Asset Summary – Wednesday, 12 March
GBPUSD is showing potential for continued strength, as dollar weakness stemming from US economic anxieties and tariff implications provides upward pressure. Simultaneously, expectations of sustained high interest rates in the UK, driven by reduced anticipation of Bank of England rate cuts, further bolsters the pound. Market participants will be carefully analyzing forthcoming UK GDP data and forecasts from the Office for Budget Responsibility, as these economic indicators could either solidify or challenge the current positive outlook for the currency pair. A positive surprise in economic performance could drive GBPUSD higher, while disappointing figures could lead to a correction.
EURUSD is exhibiting bullish momentum as the euro benefits from increased government spending initiatives across major Eurozone economies, particularly Germany, France, and Italy, signaling a commitment to economic growth. The European Central Bank’s indication of potentially nearing the end of its loosening cycle further strengthens the euro’s position. Meanwhile, concerns surrounding economic growth in the United States are weighing on the dollar, exacerbating the upward pressure on the EURUSD exchange rate. This combination of factors suggests a continuation of the euro’s upward trend against the dollar.
DOW JONES faces a potentially volatile trading day as investors react to upcoming consumer inflation data and its implications for Federal Reserve policy. While stock futures indicate a possible rebound, recent declines across major indexes, including a significant drop in the Dow itself, suggest underlying weakness. Concerns about tariffs, particularly President Trump’s decision to increase tariffs on Canadian steel and aluminum, add further pressure. Losses in major tech companies and across all S&P 500 sectors highlight broad market unease, although Ontario’s decision to pause its electricity surcharge offers a small glimmer of hope. The Dow’s performance will likely hinge on the inflation data and the market’s assessment of the Fed’s response in light of the ongoing trade tensions.
FTSE 100 is facing downward pressure as global trade tensions escalate, particularly between the U.S. and Canada, triggering investor anxiety. The imposition and threat of tariffs raise concerns about the potential impact on international trade and economic growth, leading to market declines. While positive corporate news, such as Persimmon’s strong results and expansion plans, offers some support, broader economic worries surrounding slowing retail sales growth are likely to continue to weigh on the index’s performance.
GOLD is finding support from its safe-haven status as global trade uncertainties and recession fears persist, stemming from potential US tariff policies. A weaker US dollar also contributes to its positive performance. However, the easing of geopolitical tensions, specifically regarding US-Ukraine-Russia relations, could temper further gains. Looking ahead, the upcoming US CPI data will be crucial, as it will influence the Federal Reserve’s interest rate decisions and, consequently, the direction of gold prices.