US: Last week we saw a dollar index that strengthened quite a bit, although it was slightly down at the close of the week, but still managed to reach our target of 104.5 points.
The catalyst was probably the good US employment data. The EURUSD dipped back below 1.0750, but later recovered, and the US market broke through the highs, with the SP500 breaking above 5000 points. The European market, on the other hand, seemed more cautious, and despite being at highs, the DAX40 surpassed 17,000 points.
Today we have started with a positive market in Europe, but with a very timid rise. At the moment the spot Dax40 is once again at the gates of the 17,000 level, but without a clear breakout.
Possibly, the reason why we do not see clear trend movements on the charts, is because this week we will have a good battery of macroeconomic data that will undoubtedly bring more clarity to the stock markets. Starting with tomorrow’s US CPI data. Inflation is expected to come in at 0.3% on a monthly basis, bringing annualised inflation to 2.9%.
Last week we placed special emphasis on the negative PPI data, which is being presented more and more frequently by various economic powers. These data could be the prelude to deflation in the world’s major economies. Later this week we will have a new PPI update from the UK and the US, we will pay special attention to this data and report on it.
Europe: The primary release of the eurozone schedule is the German ZEW survey, which is due tomorrow. ECB, The most dovish member of the Governing Council, Fabio Panetta, supported rate-cut forecasts, stating that the period for monetary easing was “fast approaching.” This is obviously different from the most recent comments made by hawk Isabel Schnabel, who advised against making drastic cuts too soon, as well as from more dovish members like Mario Centeno and Pablo Hernandez de Cos, who continue to advocate caution over dovish direction. Still, Policymakers seem to be in agreement that rates should be kept steady, at least until April’s European wage data.
UK: In the case of the UK, markets seem to be discounting a later rate cut compared to Europe and the US. the reasons for this would be a faster rate of inflation contraction and stable wage growth in the first quarter. In this respect, January jobs data will be announced tomorrow, followed by the CPI report on Wednesday and the GDP data on Thursday.
Geopolitics: On Saturday, February 10, at a political event in South Carolina, Trump implied that the US would not defend its NATO members because it was not spending enough on defence.
NATO Secretary-General Jens Stoltenberg told the media in a written statement that “any suggestion that allies will not defend each other undermines all of our security, including that of the US and puts American and European soldiers at increased risk.”
In response to Trump’s statements, he declared, “I expect that regardless of who wins the presidential election, the US will remain a strong and committed NATO Ally.” Trump is expected to be the Republican nominee in this year’s US presidential election.
“NATO’s motto ‘one for all, all for one’ is a concrete commitment. Undermining the credibility of allied countries means weakening the entire NATO,” he wrote on platform X.
“No election campaign is an excuse for playing with the security of the Alliance,” he added.