Morning Market Review for 05.02.2025

EUR/USD

The euro has been mixed in the EUR/USD pair during the Asian session, consolidating near 1.0380. The currency has been actively increasing in value over the past two days, but has now only reached Friday's levels, which is due to a sharp "bearish" gap at the opening of trading this week. Investors are focusing on the January block of macroeconomic statistics on business activity in the eurozone from S&P Global today: forecasts suggest that the PMI in the German services sector will remain at the previous level of 52.5 points, and the Services PMI for the eurozone as a whole may be fixed at 51.4 points. In Italy, a slight decrease in the indicator is expected from 50.7 points to 50.5 points. At 12:00 (GMT+2), December data on producer price indices will be published: analysts expect that the monthly growth rate of the indicator in the eurozone will slow sharply from 1.6% to 0.4%, and the annual figure will rise from –1.2% to –0.1%. Today, at 17:00 (GMT+2), the US market will receive January business activity statistics: the S&P Global index in the services sector is expected to remain at 52.8 points, while the similar indicator from the Institute for Supply Management (ISM) may be adjusted from 54.1 points to 54.3 points. Also, in focus at 15:15 (GMT+2) will be the Automatic Data Processing (ADP) report on private sector employment, which is expected to rise from 122.0 thousand to 150.0 thousand, ahead of the final labor market statistics on Friday, February 7. Nonfarm Payrolls is expected to decline from 256.0 thousand to 170.0 thousand, and Average Hourly Earnings are expected to decline from 3.9% to 3.8% year-on-year, while the Unemployment Rate is expected to remain at 4.1%.

GBP/USD

The British pound is trading with near-zero dynamics in the GBP/USD pair during the morning session, consolidating near 1.2470 and local highs from January 28. Market activity is gradually easing towards the middle of the week as the situation around higher import duties imposed by US President Donald Trump stabilises. Tariffs of 25.0% on goods from Mexico and Canada went into effect on February 1. Later, however, the White House agreed to delay the implementation of these measures for one month, as Canada promised to strengthen the border with the United States, and Mexico agreed to a project to send an additional 10,000 troops to protect the border from illegal migration and the transportation of prohibited substances. Instead, Trump's focus has shifted to EU goods. At the same time, European leaders declared their readiness to defend their trade interests and give a symmetrical response to American tariffs. Investors are currently focusing on business activity statistics in the US and UK services sectors, with forecasts not suggesting any changes in the figures from previous values. The UK S&P Global Services PMI is expected to come in at 51.2 points, while the US one is expected to come in at 52.8 points. At 15:15 (GMT+2), the market will receive a report from Automatic Data Processing (ADP) on the level of employment in the private sector: forecasts suggest a moderate increase in employment from 122.0 thousand to 150.0 thousand, which could slightly strengthen the position of the American currency. Tomorrow, investors will be assessing the Bank of England's interest rate decision, which will be announced at 14:00 (GMT+2). Markets are almost certain of a 25-basis-point cut to 4.50%, given progress in easing inflationary pressures and the speed of the UK economy's slowdown.

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Publication date:

05 February 2025 - 13:15 (GMT)

The NZD/USD pair is showing minor gains during the Asian session, extending the "bullish" momentum of the last two trading days. The instrument is testing 0.5660 for a breakout, while traders are awaiting the publication of January statistics on the US labor market. They are also closely monitoring the developments around increased import duties from the United States. Tariffs of 25.0% on goods from Mexico and Canada went into effect on February 1. Later, however, the White House agreed to delay the implementation of the measures for one month as a result of preliminary agreements. However, products from China are subject to 10.0% taxes in addition to the existing tariffs. Investors are focusing on the New Zealand labour market statistics for the fourth quarter of 2024 today: the Unemployment Rate rose sharply from 4.8% to 5.1%, the Employment Change fell by 0.1% after –0.5% in the previous period, while analysts expected –0.2%, and the Labour Cost Index slowed from 3.4% to 2.9% in annual terms with a forecast of 3.0% and remained at the same level of 0.6% in the quarterly terms. Some pressure on the New Zealand dollar was exerted by macroeconomic data from China, where the Caixin Services PMI fell from 52.2 points to 51.0 points in January, compared to preliminary estimates of 52.3 points.

The US dollar is showing a moderate decline in the USD/JPY pair during Asian trading, testing 153.40 for a breakdown and updating local lows from December 13. The instrument did not show active growth at the beginning of the week, as was observed in other currency pairs, in response to the introduction by US President Donald Trump of increased import duties on goods from China, Mexico and Canada. This suggests that markets still view the yen as a "safe haven" asset, especially as the Bank of Japan's monetary policy makes the currency more attractive. The yen is receiving additional support from macroeconomic statistics: the Jibun Bank Manufacturing PMI in January from S&P Global was adjusted from 52.7 points to 53.0 points. Analysts also drew attention to the significant increase in wages in December from 3.9% to 4.8%, with a forecast of 3.8%. The indexation of wages will affect the dynamics of inflation, and, consequently, will become another argument in favor of further tightening of monetary policy by the Japanese regulator. Today, at 15:15 (GMT+2), investors will pay attention to the report from Automatic Data Processing (ADP) on the level of employment in the US private sector: according to preliminary estimates, the figure will be adjusted from 122.0 thousand to 150.0 thousand. The statistics precede the final figures, which will be released on Friday, at 15:30 (GMT+2): markets forecast a decline in the Nonfarm Payrolls from 256.0 thousand to 170.0 thousand, a slowdown in Average Hourly Earnings from 3.9% to 3.8% year-on-year, and a maintenance of the Unemployment Rate at 4.1%.

During the Asian session, the XAU/USD pair is developing an upward trend in the short term, testing 2850.00 for a breakout and receiving support from increased demand for safe assets. Investors were reacting to US President Donald Trump's decision to impose new import duties on goods from Canada and Mexico in the amount of 25.0% from February 1. Later, however, the White House agreed to delay the implementation of these measures for one month, as Canada promised to strengthen the border with the United States, and Mexico agreed to a project to send an additional 10,000 troops to protect the border from illegal migration and the transportation of prohibited substances. In addition, 10.0% tariffs were imposed on imports from China, after which official Beijing introduced mirror measures on the import of coal, liquefied natural gas, agricultural machinery and some cars from the United States. Analysts expect that Donald Trump and Chinese President Xi Jinping may soon hold talks that could result in tariffs being eased or in a new phase of the "trade war" with disruption of supply chains that could impact household budgets around the world. At 15:15 (GMT+2), the market will receive a report from Automatic Data Processing (ADP) on the level of employment in the private sector: forecasts suggest a moderate increase in employment from 122.0 thousand to 150.0 thousand, which could slightly strengthen the position of the American currency. On Friday, at 15:30 (GMT+2), January data on the labor market will be presented: Nonfarm Payrolls is expected to decline from 256.0 thousand to 170.0 thousand, and Average Hourly Earnings are expected to decline from 3.9% to 3.8% year-on-year, while the Unemployment Rate is expected to remain at 4.1%.