Forex Signals Brief Feb 14: Eurozone GDP, US Retail Sales Close the Week
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Skerdian Meta•Friday, February 14, 2025•4 min read
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Given the news of tariff announcements and hotter-than-expected PPI data, one might have expected the US dollar to strengthen—but instead, it weakened. The headline PPI report appeared strong, but a closer look at the components suggested that core PCE, the Fed’s preferred inflation metric, is likely to decline. Markets interpreted this as a dovish signal, causing Treasury yields to give up all of yesterday’s CPI-driven gains.
Additionally, the reciprocal tariff announcement had been anticipated for a week, reducing its shock effect. With a six-week delay in implementation, markets are now betting that these tariffs will either be negotiated, mitigated, or not enforced as strictly as initially feared.
US Stock Market Gains Despite Trade Concerns
- Dow Jones: +355 points (+0.8%) at 44,711
- S&P 500: +63 points (+1%) at 6,115, just 3 points shy of its record close
- NASDAQ: +296 points (+1.5%) at 19,945
- Russell 2000 (Small-Caps): +26 points (+1.17%) at 2,282
Forex and Commodities Reactions
- USD/JPY erased 1.5 cents, reversing all of yesterday’s gain.
- USD/CAD dropped more than 1 cent, dipping below levels seen before Trump’s 25% tariff announcement on Canada and Mexico.
- DAX 40 climbed another 1%, continuing its steady rise.
- UK FTSE 100 fell 1.5% following weak UK GDP data.
- Gold surged rapidly toward the $3,000 mark, with buyers stepping in aggressively, pushing prices near Tuesday’s highs.
Conclusion
Markets have largely shrugged off inflation fears and trade war concerns, instead focusing on softer inflation indicators and potential tariff adjustments. Equities remain strong, with gold on track to break $3,000 and risk sentiment keeping the US dollar under pressure.
Today’s Market Expectations
Swiss CPI Inflation for January
Switzerland’s CPI is projected to slow further, with year-over-year inflation expected at 0.4%, down from 0.6%, while the monthly figure is forecasted at -0.1%. The market is pricing in a 92% probability of a 25 basis point rate cut in March and a total of 40 bps by year-end, effectively bringing the policy rate back to 0%. A strong Swiss Franc has contributed to disinflation, prompting the Swiss National Bank to consider interventions. SNB Chairman Schlegel has reiterated that while they are reluctant to return to negative rates, they will do so if necessary.
US PPI Inflation Comes After Yesterday’s Hot CPI
In the U.S., PPI data is expected to show a mixed picture. Headline producer prices are forecasted to rise 3.2% year-over-year, slightly below the previous 3.3%, while the monthly figure is expected to increase to 0.3% from 0.2%. Core PPI is projected at 3.3% annually, easing from 3.5%, with a monthly gain of 0.3% from 0.0% previously. Given recent inflation surprises, markets will likely react based on trends established in the previous day’s CPI report.
US Unemployment Claims
The U.S. jobless claims report remains a key labor market indicator. Initial claims have fluctuated between 200K-260K since 2022, while continuing claims remain elevated. This week’s initial claims are expected at 216K, slightly lower than the prior 219K. However, there is no consensus on continuing claims, which previously rose to 1.886 million from 1.850 million. The labor market remains resilient but shows signs of softening, reinforcing expectations for the Federal Reserve’s next policy moves.
Traders are keeping a close eye on key technical levels and macroeconomic developments in order to predict the next move in the financial markets. Yesterday, gold resumed its upward momentum after falling nearly $80, but it remained below $2,900. The movements of forex pairs and stock markets highlight the mixed sentiment in financial markets. Gold continues to rise as investors seek a safe haven amid uncertainty, while US stock markets struggled with resistance and volatility.
Gold Buyers Are Relentless
Gold experienced a sharp pullback on Tuesday but found support at the 50-day SMA (yellow) on the H4 chart, rebounding above the 20-day SMA (gray) on Wednesday. However, it failed to hold above $2,900 after hitting a new high of $2,942 during the Asian session, retreating in the US session due to improved risk sentiment and profit-taking. Despite this, support at the 20-day SMA has held firm, generating a fresh buy signal. On Wednesday, gold reversed higher, climbing above the $2,900 level again. XAU/USD – H4 Chart
EUR/USD Fail to Hold Above the 50 Daily SMA Again
EUR/USD has been in a consistent downtrend since October, dropping 10 cents despite occasional rebounds, such as January’s brief surge above 1.05 and…
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