In a week marked by shifting economic landscapes, distinct dynamics across the US, eurozone, and UK have captured investor attention. The US Dollar experienced a setback as the S&P Global Services PMI slipped into contraction territory, falling below 50 in February. Meanwhile, Gold continues its upward momentum, setting a new all-time high for the fourth consecutive week. The foreign exchange market also witnessed notable movements, with GBP/USD gaining traction and EUR/USD rebounding in the American session on Friday.
Repo rates in the US have become more attractive, driving expectations of bill appreciation. This trend coincides with a potential shift in monetary policy from the Federal Reserve, which may cut rates more than initially anticipated. This mirrors similar expectations in the UK, contributing to the dynamic interplay of currency values and interest rates.
The PMI data exerted pressure on the US Dollar, which consequently lost strength. This drop in USD value provided an environment for GBP/USD to regain its footing, trading above 1.2650 during the latter half of Friday. Similarly, EUR/USD showed resilience, approaching the 1.0500 mark. However, despite this rebound, the pair remains poised to end the week with little overall change.
Gold's performance remains robust, with XAU/USD maintaining its uptrend. Nonetheless, overbought conditions suggest a potential corrective phase could be on the horizon. Analysts continue to monitor these movements closely, considering them against broader economic indicators and investor sentiment.
In contrast, business activity within the private sector expanded at a slower pace than anticipated in early February. This soft expansion has tempered expectations and added complexity to market forecasts. Meanwhile, investors remain focused on developments surrounding Trump tariff talks as high-tier data releases remain sparse.
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