Asset Summary – Tuesday, 11 March
GBPUSD is exhibiting positive momentum, driven by a confluence of factors favoring the pound. The dollar’s weakness, fueled by US economic uncertainty and tariff implications, is providing a tailwind. Furthermore, the pound is benefiting from expectations of sustained high UK interest rates, as markets anticipate less aggressive rate cuts by the Bank of England than previously projected. Upcoming UK GDP data and the Office for Budget Responsibility’s economic forecasts will be closely monitored for further clues about the UK’s economic trajectory, and may amplify or dampen the current bullish sentiment surrounding the GBPUSD pair.
EURUSD is exhibiting bullish momentum driven by several factors. Increased government spending commitments in major Eurozone economies, particularly Germany, are fueling expectations of stronger economic growth within the bloc. This fiscal stimulus, coupled with potential joint EU funding initiatives, reinforces the euro’s appeal. The European Central Bank’s recent policy signals, suggesting a potential slowdown in monetary easing, further support the currency. Simultaneously, growing economic anxieties in the United States are weighing on the US dollar, amplifying the upward pressure on the EURUSD exchange rate.
DOW JONES experienced significant volatility, ultimately closing down 200 points. Initial losses were tempered by news regarding a potential easing of trade tensions between the US and Canada, specifically related to steel and aluminum tariffs. However, the negative impact of declining airline stocks, particularly Delta’s reduced earnings outlook stemming from weakened US demand, weighed heavily on the index. The performance of travel-related stocks such as Disney and Airbnb further contributed to the downward pressure. Investors are now awaiting the upcoming CPI report, which is expected to provide further guidance for market direction.
FTSE 100 experienced a significant decline, falling to its lowest point in months, primarily driven by escalating global trade war anxieties. New tariffs imposed by the U.S. on Canadian steel and aluminum triggered market uncertainty and negatively impacted investor sentiment. While positive news from Persimmon, regarding increased profits and expansion plans, offered some support, it was insufficient to offset the broader market concerns. Furthermore, slower retail sales growth in February added to the negative pressure, contributing to the overall decline in the index’s value.
GOLD’s price experienced a significant surge, reaching approximately $2,900 per ounce, a movement largely attributed to a weakening U.S. dollar and an increase in safe-haven demand. Heightened apprehension regarding the U.S. economic future, fueled by escalating trade disputes and presidential comments hinting at a possible economic slowdown, bolstered gold’s appeal as a secure investment. The complex interplay of tariff impositions and retaliatory measures between the U.S., Canada, and China further intensified economic uncertainty. While the Federal Reserve acknowledged these uncertainties, their cautious approach to interest rate cuts adds another layer of complexity. Market participants are keenly awaiting upcoming U.S. inflation data, as this information could significantly impact the Federal Reserve’s future monetary policy decisions, further influencing gold’s price trajectory.