Market Update by Solidecn.com

[Solid ECN]

Oil Prices Rise Amid Middle East Tensions



Solid ECN - WTI crude oil prices increased to about $73 per barrel on Tuesday, continuing the previous day's gains. This rise was mainly due to growing concerns over potential disruptions to oil supplies from the Middle East, fueled by increasing tensions in the area. Notably, analysts have highlighted recent US airstrikes against militias supported by Iran, though US officials have clarified their intention to avoid a broader conflict in the region.

Despite these tensions, there has been no immediate impact on the oil supply, helping prices recover slightly after suffering significant losses last week. Specifically, oil prices dropped by over 7% last week, driven by advances in peace talks between Israel and Hamas, which diminished fears of supply disruptions from the Middle East. Additionally, reduced expectations for imminent cuts to interest rates by the US Federal Reserve and ongoing worries about China's economic recovery have further pressured the outlook for global oil demand.

[Solid ECN]

EURUSD Tests Support, Eyes Resistance



Solid ECN - The EURUSD currency pair is testing the 1.07228 support after it crossed below the bearish flag. The pair’s value rose to 1.07619 in today’s trading session, which coincides with the broken channel that now acts as resistance. The awesome oscillator bars turned green, but the RSI indicator is still close to the 30 level. The pullback might extend to the Ichimoku cloud resistance area if the EURUSD bulls can close and stabilize the price above 1.07619.

On the flip side, a failure in the above scenario will lead the EURUSD price to decline further to the next support area, the 1.0658 mark.

[Solid ECN]

Rebar Futures Rise Amid Beijing's Expected Aid

Solid ECN - Steel rebar futures have been climbing, approaching the CNY 3,900 per ton mark. This increase comes after a two-week low of CNY 3,850 on January 18th. The market is reacting to the possibility of economic support from the Chinese government, which could boost demand for steel used in construction and manufacturing.

There's growing optimism that a significant aid package from Beijing might lessen fears about decreasing demand in these sectors. However, economic challenges, especially a drop in property purchases, have significantly reduced major Chinese steel producers' output. In December, steel production in China fell to its lowest in six years, dropping 15% annually and 11% monthly to 67.44 million tonnes. Despite the price recovery, the absence of purchases has caused rebar stocks in central Chinese warehouses to skyrocket more than five times to 112 thousand tonnes.

[Solid ECN]

Euro Hits Low Amid Dollar Strength and ECB Caution



Solid ECN - The euro dropped to $1.075, its lowest since November 13th, as the US dollar grew more robust. This change came after the latest US jobs report showed strength, and the head of the US Federal Reserve, Jerome Powell, hinted at being careful about lowering interest rates. Meanwhile, the European Central Bank seems unable to ease its monetary policy, even with recent weak economic indicators.

Reports showed that in December, the drop in prices producers received in the Eurozone got worse, and Germany's exports decreased more than expected due to low worldwide demand. The Ifo Institute also mentioned that the lack of manufacturing orders is increasingly troubling for Germany's economy. Market predictions for the European Central Bank to cut rates by the end of the year have decreased to about 125 basis points from 138 basis points the previous week.

[Solid ECN]

Germany's Factory Orders Surge in December 2023

The Mexican peso weakened past the 17.1 per USD level, retreating from a two-week high of 17.07 USD seen February 1st, amid US dollar strength driven by a strong labor market. The greenback found support from lowered bets for early Fed interest rate cuts after the US economy created nearly double the number of jobs than anticipated, totaling 353K jobs.

Despite this, the peso's decline was tempered by business confidence, maintaining an eleven-year high at 54.5 in January and the PMI remaining in expansionary territory. Furthermore, although fourth-quarter GDP growth fell short of expectations, the data indicated a resilient Mexican economy. Combined with inflation persistently exceeding Banxico's target, there could be a delay in the first rate cut despite some officials suggesting the possibility of rate reductions in the first quarter of 2024.

