November, and the Employment Index of the ISM Manufacturing PMI survey declined to 47.1 in January from 47.5 in December.

Summary Eurozone GDP was flat in the fourth quarter, meaning the region narrowly avoided a technical recession during the second half of last year. Moderate growth in employment and real household incomes and still-subdued sentiment surveys argue against a deep slump in Eurozone activity. However, they do not offer much encouragement for a quick rebound either. We forecast Eurozone GDP growth of 0.7% for 2024, up only slightly from 0.5% in 2023. Eurozone CPI inflation slowed further in January, while when estimated on a six-month annualized basis, underlying inflation already appears to be trending at a pace broadly consistent with the European Central Bank's (ECB) 2% inflation target. Should Eurozone economic growth remain weak enough, and underlying inflation ebb further, we believe the ECB could feel comfortable enough to begin lowering its policy interest rate with a 25 bps cut to 3.75% at its April monetary policy meeting. We also forecast a cumulative 175 bps of rate cuts from the ECB over our forecast horizon through until mid-2025. Our forecast pace of rate cuts is broadly in line with market implied pricing through September of this year, but somewhat more gradual thereafter. Moreover, we view the risks as likely tilted to ECB rate cuts beginning later, or proceeding more gradually, than our base case. Download the full International Commentary

Gold price consolidates the rally to monthly highs on US NFP Friday.   US Dollar and Treasury bond yields attempt a bounce amid risk-on mood.   Gold price remains a 'buy the dips' trade after the triangle breakout, as the daily RSI stays bullish. Gold price is taking a breather early Friday, having rallied 1% to hit fresh monthly highs at $2,065 on Thursday. A modest uptick in the US Dollar (USD), tracking the US Treasury bond yields rebound, is acting as a headwind for Gold price ahead of the highly-anticipated US Nonfarm Payrolls (NFP) data release. US Nonfarm Payrolls to spike up Gold Price Volatility Gold traders brace for a volatility spike on the release of the critical US labor market data, with the NFP figure expected to come in at 180K for January while Average Hourly Earnings are seen rising at an annual pace of 4.1% in the same period. A stronger-than-expected NFP print combined with a surprise upside in the wage inflation data is likely to affirm the US Federal Reserve's (Fed) pushback against early rate cuts, infusing a new life into the US Treasury bond yields while driving the US Dollar back toward multi-week highs against its major peers. In such a case, Gold price could witness a correction from the monthly high. On the contrary, Gold price could resume its uptrend toward the $2,100 threshold, if the US employment data disappoints and revives the odds of a March Fed rate cut. Renewed dovish Fed expectations are likely to reinforce the bearish sentiment around the US Treasury bond yields, as well as, the US Dollar. However, the end-of-the-week-flows are also expected to play a pivotal role, as markets readjust their positions in the Fed aftermath. Gold price remains on track to book the best week in seven, especially after posting a solid rally on Thursday. The US Dollar reversed its gains and fell steeply after the US Labor Department showed Initial Jobless Claims rose more than expected last week. The risk-on rally on the US indices, thanks to the impressive tech results, also hit the safe-haven demand for the US Dollar, helping Gold price regain its lost footing. Heading into the US NFP showdown, markets are pricing a 39% chance that the Fed will cut interest rates in March while that for a May rate cut stands at about 85%. Gold price technical analysis: Daily chart As observed on the daily chart, Gold price remains on track for further upside due to a triangle breakout and a bullish Relative Strength Index (RSI) indicator. The 14-day RSI continues to hold firmer above the midline, despite the latest downtick, suggesting that Gold price remains a good buying opportunity on pullbacks.  Gold buyers are likely to stay hopeful so long as they defend the critical support in the $2,030-$2,035 region, where the triangle resistance-turned-support, 21-day and 50-day Simple Moving Averages (SMA) align. On the upside, the immediate strong resistance is seen at the monthly top of $2,065. Further up, the $2,070 round figure could challenge bearish commitments, as Gold optimists target at $2,100 threshold.   Conversely, if the abovementioned strong support around $2,030 is breached, a fresh downside could open up, targeting the triangle support at $2,015. The next relevant cushion is seen at $2,000 barrier, which will be the line in the sand for Gold buyers.

