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November 15th - Stephen Innes, Managing Partner of SPI Asset Management, stated that with the US government reopening, a backlog of important data will be released, including employment and inflation indicators, which the market expects to be weak. Weaker US data could depress US Treasury yields, reigniting market expectations for an interest rate cut in early 2026 and providing room for a rebound in gold prices, which have been squeezed by rising real yields. The recent pullback in gold prices appears more like position adjustments than a trend reversal. The outlook for gold remains positive, and investors will closely watch US real yields, a weaker dollar, and upcoming data. If the data points to a cooling US economy, gold could rebound next week.November 15th - According to the Financial Times, Apple (AAPL.O) is accelerating its succession planning, preparing for Tim Cook to potentially step down as CEO as early as next year. Multiple sources familiar with internal discussions revealed that Apples board and senior management have recently expedited preparations to welcome Cooks departure. John Ternus, Apples senior vice president of hardware engineering, is widely considered Cooks most likely successor, but a final decision has not yet been made. Sources close to Apple indicate that this long-awaited transition is not due to the companys current performance, as Apples iPhone sales season at the end of this year is expected to be very strong. If a successor is announced early next year, the new leadership team will have time to establish themselves before Apples key annual events, including the Worldwide Developers Conference (WWDC) in June and the iPhone launch event in September.According to the Financial Times, Apple (AAPL.O) is preparing for Tim Cook to step down as CEO as early as next year, with John Ternus, the companys senior vice president of hardware engineering, widely considered the most likely successor.According to the Financial Times, Apple (AAPL.O) is stepping up its planning for a successor to CEO Tim Cook.On November 15th, the European Parliament adopted its position paper on amendments to the European Climate Law on the 13th, supporting the addition of a legally binding 2040 mid-term climate target to the existing EU climate law. The position paper requires the EU to reduce net greenhouse gas emissions by 90% from 1990 levels by 2040, while also supporting the European Commissions proposal to introduce flexibility in achieving the target. The European Parliament stated its support for member states to offset emissions reductions of up to 5% of their 1990 emissions by purchasing international carbon credits from other partner countries starting in 2036. The European Parliament also advocated for incorporating permanent carbon removal into the EU Emissions Trading System, in addition to existing reduction methods, to offset some emissions that are difficult to reduce.

EUR / USD Investors Challenge 1.0600 As Mixed US Data Tests Fed Conservatives, US NFP, and ECB's Lagarde

Daniel Rogers

Mar 10, 2023 11:31

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EUR / USD gains bids to extend the midweek rebound from a two-month low, rising 0.16 percent intraday near 1.0600 on Friday morning. In doing so, the Euro-Dollar pair celebrates the broad weakness in the US Dollar ahead of the important US employment report for February and Christine Lagarde's speech as president of the European Central Bank (ECB).

 

The major currency pair reversed a two-day losing trend due to mixed US data and a decline in US Treasury bond yields the day before. Hawkish ECB remarks and the market's positioning for today's crucial US data bolstered the run-up. However, inflation worries and geopolitical tension present challenges for EUR / USD buyers.

 

Despite this, US Initial Jobless Claims increased to 211K for the week ending March 3, compared to the predicted 195K and the previous week's 190K. In addition, there was a decline in Challenger Job Cancellations and an increase in Continuing Jobless Claims. Consequently, early indications for Friday's Nonfarm Payrolls (NFP) appear mixed and challenge the market's push for a 0.50 percentage point Fed rate hike in March, which is supported by Federal Reserve Chairman Jerome Powell's most recent signals.

 

Despite contradictory data, inflation worries continue to favor Fed conservatives, especially after Chairman Jerome Powell defends the stricter monetary policy, which restrains Euro prices. It should be noted that the most recent report from the New York Fed noted that recent upward revisions to inflation data and higher-than-anticipated levels of inflation had altered what had previously appeared to be a decline in price pressures.

 

Francois Villeroy de Galhau, an ECB policymaker, stated on Thursday that they will return inflation to 2% by the end of 2024 or 2025.

 

In addition to the aforementioned catalysts, geopolitical concerns emanating from US President Joseph Biden's proposed budget for 2024 and the US's partnership with the UK and Australia for nuclear submarines should challenge EUR / USD buyers.

 

In this context, US 10-year and 2-year Treasury bond yields extend yesterday's losses to 3.88% as of press time, dragging on the US Dollar Index (DXY), which is presently down 0.10 percent to 105.12. Despite this, Wall Street benchmarks closed with daily losses exceeding 1.5%, causing S&P 500 Futures to post modest losses as of press time.

 

According to market predictions, the employment report for February in the United States is expected to reveal a general softening. The same contrasts with the Fed's hawkish inclination to emphasize the likelihood of a significant market move in favor of the US Dollar in the event of a positive surprise. However, Lagarde of the ECB must confirm this.

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