[Solid ECN]

Euro Hits Low Amid US Dollar Strength





Solid ECN - The euro dropped to its lowest value since November 13th, at $1.075, because of a strong US dollar. People had less hope for the US Federal Reserve to start reducing interest rates soon after a strong US job report and cautious words from Jerome Powell, the Federal Reserve Chair, about lowering rates. Meanwhile, the European Central Bank (ECB) is expected to delay easing its monetary policies even though recent data shows the economy is not doing well.


Reports indicated that in December, the drop in prices manufacturers get for their products worsened in the Eurozone, and Germany saw a bigger-than-expected decrease in exports due to low demand worldwide. The Ifo Institute noted that a lack of manufacturing orders is increasingly problematic for Germany's economy. Market predictions for ECB rate cuts by the end of the year have decreased to about 125 basis points from 138 points last week.

[Solid ECN]

Gold Prices Dip Amid Strong US Data



Solid ECN - Gold prices dropped to around $2,030 per ounce on Monday, continuing the decline from the last session. This drop was influenced by robust US economic reports and clear indications from the Federal Reserve that there might not be immediate cuts in interest rates. Recent data on Friday indicated that the US job market grew significantly in January, with 353,000 new jobs added, a jump from the revised figure of 333,000 in December and much higher than the anticipated 180,000.

The Federal Reserve's Chair, Jerome Powell, in an interview with "60 Minutes" that aired on Sunday, committed to a cautious approach towards reducing interest rates this year. He emphasized the need for further proof that inflation consistently reaches the 2% target before making significant moves. Powell mentioned that any action by the Fed would likely be slower than what the markets are expecting. Following these developments, traders have scaled back their expectations for a rate cut in March to just 20%. They foresee a total reduction of about 137 basis points in interest rates for the year, less than the previously estimated 150 basis points.

[Solid ECN]

Oil Prices Steady at $72 Amid Middle East Watch




Solid ECN - WTI crude oil prices stabilized at just over $72 per barrel on Monday, recovering from a significant drop last week. This shift came as traders kept an eye on the situation in the Middle East. Oil prices had fallen by over 7% the previous week due to advancements in peace talks between Israel and Hamas, which reduced worries about potential supply issues.

Additionally, the decreasing likelihood of immediate interest rate reductions by the US Federal Reserve and ongoing concerns over China’s economic growth put pressure on the worldwide demand forecast. On another note, the US announced plans for more military actions against groups supported by Iran, heightening tensions in the Middle East. However, it clarified its intention to avoid escalating the conflict further.

[Solid ECN]

Oil Prices Steady Amid Middle East Peace Hopes


Solid ECN - On Friday, WTI crude oil prices stabilized at about $74 per barrel, facing a roughly 5% drop over the week. This shift came as tensions in the Middle East appeared to calm, reducing fears of interruptions in oil supply. There were discussions about a possible ceasefire between Israel and Hamas, with Hamas examining the proposal.

The hope was that peace in Gaza might prevent further Houthi assaults on Red Sea shipping lanes, which have been affecting global trade and oil distribution. Despite these discussions, a Qatari official said no ceasefire had been reached. In the meantime, OPEC+ decided to continue with its existing production strategy, maintaining a reduction of 2.2 million barrels per day into the next quarter. On another note, the global oil demand is expected to rise by 2 million barrels per day in 2024, significantly above the earlier prediction of 1.24 million barrels per day, as per the Energy Information Administration (EIA).

[Solid ECN]

Silver Prices Dip to $22.6 Amid Altered Fed Rate Outlook


Silver prices fell to approximately $22.6 per ounce following investor expectations that the Federal Reserve would not lower interest rates in March. This sentiment arose after Fed Chair Powell indicated that monetary policy easing early in the spring was improbable. However, Powell's decision to stop suggesting further rate hikes led investors to anticipate 140 basis points in Fed rate cuts for the year, an increase from the previously estimated 130 basis points—the decline in the U.S.

Treasury yields and financial difficulties faced by the regional bank New York Community Bancorp also bolstered the appeal of silver as a secure investment. Attention is now turning to upcoming economic indicators, including weekly jobless claims, the ISM PMI reports on Thursday, and the crucial monthly employment report on Friday. Additionally, the price of XRPUSD is now above the weekly pivot.