The Baker Hughes oil rig count in the United States has increased from 487 to 489. This change reflects ongoing developments in the oil industry and drilling activity.

The EUR/USD currency pair has remained near 1.0400 following the release of US PCE inflation data for January. Meanwhile, Gold has dipped to fresh multi-week lows below $2,840, influenced by uncertainty regarding trade policies.

GBP/USD maintains a positive trend just above 1.2600 after the same inflation release. Furthermore, the upcoming week will see attention on US payrolls and an ECB rate meeting.

The latest figures from Baker Hughes show a slight increase in active oil rigs, which hints at more drilling activity. Although the rise was minor, it adds to the broader picture of how supply dynamics might shift in the weeks ahead. More rigs usually signal expectations of steady or stronger demand, but it remains to be seen whether this upward trend continues or if it merely reflects temporary adjustments by producers.

Meanwhile, the euro remains near 1.0400 against the dollar. This stability follows the latest US PCE inflation figures, which traders often watch closely for clues on interest rate expectations. Inflation data like this impacts decisions from the Federal Reserve, meaning it has a strong influence over currency pairs like EUR/USD. Any deviation in future inflation readings could lead to more movement in the market.

Gold is under pressure, dropping to levels not seen in several weeks. The recent decline below $2,840 suggests that traders are weighing a combination of policy uncertainty and broader market sentiment. Safe-haven demand can fluctuate based on risk appetite and central bank signals, so further weakness or recovery will likely hinge on upcoming events in the economic calendar.

Sterling continues to hold just above 1.2600, maintaining strength in response to the same PCE inflation data that moved other assets. Looking ahead, focus will shift to US payroll figures, which often bring volatility, along with the European Central Bank’s next rate decision. These events could present new opportunities, particularly if payroll figures surprise markets or if policymakers in Frankfurt signal a shift.

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US 10-year Treasury yields have decreased in nine out of the last eleven days amid concerns over economic weakness. These worries intensified following weak consumer and business sentiment reports, along with a rise in jobless claims and a sharp fall in the Atlanta Fed GDPNow tracker.

Currently, 10-year yields stand at 4.23%, down from a high of 4.66% on February 12 and 4.80% in mid-January. This level is below the Federal Reserve’s target range of 4.25-4.50%, with 3-month T-bill rates at 4.30%, indicating an inverted yield curve, which often signals an impending recession.

Historically, such inversions have preceded recessions, yet the previous inversion from 2022 to late last year did not lead to a recession immediately. The economic indicators continue to evolve, leaving observers awaiting further developments.

The recent decline in 10-year Treasury yields reflects growing pessimism about economic strength. Investors have reacted to weaker data, forcing yields lower as they recalibrate expectations for future growth. The drop from 4.66% just weeks ago to 4.23% today marks a considerable change in sentiment. With short-term rates now exceeding longer-term ones, the market is sending a warning signal—one that has historically predicted downturns.

Jerome and his colleagues at the Federal Reserve remain aware of this. The yield curve’s behaviour suggests that financial markets anticipate slower expansion, potentially leading to policy adjustments. However, the disconnect between traditional recession indicators and actual economic performance has made forecasting more difficult. The yield curve inversion that began in 2022 did not immediately lead to broad contraction, adding complexity to the current situation.

Labour market softness is now entering the discussion more prominently. Rising jobless claims, if sustained, typically indicate stress in hiring trends. Consumers have also begun to pull back. The weaker sentiment data highlights concern about future conditions, reinforcing the bond market’s message.

The Atlanta Fed’s GDPNow model—often watched for real-time growth estimates—has lowered its projections. A sharp downgrade in anticipated output suggests that prior resilience in economic data may be fading. If momentum is indeed decelerating, it increases the likelihood that policy expectations will shift in the coming weeks.

Money markets have already priced in adjustments, but Jerome’s team has remained measured in their statements. Inflation, though lower than last year, still sits above their preferred range. Future rate moves will depend on how incoming data aligns with their objectives. Any indication of sustained weakness could strengthen the argument for policy easing sooner than previously projected.

Market participants have taken note. A steady decline in Treasury yields reflects positioning for a slower economy, potentially altering strategies across multiple asset classes. If trends in recent data persist, the probability of monetary intervention may rise, reinforcing the directional move in rates observed over the past several weeks.

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EUR/USD exhibited slight fluctuations after a week of volatility, rebounding from losses. The pair fell over 0.70% to a two-week low after facing a third rejection at the 100-day Simple Moving Average (SMA), finding stability just below the 20-day SMA around 1.0420.

