Yesterday started with the final reading for the Japan Q4 GDP, which as revised higher from -0.1% to 0.1%, which showed that the Japanese economy is not in a recession. This increased the odds of the Bank of Japan tweaking the monetary policy and raising interest rates, keeping the JPY bullish through the day.

So, The Japanese Yen (JPY) closed the day as the strongest among major currencies, while the British Pound (GBP) was the strongest overall. In the GBP/USD pair, the pound weakened, experiencing a decline during the US session. European and US stocks had a mixed performance, with only the Dow 30 index posting gains for the day.

The S&P 500, Nasdaq, and Russell 2000 indices all declined. Meta shares (formerly Facebook) saw a significant drop of more than 4.5% following comments made by former President Trump on CNBC, where he criticized the company, stating that it was “the enemy of the people.”

Today’s Market Expectations

Today we have the GDP and employment reports from Britain. The UK unemployment rate is forecasted to remain unchanged at 3.8%, consistent with the previous figure. However, there are expectations of a slight decline in Average Earnings Ex-Bonus, from 5.8% to 5.7%, while Average Earnings with Bonus are expected to stay steady at 6.2%. Weak results, especially in wage growth, could accelerate expectations for rate cuts by the Bank of England (BoE). Conversely, if the data proves solid, it might not significantly alter expectations in the short term. Currently, the markets are anticipating the BoE to implement its first interest rate cut in August.

The forecasts for US Consumer Price Index (CPI) year-on-year (Y/Y) and month-on-month (M/M) figures indicate expectations for continued inflationary pressures. The predicted Y/Y CPI is 3.1%, the same as the previous year, while the M/M figure is anticipated to be 0.4%, up from 0.3% in the previous year. For Core CPI, which excludes volatile food and energy prices, the Y/Y forecast is 3.7%, down from 3.9% the previous year, with an expected M/M figure of 0.3%, down from 0.4%.

Given the recent string of negative US economic statistics, particularly in the employment market, the release of CPI data may not receive as much attention or have a significant impact if there’s a hawkish reaction to a beat. This suggests that if the CPI data exceeds expectations and triggers a hawkish response from policymakers, it may be overshadowed by broader concerns about the economy. Conversely, if the CPI data fails to meet expectations, it could further bolster expectations for a rate cut by the Federal Reserve in May.

Yesterday markets were quiet, except for the cryptocurrencies which once again surged higher. Gold and forex pairs were trading in small ranges, as we await the US CPI inflation later today. We opened four trading signals, but only had two closing short on USD/JPY, both of which hit the take profit targets.

Gold Consolidates Around $2,180

The bullish trend has accelerated over the last two weeks, owing to market expectations of potential interest rate reduction by the Fed. This feeling was backed by mixed results from the Non-Farm Payrolls (NFP) report released on Friday, which added to market volatility. Following the announcement of the US NFP statistics, which showed mixed results, gold prices suffered another substantial increase. In response to the data, 10-year US bond yields fell to 4.04%, adding to the optimistic attitude towards gold. On Friday, gold prices reached a fresh all-time high of more than $2,180 per ounce. This high spike demonstrates the robust demand for gold and investor confidence in its role as a hedge against economic risks and possible future interest rates.

XAU/USD – 60 minute chart

Silver Remains Supported by MAs

XAG’s price found resistance at moving averages on the daily chart earlier this year, stopping it from exceeding $23.50. However, last week’s gain lifted the price of silver over the daily chart’s moving averages, paving the way for $24. That milestone has been broken, and Spot Silver is now on the verge of reaching $25.

XAG/USD – 240 minute chart

Cryptocurrency Update

New Record High Above $72,000 in Bitcoin

BTC experienced a volatile day yesterday, following a new all-time high the day before. Finding support near the 50-period Simple Moving Average (SMA) suggests a potential reversal in the short term. Your decision to initiate a buy signal at the support level appears to have been well-timed, considering the subsequent price rebound. However, failure to cross the $70,000 threshold indicates market resistance, and in recent sessions, BTC retreated, falling below the 50 SMA (yellow). But buyers returned and yesterday they pushed the price above $72,000.

BTC/USD – 60 minute chart

Ethereum Finally Moves Above $4,000

ETH continued to increase last week, despite a bearish reversal after reaching the $4,000 level, and found support above the 50-period Simple Moving Average (SMA) on the H4 chart. This support level is likely to have drawn buyers, resulting in a price recovery. ETH touched new year highs of $3,900, showing continued market optimism. Traders will most likely keep a close eye on price activity to see if ETH can maintain its upward trend and potentially reach $5,000 after breaking the $4,000 mark in the near future.

ETH/USD – 240 minute chart