- The weakness of the labor market forces the Bank of England to cut rates.
- Near-record imports from India support precious metals.
The partial rebound in the US stock indices allowed them to gain ground. The main currency pair managed to stay above 1.18 and launched a counterattack thanks to the lower demand for the US dollar as a safe haven asset. Investors are eagerly awaiting the release of the U.S. third-quarter statistics minutes.
According to FOMC member Michael Barr and Chicago Fed President Austan Goolsbee, more evidence is needed that inflation is heading toward 2%. Suppose we see that the easing cycle could resume. San Francisco Federal Reserve President Mary Daly supported Kevin Warsh's view that rapid economic growth is possible without accelerating inflation, thanks to artificial intelligence.
This position will allow the Federal Reserve to make monetary policy more flexible. According to 38% of asset managers surveyed by Bank of America, Kevin Warsh will lead to a weakening of the US dollar, while Treasury yields will rise. 21% believe Treasury yields will fall along with the dollar under the new Federal Reserve chair.
Shares plummeted to a four-week low amid British unemployment rising to a five-year high and wage growth cooling. The futures market raised the probability of two rate cuts this year from 3.25% to almost 100%. In early February he estimated the chances of such an outcome at about 50%. BBVA believes that the Bank of England can go further. If derivatives start predicting a third, the pound will continue to weaken.
According to the IMF, the Bank of Japan will increase its overnight interest rate three times in 2026-2027 to a neutral level of 1.5%. Along with capital repatriation, this will support the bears.
Precious metals were boosted by information about near-record demand from India. In January, the country imported $12 billion and $2 billion. Only in October were higher figures observed, with $14.7 billion and $2.7 billion, respectively. At the same time, the main source of speculative demand, China, is absent from the market due to the Lunar New Year celebrations. This is slowing down the growth of gold and silver prices.
He FxPro Analyst team