AUD/USD dropped to a new three-month low near 0.6500. Chinese Caixin data came in slightly above estimates. The RBA is largely anticipated to leave its rates unchanged. There was no respite for the selling pressure around the Aussie dollar on Thursday, this time dragging AUD/USD to fresh three-month lows in the boundaries of the 0.6500 contention zone. Indeed, the pair retreated for the third straight session on the back of tepid gains in the greenback and discouraging results from the Chinese docket, where China's Caixin Manufacturing PMI failed to surprise markets in January, coming in just above consensus. Meanwhile, the ongoing leg lower in spot seems to have broken below the critical 200-day SMA in quite convincing fashion, allowing for the continuation of the bearish trend at least in the short-term horizon. While additional stimulus measures by the PBoC to support China's stock market and foster economic recovery post-pandemic initially lent some support to the Aussie dollar, those effects rapidly dissipated pari passu with the absence of positive surprises from the fundamentals of that economy. On another front, the anticipated decision of the Reserve Bank of Australia (RBA) to maintain its current policy stance at its February 6 meeting is seen as a factor favouring further weakness in the Australian currency in the near term. Underpinning this prospect emerges the latest inflation data in Australia, where disinflationary pressures gathered extra steam towards the end of last year, as both the Inflation Rate and the RBA's Monthly CPI Indicator rose by (much) less than initially estimated by 4.1% in Q4 and by 3.4% in December, respectively. Next on tap in the domestic calendar are the December readings for Home Loans and Investment Lending for Homes. AUD/USD daily chart AUD/USD short-term technical outlook Further losses might prompt the AUD/USD to retest its 2024 level of 0.6508 (February 1), which is underpinned by the vicinity of the interim 100-day SMA (0.0.6529) and the December 2023 low. Extra weakening from here should not meet any contention of significance until the 2023 bottom of 0.6270 (October 26) ahead of the round level of 0.6200, all of which precede the 2022 low of 0.6169 (October 13). On the upside, there is a brief obstacle at the 55-day SMA of 0.6644. The breakout of this zone may inspire the pair to set sails for the December 2023 high of 0.6871 (December 28), prior to the July 2023 top of 0.6894 (July 14) and the June 2023 peak of 0.6899 (June 16), just before the key 0.7000 level. The 4-hour chart shows initial contention near the 0.6500 neighbourhood for the time being. Once this area is cleared, there is no major disagreement until 0.6452. On the bullish side, 0.6624 is an immediate obstacle ahead of the 200-SMA at 0.6681. The break of this zone suggests a possible advance to 0. 6728.The MACD remains slightly in the negative zone, while the RSI rises to 35. View Live Chart for the AUD/USD

