Morning Market Review for 27.02.2025

EUR/USD

The European currency shows a moderate decline in the EUR/USD pair during the Asian session, developing the “bearish” impulse formed yesterday, when quotes managed to update local highs from January 27: the instrument is testing the 1.0465 mark for a breakdown, while traders are waiting for new drivers of movement. Among other things, investors will focus on the February report on the level of business sentiment in the economy today at 12:00 (GMT+2): the sentiment index in the eurozone economy is likely to increase from 95.2 points to 96.0 points, the sentiment indicator in the services sector – from 6.6 points to 6.8 points, and the level of consumer confidence may be fixed at −13.6 points. In addition, February inflation data from Spain will be released today: forecasts suggest a slowdown in the harmonized index of consumer prices from 2.9% to 2.8% YoY and a noticeable increase of 0.4% after −0.1% MoM. So far, the single currency has been pressured by the consumer confidence index in Germany published yesterday by the analytical portal Gfk Group: in March, the indicator fell from −22.4 points to −24.7 points, while analysts expected −21.0 points. Today at 15:30 (GMT+2), US statistics on the dynamics of gross domestic product (GDP) in the fourth quarter will be published, which is expected to remain at 2.3%, as well as data on durable goods orders: according to forecasts, in January the indicator will be adjusted from -2.2% to 2.0%, and excluding defense and aviation orders – from 0.4% to 0.3%. Investors will also pay attention to the number of initial jobless claims for the week ending February 21, which could accelerate from 219.0 thousand to 221.0 thousand, and the number of repeat applications from citizens on February 14 could remain at 1.869 million.

GBP/USD

The British pound is trading slightly lower in the GBP/USD pair during the morning session, correcting after a predominantly “bullish” trend at the beginning of the week, as a result of which quotes managed to update local highs from December 18: the instrument is testing the 1.2655 mark for a breakdown, while investors are awaiting the publication of macroeconomic statistics. Investors will focus on US data on gross domestic product (GDP) for the fourth quarter of 2024, as well as January data on durable goods orders, at 15:30 (GMT+2). It is expected that the growth rate of the US economy will not change from the previous value of 2.3%, and the dynamics of capital goods orders may add 2.0% after −2.2% a month earlier, while the indicator excluding defense and aviation orders may adjust from 0.4% to 0.3%. On Friday at 15:30 (GMT+2), the market will receive key data on consumer inflation for the US Fed – the price index of personal consumption expenditures: analysts expect a slowdown in the core indicator in January from 2.8% to 2.6% YoY, and MoM, a correction is expected from 0.2% to 0.3%, while the broader index may fall from 2.6% to 2.3% and remain at the previous level of 0.3%, respectively. In addition, investors continue to evaluate the data on retail sales from the UK, presented at the end of last week: sales volumes in January added 1.7% after −0.6% in the previous month, while analysts expected 0.3%, and the indicator slowed from 2.8% to 1.0% YoY with expectations of 0.6%.

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Publication date:

27 February 2025 - 14:26 (GMT)

The Australian dollar shows a moderate decline in the AUD/USD pair during the Asian session, developing a stable downtrend in the ultra-short-term and short-term perspectives: the instrument is testing the 0.6285 mark for a breakdown, updating the local lows of February 13, while the positions of the American currency are strengthening against the background of technical factors and the renewed growth in the yield of short-term American bonds. Meanwhile, the macroeconomic background remains mostly weak. Today, investors are focused on data on the dynamics of private capital expenditure in Australia for the fourth quarter of 2024: the indicator showed a decrease of 0.2% after an increase of 1.6% last month, which turned out to be significantly worse than the forecast of 0.8%. Yesterday, January data on the consumer price index (CPI) were published, which was fixed at 2.5%, while analysts expected 2.6%. This could put pressure on the Reserve Bank of Australia (RBA) to further reduce borrowing costs, while higher consumer prices could force the regulator to take a wait-and-see approach for a longer period. The dynamics of completed housing in the fourth quarter slowed sharply from 2.0% to 0.5%, compared with expectations of 1.0%. Today at 15:30 (GMT+2), US investors will turn their attention to statistics on gross domestic product (GDP) in the fourth quarter, which is expected to remain at 2.3%, as well as data on durable goods orders, which are forecast to correct from −2.2% to 2.0% in January, and from 0.4% to 0.3% excluding defense and aviation orders.

The US dollar is showing weak growth in the USD/JPY pair during trading in Asia, testing the 149.15 mark for a breakout: the American currency is supported by technical factors, as well as the renewed increase in the yield of US bonds, despite the fact that the macroeconomic background from the US remains weak. Recall that the S&P Global Services PMI fell from 52.9 points to 49.7 points in February with a forecast of 53.0 points, and the Manufacturing PMI strengthened from 51.2 points to 51.6 points, while analysts expected 51.5 points. Investors also paid attention to the significant decrease in the consumer confidence index from the University of Michigan in January from 67.8 points to 64.7 points. Meanwhile, the yen's positions remain quite strong, as traders expect that the Bank of Japan will be able to continue gradually tightening monetary policy in the near future. Inflation data released late last week supported these expectations, with the national CPI accelerating to 4.0% from 3.6% in January, while the CPI excluding fresh food rose to 3.2% from 3.0%, compared with preliminary estimates of 3.1%. Tomorrow at 01:30 (GMT+2), Japan will release inflation statistics for the Tokyo region, with the CPI excluding fresh food forecast to fall to 2.3% from 2.5% in February. Also at 01:50 (GMT+2), retail sales data for January will be released, with figures set to rise 4.0% after rising 3.7% in December. In addition, statistics on industrial production will be released to the market: a 1.2% decline in the annual indicator is expected after an increase of 1.6% the month before, and MoM, an increase in the negative dynamics from −0.2% to −1.0%.

The XAU/USD pair is declining during the Asian session, developing the downward dynamics that have prevailed this week and again testing the 2900.00 mark for a breakdown: gold quotes are under pressure amid the strengthening of the American currency, which is regaining lost ground. The macroeconomic background from the United States remains mixed: yesterday, statistics reflected a decrease in new home sales in January by 10.5% after they showed an increase of 8.1% in December 2024, and in absolute terms, the dynamics slowed down from 0.734 million to 0.657 million, while the markets expected 0.680 million. In turn, the mortgage lending index from the Mortgage Bankers Association (MBA) for the week of February 21 was −1.2% after −6.6% in the previous period. Investors will be focused on the US data on gross domestic product (GDP) for the fourth quarter of 2024 and January data on durable goods orders at 15:30 (GMT+2). The US economic growth rate is expected to remain unchanged at 2.3%, while capital goods orders may add 2.0% after −2.2% a month earlier, while the indicator excluding defense and aviation orders may adjust from 0.4% to 0.3%. In addition, statistics on the number of applications for unemployment benefits will be presented: for the week ending February 21, the number of initial jobless claims will likely increase from 219.0 thousand to 221.0 thousand, while repeat applications (for the week ending February 14) are expected to be around the previous mark of 1.869 million.