US PCE and GDP rates could shake the markets
The market’s attention is turning towards the release of the US PCE rates for December and the GDP rates for Q4 25. The release of the Fed’s January meeting minutes, underscored the importance, some Fed policymakers are placing on the US inflationary pressures. At the same time we also get the preliminary GDP rate of the US for Q425 and the rates are expected to slow down, signalling a slower pace of economic growth for the US. It’s understandable that the path of the US economy is critical in the perception of investors and the release could enhance volatility on the markets.
Xlence Research Team opinion
The PCE rates are expected to accelerate slightly on a core level and should they accelerate beyond market expectations, we may see the market being forced to readjust its expectations for the Fed to ease its monetary policy and thus provide some support for the USD. On the flip side, a possible considerable slowdown of the rates could enhance market expectations for the Fed to cut rates and thus the release could weigh on the USD.
Oil prices correct lower yet worries linger on
Oil prices tended to correct lower in today’s European session, yet market worries for a possible US-Iranian conflict linger on. It should be noted that the US is reported to have amassed the largest military force since 2003 while Iran is increasing its defensive positions. A possible US-Iranian conflict could create a shortage in the supply side of the international oil market as the Straits of Hormuz, a key sea passage way for Gulf countries to export their oil could be closed by Iran.
Xlence Research Team opinion
For the time being we view the current correction lower of oil prices as temporary, unless we see the fundamentals changing. Should we see tensions rising further and the prospect of a military action intensifying we may see support building up for oil prices, which could be expressed in Monday’s Asian session.
US stock markets remain stable
US equity markets remained relatively stable over the past 24 hours signaling a relative uncertainty as markets have to navigate amidst conflicting fundamentals. The path of the US economy, the US-Iran tensions, the Fed’s intentions and the oversized investments in AI by US companies, all tend to create a more cautious approach by market participants which could weigh on US equities, should it dominate the markets. Also the release of the US PCE rates for December and preliminary US GDP rates for Q4 25 could affect US equities, later today.
Xlence Research Team opinion
For the time being we expect the sideways motion of US stock markets to be maintained, yet warn of any bearish tendencies, especially should US PCE rates accelerate or fundamental worries prementioned intensify.
Bitcoin seems to stabilise
Bitcoin edged higher yesterday and until today’s European session. The importance of the movement relies not so much on the size but in the direction as it allowed the cryptocurrency’s price action to remain steadily above the $65000 support level. On the other hand the cautious market sentiment is not in the cryptocurrency’s favour given its riskier nature.
Xlence Research Team opinion
Overall, for the time being we maintain a bias for a sideways motion of the pair yet we still have some worries for a possible bearish movement of the cryptocurrency’s price action, given that the market seems to maintain a bearish predisposition for it.
Disclaimer: This information is not considered investment advice or an investment recommendation, but instead a marketing communication.