Despite a slight recovery at the week’s end, the pair remains at risk after unsuccessful attempts to maintain levels above the 100-day SMA. The confluence of the 20-day and 100-day SMAs raises concerns of a bearish crossover.

Technical indicators show mixed signals, with the Relative Strength Index (RSI) flat in negative territory and the Moving Average Convergence Divergence (MACD) histogram reflecting ongoing selling pressure.

Resistance is currently at the 20-day SMA, while potential support lies at 1.0380 and 1.0350, a key threshold that may influence future price action.

These movements highlight the difficulty in sustaining upward momentum, particularly given repeated failures at the 100-day SMA. This area has now reinforced itself as a barrier that traders will be closely monitoring in the days ahead. In contrast, the 20-day SMA has not provided strong support, which hints at sellers remaining in control. Recent price action suggests that any attempts to move higher could struggle unless we see a decisive break above resistance.

The possibility of a bearish crossover, as suggested by the alignment of the 20-day and 100-day SMAs, adds further downside risk. A break below the aforementioned support levels of 1.0380 and 1.0350 could open the door for further declines, particularly if broader market sentiment shifts against the pair. These support zones should be watched carefully, as a breach may accelerate selling momentum.

Momentum indicators are not offering much reassurance either. The RSI remaining weak suggests a lack of buying pressure, while the MACD histogram points to ongoing selling. Until these indicators show signs of improvement, traders may remain cautious about bullish positions.

For those dealing in derivatives, particularly short-term options and futures, the current setup presents both opportunities and risks. Shorting rallies near resistance levels has been a successful strategy recently, though it requires close attention to shifting market dynamics. If the pair does move lower, watching for reactions at the next support levels will be key in determining whether there is potential for a reversal or a continuation downward.

Heading forward, price action around current resistance and support thresholds may define short-term direction. If sellers remain dominant and the pair struggles to reclaim the 100-day SMA, the downside scenario could stay intact. However, any sudden change in momentum indicators or a breakout above these resistance points might indicate a change in sentiment that requires adjustment to positioning.

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The NASDAQ experienced a drop outside its established range from November, though it approached the 200-day moving average, where a temporary slowdown in the decline occurred. A bounce followed, pushing the price above key levels, including the 38.2% retracement at 18,487.09 and the swing low from November 15 at 18,595, which are now considered support.

For the upward movement to gain traction, surpassing the low of the Red Box at $18,831 is necessary to bolster buyer confidence and advance the correction. Failure to maintain above current support levels may lead to negative technical implications.

The recent downturn in the NASDAQ took it beyond the lower boundary that had held since November, yet the decline lost momentum near the 200-day moving average. This area has historically encouraged buying activity, and once again, demand emerged. The rebound that followed lifted prices back above reference points that traders had been monitoring for potential support, particularly the 38.2% retracement at 18,487.09 and the November 15 swing low at 18,595. These levels, having previously acted as resistance, now take on a different role. If buyers hold their ground here, the path higher remains open.

Stability above these levels is only part of the equation. For sentiment to shift decisively, the market needs to clear the lowest point of the Red Box at 18,831. A move through this area would indicate that buyers are willing to extend the recovery further. Without such a push, uncertainty lingers, and the recent gains may not hold. If sellers regain control and push prices back down, especially below the levels that have just been reclaimed, the structure weakens. A failure to maintain support would reinforce the dominance of those positioned for further downside, potentially accelerating selling pressure.

Market participants should focus not only on price movements but also on how the market reacts at these levels. A measured approach is necessary. Rash decisions based on short-term fluctuations can be costly, particularly when broader trends still lack clarity. The next few sessions will provide insight into whether this recovery is a pause in a larger decline or the start of something more sustainable. Buyer participation near support levels matters; if interest fades, expectations should adjust accordingly.

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The Pound Sterling is currently struggling to surpass the 1.2600 mark against the US Dollar, trading at 1.2607. It is anticipated to achieve its first monthly gain since September 2024.

In the North American session, GBP remains stable near 1.2600, as the US Dollar retracts gains due to forecasts of a slowdown in the core Personal Consumption Expenditure (PCE) index. The USD Index maintains a value around 107.40.

The GBP/USD pair dipped to approximately 1.2580 earlier, influenced by tariff uncertainties from the US administration. Upcoming US PCE data is expected to be a key focus later today.

James has highlighted the struggle of Sterling to break past 1.2600, but signs suggest it could post its first monthly advance since last September. While it holds steady in the North American session, some support comes from the US Dollar pulling back. That retreat seems linked to forecasts of a slowdown in the core PCE index. Meanwhile, the broader Dollar gauge remains elevated around 107.40.

