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The US dollar held steady against most major currencies with the US dollar index (USDX) down by 0.03% as rising inflation and dampening expectations for aggressive rate cuts are overshadowed by the potential for peace in Ukraine and a slowdown in global trade disputes. Tariff threats are now seen as a negotiating tactic, as demonstrated by grace periods given to Mexico and Canada, a delay in steel and aluminum tariffs, and a stated preference for "fair and reciprocal" agreements. Meanwhile, Russia's agreement to pursue a ceasefire in Ukraine, following discussions, has boosted hopes for peace and weakened the dollar.
US and Russian officials will meet in Riyadh, Saudi Arabia, this week to explore peace negotiations for the war in Ukraine, according to reports. The US delegation will include Secretary of State Marco Rubio, National Security Advisor Mike Waltz, and Middle East Envoy Steve Witkoff. This high-level meeting, the first of its kind in years, raises the possibility of a future Trump-Putin summit.
After the Presidents' Day holiday, US markets resume trading on Tuesday, while Asian and European markets have already seen positive movement this week. Investors are focused on Walmart's earnings release Thursday, which could shed light on US consumer sentiment, particularly given recent data suggesting worries about inflation and potential tariffs. With consumer spending driving a significant portion of US economic activity, these concerns are important.
On the energy front, the two main crude oil benchmarks WTI and Brent recovered sharply on Monday adding more than 1.3% on their values, as an attack on an oil pipeline pumping station in the Caspian Sea slowed flows from Kazakhstan, while investors monitored developments of a possible Moscow-Kiev ceasefire agreement that could ease sanctions and increase global supplies.
For Tuesday, the focus turns to the German ZEW Economic Sentiment, CPI data from Canada, the U.S. Empire State Manufacturing index and U.S. TIC Long-Term Purchases. This week's focus shifts to numerous Federal Reserve speakers and the release of the minutes from January's meeting, where rates were held steady. Some price action could also be observed upon the release of Flash Manufacturing and Services PMIs by the US, UK and the eurozone and quarterly earnings reports by Walmart and Alibaba.
The EUR/USD pair struggled to hold gains at the 1.0500 level on Monday, ending a four-day winning streak as bullish sentiment cooled.
Germany and the broader Eurozone will release economic sentiment survey results early Tuesday, but the impact on markets is likely to be muted. Consumer sentiment often lags behind broader economic trends, making these reports less influential on immediate price action. However, February’s figures are expected to show an improvement from January’s readings.
The key focus for US markets this week will be Wednesday’s release of the Federal Reserve’s Meeting Minutes from its latest rate decision. Additionally, US Purchasing Managers' Index (PMI) data is set for release on Friday, offering further insight into economic conditions later in the week.
Gold prices edged higher on Monday in subdued trading as US markets remained closed for Presidents’ Day.
Despite recording its steepest decline since December 18 last Friday, gold’s broader outlook remains positive, supported by ongoing geopolitical uncertainties and US trade policies aimed at reducing the deficit.
Last week’s US economic data painted a mixed picture. Both the Consumer Price Index (CPI) and Producer Price Index (PPI) came in slightly above expectations, while Retail Sales disappointed, prompting investors to anticipate further policy easing from the Federal Reserve (Fed).
Oil prices gained on Monday following an attack on a pipeline pumping station in the Caspian Sea, which disrupted flows from Kazakhstan. Meanwhile, investors closely monitored the potential for a Moscow-Kyiv ceasefire agreement, which could ease sanctions and increase global crude supply.
A weaker US dollar also contributed to oil’s upward momentum, as the dollar index hovered near a two-month low after softer-than-expected US retail sales data for January, making crude more affordable for non-US buyers.
Elsewhere, concerns over global trade tensions capped oil’s gains after Trump ordered a review of reciprocal tariffs against countries imposing duties on US goods.
U.S. stock index futures drifted higher in thin trading on Monday evening, as investors remained cautious about potential trade tariffs and the prospect of prolonged elevated interest rates.
With U.S. markets closed for a holiday, trading volumes were subdued, offering little fresh direction for Wall Street. Attention remained focused on former President Donald Trump’s plans for new trade tariffs, alongside concerns about the Federal Reserve’s policy stance following last week’s stubborn inflation readings.
On Monday, Trump reiterated his intention to implement reciprocal tariffs, stating that the U.S. would match duties imposed by other countries on American exports.
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18/02/2025 - 08:42 UTC