Europe It's been a weak start to the month for European markets as investors weigh the messaging from both the Federal Reserve and the Bank of England, which appears to be that rate cuts are coming, just not as soon as markets were hoping 24 hours ago, prompting some modest weakness across the board. Today saw EU inflation slow by less than expected in January, while the Bank of England was split when it comes today's monetary policy decision. What we can glean from today's press conference with Bank of England governor Andrew Bailey is that while the tightening bias has gone, and that a rate cut is coming, the MPC isn't too keen to signal one yet given the elevated levels of services inflation, and that we might have to wait until June. It was a similar story from Fed chair Jay Powell just under 24 hours ago when he pretty much stomped on the idea of a March rate cut from the Fed, although like the Bank of England, the Fed did signal the end of its own tightening bias. The FTSE100 has performed slightly better than its European peers largely due to a solid day for Shell whose shares rose to 3-week highs after announcing better than expected Q4 profits of $7.3bn, helped by a big jump in integrated gas profits of $3.96bn, pushing annual profits up to $28.25bn, a significant decline on last year's $39.87bn. There was also a 4% increase in the dividend and the announcement of another $3.5bn buyback mainly financed by a $3bn increase in net debt. BT Group shares tried to move higher in early trading before sliding into the red despite reporting a better-than-expected set of Q3 numbers, which have been boosted by a 5% increase in revenues on the consumer side of the business, which rose to £2.56bn, helping to lift Q3 revenues to £5.34bn. Adjusted EBITDA saw an increase of 1% to £2.03bn, with the telecoms giant on course to register its first annual revenue increase since 2017, helped in no small part by price hikes at the start of the year, which have helped push reported profit before tax up by 15% to £1.5bn. Airtel Africa is also higher after reporting a Q3 pre-tax profits of $43m and announcing a share buyback program of $100m. A profit warning from Adidas has seen weakness in the likes of JD Sports and Sports Direct owner Frasers Group. Adidas said it expects operating profits for 2024 to come in at €500m, over half of previous estimates of €1.27bn, largely due to currency effects. US After seeing its worst one-day decline since September, the S&P500 along with the rest of US markets have seen a modest rebound as last night's Powell pushback on a March rate cut shifts the focus to the latest set of earnings numbers from the likes of Amazon, Apple, and Meta Platforms after the bell. With the disappointment over Alphabet and Microsoft's numbers very much front of mind the hope is that tonight's numbers from the rest of the "Magnificent 7" and call a halt to 2 days of decline on the Nasdaq 100.   The US banking sector is set to be in focus after yesterday's slide in New York Community Bancorp due to concerns over its exposure to big losses on US real estate, with the real risk its credit rating could be cut to junk. Qualcomm shares are lower after Q1 revenues came in at $9.94bn and profits of $2.37 a share, with the chip maker extending its contract with Apple until 2027. Q2 guidance was disappointing with the company forecasting a slowdown in revenues of $8.9bn to $9.7bn. Still not seeing much of a sign of a turnaround at Peloton after Q2 revenues come in at $744m, slightly ahead of forecasts, while losses came in at 54c a share. Q3 guidance however was weaker than expected with Peloton downgrading it to between $700m and $725m, with the shares slumping by over 20%. How long before the company is subject to takeover interest? FX It's been a poor start to the month for the US dollar after yesterday's choppy session, with another rise in jobless claims signalling a modest slide. If we were hoping for clues as to when to expect a rate cut from the Bank of England, then today's vote to leave rates unchanged didn't offer much clarity. If anything, they muddied the waters further as 2 MPC members, Mann and Haskel voted for another rate hike, however Swati Dhingra voted for a rate cut. Despite the 2 votes for a rate hike the central bank dropped its reference to further tightening, with the MPC saying it needs to see more evidence before they can consider lowering rates. The Bank of England also updated its inflation forecast for 2024 reducing it to 2.75% from 3.25%, while upgrading its...

XAU/USD Current price: 2,061.48 United States Treasury yields plummeted following mixed employment-related data. The Nonfarm Payrolls report is expected to show that 180K new positions were added in January. XAU/USD is firmly bullish in the near term and looks to test record highs. Gold price resumed its advance and XAU/USD reached a fresh weekly high of $2,065.54, as financial markets left behind the Federal Reserve (Fed) announcement and focused on United States (US) data. The economy keeps proving resilient as the  ISM Manufacturing PMI improved to 49.1 in January from 47.1 in the previous month. Additionally, Q4 Nonfarm Productivity rose 3.2%, beating expectations, while Unit Labor Cost in the same period increased 0.5%, less than the 1.7% expected. Wall Street turned positive, while government bond yields plunged, adding pressure on the Greenback. The 10-year Treasury note currently yields 3.83% after peaking at around 4.06% on  Wednesday, while the 2-year note offers 4.17%. The focus now shifts to the January US Nonfarm Payrolls (NFP) report. Fed Chairman Jerome Powell noted after the FOMC meeting that: "Inflation has eased from its highs without a significant increase in unemployment," taking off some of the pressure on the labor market. The NFP report is expected to show the country added 180K new jobs in January, while the Unemployment Rate is foreseen at 3.8%, ticking modestly higher. XAU/USD short-term technical outlook The XAU/USD pair holds on to gains and trades around the $2,060 level up for a fourth consecutive day. Technically, the pair has room to extend its advance towards January high at $2,078.99. In the daily chart, the bright metal bounced sharply from a flat 20 Simple Moving Average (SMA) while the longer moving averages advance below it. The Relative Strength Index (RSI) indicator aims firmly north well above its midline, while the Momentum indicator lags, hovering around neutral levels. In the near term, and according to the 4-hour chart, bulls are in full control. Technical indicators head north almost vertically, while XAU/USD develops above all its moving averages. Furthermore, the 20 SMA extended its advance above the 100 SMA and is about to surpass the 200 SMA, providing dynamic support at around $2,038.40. Support levels: 2,038.40 2,022.75 2,009.10 Resistance levels: 2,065.60 2,079.00 2,088.50