Earlier in the session, the Pound fell to roughly 1.2580. This drop happened as traders reacted to uncertainty around potential tariffs from Washington. However, eyes are now firmly set on the upcoming core PCE index report.

Daniel draws attention to that data release, and for good reason—it’s the Federal Reserve’s preferred inflation gauge. If figures come in lower than expected, markets may interpret it as a sign that rate pressures could ease, which might weaken the Dollar further. That, in turn, could provide more fuel for Sterling to push back towards recent highs. Conversely, if the data surprises to the upside, the arguments for keeping US interest rates higher for longer would gain credibility, likely putting renewed pressure on the Pound.

Beyond today’s numbers, we should watch for any indication of a shift in the Bank of England’s stance. Emma has already pointed out that Sterling’s outlook depends not just on the Fed, but also on expectations around the BoE’s rate trajectory. Any signals that policymakers in London are growing more cautious about inflation cooling too quickly could add strength to Sterling.

Meanwhile, traders should remain alert to ongoing discussions around tariffs. Whether or not Washington moves forward with new trade measures will be key, as uncertainty in that domain could continue to inject volatility into markets. Short-term movements in the pair are likely to reflect the tension between US rate expectations and any new trade policy shifts.

For now, the focus remains on the coming PCE inflation data. If traders see confirmation of softer price pressures, we could find Sterling attempting further upside moves. However, if that data suggests inflation is still sticky, expect buying pressure on the Dollar to pick up pace again.

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The market is reacting to slowing growth, with the Atlanta Fed Q1 GDP tracker dropping from +2.3% to -1.5%. This marks one of the steepest declines for this index.

Recent data from the US Bureau of Economic Analysis and the US Census Bureau indicates that the contribution of net exports to first-quarter GDP fell significantly, from -0.41 percentage points to -3.70 percentage points. Additionally, first-quarter personal consumption expenditures growth is now projected to decline from 2.3% to 1.3%.

Trade data shows a soft performance, with the trade deficit increasing from $122 billion to $153 billion, mainly due to rising imports. There are concerns surrounding consumption and residential investment, following weak reports from Home Depot and record-low pending home sales.

The sharp drop in the Atlanta Fed’s GDP tracker highlights how quickly sentiment is shifting. A swing from expected growth to contraction in such a short period suggests that prior optimism may have overstated underlying strength. This change in outlook aligns with recent official reports, confirming that trade and consumer spending trends are losing momentum.

Net exports have played a major role in this adjustment. A deeper quarterly drag from trade flows means that foreign demand is not offsetting domestic weaknesses. The latest data shows an increasing trade gap, driven by rising imports outpacing exports. This reflects both a stronger US dollar making American goods more expensive abroad and softening global demand. Taken together, this adds another layer of stress to growth projections.

Consumption, which is the largest driver of economic activity, is also at risk. The downward revision from 2.3% to 1.3% in personal spending suggests Americans are pulling back, whether due to rising costs or a more cautious approach to discretionary purchases. Given that household consumption typically provides stability, this shift raises concerns about whether weaker spending will persist.

Housing-related indicators add further weight to these worries. A poor showing from Home Depot, a retailer closely tied to home improvement and construction, hints at slowed activity in the sector. Meanwhile, pending home sales remain at their lowest levels on record, pointing to continued softness in residential investment. With borrowing costs still elevated, housing struggles are unlikely to be resolved overnight.

For those involved in trading derivatives, these trends demand focus. When GDP expectations fall so drastically in a short time, volatility becomes more likely. If similar data continues to come in weak, asset prices could react sharply, particularly in sectors most exposed to consumption and trade. Moves in interest rate expectations may also shift market assumptions, adding further price swings across asset classes.

Information from the next few weeks will determine whether the reassessment of growth is temporary or part of a broader weakness. Until there is clarity, rapid shifts in sentiment will keep markets sensitive to incoming reports.

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The Pound Sterling (GBP) is currently struggling to surpass the 1.2600 level against the US Dollar (USD) but is on track for its first monthly gain since September 2024. The Core Personal Consumption Expenditures (PCE) Price Index increased by 0.3% month-on-month in January, with a year-over-year rise of 2.6%, indicating stalled disinflation.

US President Donald Trump announced 25% tariffs on goods from Mexico and Canada, as well as an additional 10% on China. Cleveland Fed official Beth Hammack mentioned no immediate rate hike is expected, given anchored inflation expectations.

The Bank of England’s David Ramsden stated the risks related to achieving the 2% inflation target are now two-sided. The GBP/USD pair is trading within the 1.2549 to 1.2700 range, with necessary resistance at 1.2700 and the 200-day Simple Moving Average at 1.2785 to extend gains.

