Morning Market Review for 11.03.2025

EUR/USD

The European currency is relatively stable in the EUR/USD pair during trading in the Asian session. The instrument is consolidating near local highs, while market participants are waiting for new drivers to emerge. Tomorrow, at 14:30 (GMT+2), investors will pay attention to the US inflation report for February: analysts expect a further slowdown in the Consumer Price Index from 3.0% to 2.9% year-on-year and from 0.5% to 0.3% month-on-month, while the Core CPI excluding Food and Energy may decline from 3.3% to 3.2% and from 0.4% to 0.3%, respectively, which will favorably affect expectations regarding further interest rate cuts by the US Federal Reserve. However, markets are somewhat concerned about the possibility of inflation accelerating as the trade wars develop. In particular, this month, the introduction of new tariffs from the administration of President Donald Trump against the EU, as well as on all imports of steel and aluminum, cannot be ruled out. The single currency received some support the day before from January data on Industrial Production in Germany, which showed a 2.0% increase in monthly terms after –1.5% in the previous month, with a forecast of 1.5%, while in annual terms the negative dynamics slowed from –2.2% to –1.6%. In addition, the euro is strengthening against the backdrop of the European Commission's large-scale plans to re-arm the EU, as well as after the German authorities announced the creation of a special fund in the amount of 500.0 billion euros, the funds from which should be used for the modernization of infrastructure and investments in the defense sector.

GBP/USD

The British pound is losing value in the GBP/USD pair during the Asian session, consolidating near 1.2870. Market activity remains subdued as traders await new drivers of movement. Tomorrow, at 14:30 (GMT+2), investors will be assessing macroeconomic statistics on inflation: the Core Consumer Price Index in February is expected to slow from 3.3% to 3.2% year-on-year and from 0.4% to 0.3% month-on-month, while the CPI is expected to decline from 3.0% to 2.9% and from 0.5% to 0.3%, respectively. If the actual dynamics turn out to be close to the forecasts, the American currency is unlikely to react significantly to this data, but investors are closely monitoring the prospects for a reduction in the US Federal Reserve interest rate. Markets are not ruling out the possibility of three 25-basis-point adjustments to the indicator now, while last week only two adjustments were expected. Meanwhile, some pressure on the pound's position is being exerted by data on the dynamics of Retail Sales in the UK: the February figure from the British Retail Consortium (BRC) slowed sharply from 2.5% to 0.9%, while analysts had expected 2.4%. On Friday, at 09:00 (GMT+2), January statistics on Gross Domestic Product and Industrial Production will be presented. Forecasts suggest that the monthly growth rate of the UK economy will slow from 0.4% to 0.1%, while Industrial Production will contract by 0.1% after increasing by 0.5% in the previous month, and in annual terms it may increase from –1.9% to –0.8%.

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Publication date:

11 March 2025 - 14:05 (GMT)

The Australian dollar is showing a moderate decline in the AUD/USD pair during the Asian session, developing an uncertain "bearish" trend that has been trying to form since the end of last week. The instrument is testing 0.6260 for a breakdown in anticipation of the emergence of new drivers. Tomorrow, at 14:30 (GMT+2), the US consumer inflation report will be published: analysts expect a further slowdown in the Consumer Price Index from 3.0% to 2.9% year-on-year and from 0.5% to 0.3% month-on-month, while the Core CPI excluding Food and Energy may adjust from 3.3% to 3.2% and from 0.4% to 0.3%, respectively. This could have a positive impact on expectations for further reduction in borrowing costs by the US Federal Reserve. At the same time, markets are somewhat concerned about the possible acceleration of price growth in the future as the "trade wars" develop. In particular, new tariffs from the White House administration, previously announced, cannot be ruled out this month. Thus, duties on goods from the EU, as well as on all imports of steel and aluminum into the US may come into effect. The macroeconomic statistics from Australia published the day before do not provide any noticeable support to the instrument: Westpac Consumer Confidence in March increased from 0.1% to 4.0%, the National Australia Bank Business Conditions Index in February increased from 3.0 points to 4.0 points, and the National Australia Bank Business Confidence indicator fell from 5.0 points (revised from 4.0 points) to –1.0 points.

The US dollar is showing an uncertain decline in the USD/JPY pair in Asian trading, developing a stable downward trend formed in the short-term and medium-term. The instrument is testing 146.90 for a breakdown, having managed to update the local lows of October 4, 2024. Pressure on the position of the American currency is being exerted by concerns about the state of the national economy and the possible acceleration of inflation in the country as the global trade situation worsens. This week, the United States imposed tariffs on imports from Canada and Mexico, and also increased tariffs on a range of goods from China. By the end of March, additional trade restrictions against the EU are likely to be introduced, as well as global ones on the import of steel and aluminum. In addition, the US labor market report published on Friday put some pressure on the dollar: thus, Nonfarm Payrolls in February increased from 125.0 thousand to 151.0 thousand, while analysts expected 160.0 thousand, Average Hourly Earnings in annual terms accelerated from 3.9% to 4.0% with a forecast of 4.1%, and in monthly terms — slowed from 0.4% to 0.3%, and the Unemployment Rate adjusted from 4.0% to 4.1%. Meanwhile, statistics from Japan are currently preventing the yen from growing more actively: the data on Gross Domestic Product (GDP) showed an annual growth rate of only 2.2% in the fourth quarter of 2024, while the preliminary estimate published in February of this year suggested an increase of 2.8%, and in quarterly terms the indicator was also adjusted from 0.7% to 0.6%. In addition, Overall Household Spending slowed to 0.8% in January from 2.7%, contrary to the forecast of 3.6%.

The XAU/USD pair is showing weak growth during the morning session, recovering from a moderate decline the day before. The instrument is once again preparing to test 2900.00 for a breakout, while the US dollar's positions remain vulnerable amid concerns about the state and prospects of the national economy. Investors are also concerned about a possible pickup in inflation as President Donald Trump imposes new tariffs on goods from the EU, for example, as well as on steel and aluminum imports, causing market participants to revise their forecasts for the prospects for the US Federal Reserve to lower borrowing costs in 2025. Market quotes on Friday showed investors were already counting on three 25-basis-point rate adjustments, up from just two earlier last week. The report on the US labor market also did not provide significant support to the dollar: thus, Nonfarm Payrolls in February increased from 125.0 thousand to 151.0 thousand, while analysts expected 160.0 thousand, Average Hourly Earnings in annual terms accelerated from 3.9% to 4.0% with a forecast of 4.1%, and in monthly terms — slowed from 0.4% to 0.3%, and the Unemployment Rate adjusted from 4.0% to 4.1%. Tomorrow, at 14:30 (GMT+2), investors will be assessing macroeconomic statistics on inflation: the Core Consumer Price Index in February is expected to slow from 3.3% to 3.2% year-on-year and from 0.4% to 0.3% month-on-month, while the CPI is expected to decline from 3.0% to 2.9% and from 0.5% to 0.3%, respectively.