Euro in Holding Pattern Ahead of ECB Decision

The euro is barely making a peep on Thursday, ahead of the European Central Bank’s decision later in the day. In the European session, EUR/USD is trading at 1.0894, down 0.04%.

Sunset Market Commentary

On FX, the dollar gains modestly without changing the (neutral) technical set-up. DXY regains the 104 barrier (open 103.81). USD/JPY (150.7) gains marginally, with the February top (150.89) and the cycle multi-year peak levels (151.91/95) again within reach. The euro underperformed, especially this morning, as EUR/USD quickly dropped to test bids just below 1.08. We didn’t see an unequivocal trigger.

Australian Dollar Slides After CPI Stays Steady

The Australian dollar took a hit after Australian inflation was lower than expected. In the North American session, AUD/USD is trading at 0.6493, down 0.78%.

Focus Turns to Inflation

In the US, January Personal Consumption Expenditures (PCE) data is due for release this afternoon. Consensus foresees Core PCE, which is the Fed's preferred measure for underlying inflation, at 0.4% m/m SA, in line with a similar increase in the CPI released earlier. We will also keep an eye out for real consumption volumes, which remained on a solid footing towards the end of 2023.

Bitcoin FOMO is Back

One place that doesn’t seem to be affected by news is Bitcoin. The coin’s price is rising exponentially since the week started; a unit of Bitcoin traded at $64’000 per coin yesterday. That’s around $5K shy of the ATH recorded back in 2021, and the strength of the rally makes us think that there is rising FOMO aiming the $100K mark. Of course, I am not saying that Bitcoin will rally straight to that level, but enthusiasm will clearly be back if Bitcoin successfully clears the $69K offers.

USD/JPY Technical Analysis: Yen Strengthens after Comments from Japanese Officials

This week has raised alarm bells for USD/JPY market participants who are trading the bullish momentum that has been going on since early 2024 (shown in the blue curved lines on the USD/JPY chart):

Canadian Dollar Hits 10-Week Low Ahead of GDP

The Canadian dollar is drifting on Thursday. In the European session, USD/CAD is trading at 1.3585, down 0.06%. A day earlier, the Canadian dollar dropped below 1.3600 for the first time since March 13.

Early Flight to the Moon

In an impressive surge of more than 7.3% in 24 hours, the crypto market capitalisation reached $2.32 trillion. The crypto market hasn’t been worth this much since late 2021. Back then, it took two months to get from current valuations to a peak of $3 trillion. But it’s worth remembering that the rally then started from a higher point of around $1.9 trillion versus the current $1.5 trillion. This means that we’re likely to see some profit-taking before the all-time highs are reached.

Sunset Market Commentary

Today’s EMU CPI/US PCE deflators were supposed to provide a reality check as markets recently adapted positions in line with the Fed and the ECB guidance that central banks will (have to) take their time to assess where inflation is really headed for.

Ripples and Waves

Even once the ripple effects from the pandemic have faded completely, there is no guarantee that economic behaviour reverts to previous norms. Past experience is not worthless, but it would be a mistake to assume a static world where key economic metrics and relationships never change. Identifying shifts in these relationships – especially changes in trends – is one of the key challenges of forecasting.