If GBP/USD does not close above 1.2600 daily, a decline to the February 5 peak of 1.2549 could occur, followed by a potential test of the 50-day SMA at 1.2457. The Pound Sterling remains the fourth most traded currency globally, constituting 12% of all transactions, and is influenced by monetary policy, economic data, and trade balance indicators.

The Pound has been making attempts to rally past the 1.2600 mark against the Dollar but has not yet managed to establish itself above that level. Still, it looks set to record its first monthly advance since September of last year, which could provide confidence to those watching price action closely.

Meanwhile, the Core PCE Price Index—the Federal Reserve’s preferred inflation measure—showed a 0.3% increase for January, bringing year-over-year figures to 2.6%. This suggests that the slowdown in inflation has stalled, which is highly relevant to anyone gauging potential monetary policy moves in the United States. A slower pace of disinflation means there’s less immediate pressure on the Fed to cut interest rates, a scenario that, all else being equal, tends to support the greenback.

On the trade front, Donald’s announcement of new tariffs—25% on imports from Mexico and Canada, and an extra 10% on goods from China—adds another layer of complexity for markets. A trade war poses risks to global supply chains and inflation, making it something we must monitor for its broader effects on currency valuation.

Beth made it clear that the Federal Reserve sees no reason for an immediate rate increase since inflation expectations remain under control. While this doesn’t change the current interest rate environment, it does reinforce the idea that rate cuts will only come once price pressures ease convincingly.

From the Bank of England’s side, David pointed out that inflation risks now come from both higher and lower pressures, rather than clearly leaning in one direction. This suggests policymakers are in no rush to move interest rates in either direction, especially while core inflation dynamics remain uncertain.

Right now, the Pound is moving between 1.2549 and 1.2700, with any attempt to push higher facing resistance at 1.2700. A breakthrough would then need to clear the 200-day Simple Moving Average at 1.2785 before further upside momentum could develop. If prices fail to exceed 1.2600 at the close of a trading day, the next area to watch sits at 1.2549, aligned with the February 5 peak. Below that, the 50-day Simple Moving Average at 1.2457 stands as the next technical marker.

Sterling continues to hold its place as the fourth-most traded currency, accounting for 12% of global transactions, which underscores just how exposed it is to economic data, central bank policies, and trade developments.

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Canada’s fiscal year-to-date budget deficit is $21.72 billion, a decrease from $22.72 billion this time last year. In December, a surplus of $1 billion was reported, compared to a deficit of $4.71 billion in December of the prior year.

This fluctuation in figures is partly due to timing shifts concerning monthly pay periods, particularly after a large deficit in November. The government’s two-month HST (sales tax) holiday, initiated in mid-December, is anticipated to cost nearly $2 billion and will be reflected in future reports.

Overall, Canada’s federal fiscal condition remains stable, providing the new government with some flexibility in fiscal policy decisions.

When looking at the broader picture, the year-to-date budget deficit narrowing to $21.72 billion from the previous year’s $22.72 billion signals modest improvement. The surplus of $1 billion in December starkly contrasts with the $4.71 billion shortfall recorded in the same month of the prior year—largely influenced by timing shifts in government payments. This kind of volatility has been observed in past years and should be noted when assessing short-term trends.

November’s pronounced deficit shaped expectations, but December’s numbers suggest that wasn’t an enduring pattern. In part, this was due to the shifting of monthly pay periods, which can create variances that need to be considered carefully when interpreting financial data. Additionally, December’s temporary gain does not account for the impact of the sales tax holiday introduced late in the month. With nearly $2 billion in deferred revenue from this policy, future reports will reflect a more accurate picture of the government’s fiscal position once delayed receipts are fully accounted for.

The wider context offers a stable foundation. A fiscal environment that isn’t rapidly deteriorating ensures that policy decisions remain flexible rather than reactive. While revenue adjustments, such as the tax holiday, can temporarily distort figures, they do not indicate long-term structural shifts without further supporting trends.

Given these developments, attentiveness to revenue data in the coming months will be essential in determining whether December’s budgetary strength was an anomaly or part of a broader pattern. The timing of fiscal policies often skews short-term readings, but underlying conditions remain the primary determinant. With upcoming reports expected to capture the full effect of recent measures, future assessments will benefit from a more complete data set.

For those tracking fiscal trends, observing how expenditures align with revenue shifts will provide useful insights into the sustainability of recent numbers. If future months show a return to broader deficits beyond what would be expected from seasonal variations, the extent of spending commitments will warrant closer examination.

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A group of policymakers is advocating for a pause in monetary policy changes, but this is not expected to influence the upcoming ECB meeting. The ECB is anticipated to reduce the deposit rate by 25 basis points during this session.

Predictions suggest that inflation projections for 2025 may be adjusted upwards, influenced by potential US tariffs. It is estimated that inflation may take longer than previously thought to meet targets, accounting for the possibility of tariffs.

The expectation is for one more rate cut in April, though risks are increasing that this may shift to June.

There is a growing argument among policymakers for a slowdown in policy adjustments, yet this is unlikely to alter what is coming at the next European Central Bank gathering. As of now, expectations remain firm that interest rates on deposits will be cut by a quarter of a percentage point.

Looking ahead, inflation estimates for 2025 might be revised higher. Part of this reflects concerns around possible new tariffs from the United States, which could affect trade costs and consumer prices in Europe. If those trade restrictions materialise, achieving the central bank’s inflation target may take longer than currently forecast.

At present, there is an assumption that another lowering of interest rates will happen in April. However, the possibility of a delay until June has been growing. If the economic outlook shifts in the next few months, or if inflation remains stubbornly high, then policymakers may opt to take more time before adjusting rates again.

For those in derivative markets, these potential shifts in monetary policy could require adjustments to existing strategies. If rate cuts arrive more slowly than expected, yield curves may steepen unexpectedly, requiring a rethink in positioning. If inflation expectations edge up, that could influence pricing for longer-term contracts.

We will need to watch how expectations evolve around inflation and trade policies. Any fresh developments on tariffs could force a reassessment, not just for inflation projections but also for how aggressively central banks adjust monetary policy. If delays in rate cuts become more likely, both short-term and longer-term market pricing will need to reflect that change. Keeping a close eye on forward guidance from monetary authorities becomes increasingly important.

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Equities have seen a notable increase, with the S&P 500 up 34 points after starting lower. This small recovery follows a significant decline the previous day.

Possible factors include month-end flows or short-covering following a drop in major tech stocks. Nvidia has gained 2% after initially declining by the same percentage in pre-market trading.

Bond and foreign exchange markets have remained stable, with US 2-year yields showing little change since the market opened. The yield curve has dipped by 2-4 basis points today.

The Canadian dollar is experiencing a rebound, but generally, the US dollar is strengthening, which is atypical during a ‘risk on’ scenario. Meanwhile, bitcoin has recovered to $84,000 after dipping below $80,000 earlier in Asia.

A modest recovery in equities suggests that recent selling pressure may have been overextended, at least in the short term. Gains in the S&P 500, initially weighed down at the open, point to either opportunistic buying or the unwinding of negative bets placed during the previous trading session. This is particularly noticeable in stocks that were hit hardest. Nvidia’s movement exemplifies this—early losses were quickly erased as traders stepped in, either covering past positions or seeing value after the pullback.

Bond markets have presented a relatively calm front today, with shorter-duration yields largely unchanged. This lack of movement suggests that concerns about interest rates or economic data have not materially shifted sentiment. The small dip in the yield curve, though present, is within a range that doesn’t indicate a strong directional bias. Forex markets, on the other hand, tell a slightly different story. The US dollar’s firmness, despite renewed bullishness in equities, goes against the typical pattern where risk appetite weakens demand for safer assets. A recovering Canadian dollar does little to disrupt this broader dynamic.

Bitcoin’s rebound stands out, particularly after slipping below a key round number during Asian trading hours. The ability to reclaim lost ground suggests that the downside move may have been more about short-term positioning rather than a deeper shift in outlook. The level of confidence in holding digital assets remains, with traders stepping back in following a period of softness overnight.

For those involved in trading derivative contracts, the way these markets have behaved provides useful cues. The sharp decline in stocks yesterday may not have altered broader sentiment as much as initially feared. When a deep sell-off is followed by buyers returning quickly, it implies that participants haven’t fully lost confidence in holding long positions. That said, with bond yields staying put and the dollar still in demand, it raises questions about how much conviction there truly is behind this bounce. The contrast between stronger equities and a resilient dollar suggests that today’s buying might owe more to short-term adjustments than a broader shift in confidence.

Short-term price swings in individual shares confirm how reactive the market currently is. Nvidia’s reversal shows just how quickly sentiment can shift in a single session, underscoring that positions must be managed with flexibility. Taking on risk too aggressively in one direction carries the potential for being caught on the wrong side of abrupt reversals.

Market conditions remain fluid, and while today’s movement appears constructive for risk appetite, the lack of follow-through outside equities and bitcoin suggests traders should be watching for any signs that this recovery might struggle to extend. Keeping an eye on how other asset classes react moving forward will help in assessing whether this remains a bounce within a wider pullback or if sustained momentum is genuinely building.

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