Daily Analysis 03/03/2025

• GBP/USD Price: The GBP/USD pair attracts fresh buying interest during the European session on Monday, pausing its retracement from levels beyond 1.2700—its highest mark in over two months reached last week. The renewed demand suggests traders see value at lower levels.
• BoE Expectations: Market sentiment indicates that the Bank of England (BoE) may maintain a cautious approach due to persistently strong wage growth. Average Earnings (excluding bonuses) rose to 5.9% in the three months ending December, marking the highest level since April 2024 and adding to inflationary concerns.
• BoE Signals: BoE Governor David Ramsden noted that risks to achieving the 2% inflation target are now more balanced, no longer skewed to the downside. This shift could indicate a more measured approach to rate adjustments in the coming months.
• Fed Signals: Cleveland Fed President Beth Hammack stated that a rate hike is not part of her current outlook, as inflation expectations remain anchored. However, she acknowledged the uncertainty surrounding the economic impact of new US tariffs, which could influence future monetary policy decisions.
• US Data: Traders now turn their attention to upcoming US macroeconomic data at the start of the new month, particularly the ISM Manufacturing PMI. This release could provide fresh momentum for the GBP/USD pair and shape near-term market sentiment.

Closing statement: GBP/USD remains supported by strong UK wage growth and balanced BoE inflation risks, but uncertainties surrounding US economic data and Fed policy could drive further volatility.

• XAU/USD Price: Gold prices (XAU/USD) saw positive traction on Monday, benefiting from a weaker US Dollar (USD). Market expectations that the Federal Reserve (Fed) will cut interest rates again weighed on the greenback, supporting demand for the safe-haven metal.
• US PCE Inflation: The US Bureau of Economic Analysis reported on Friday that the Personal Consumption Expenditures (PCE) Price Index rose 0.3% in January, with the annual rate easing to 2.5% from 2.6% in December. This slight decline in inflation supports market expectations of Fed rate cuts, which is bullish for gold.
• Geopolitical Uncertainty: French President Emmanuel Macron, in an interview with Le Figaro on Sunday, revealed that France and Britain are advocating for a one-month ceasefire in Ukraine. The proposal aims to halt all air and sea conflicts, as well as attacks on energy infrastructure, adding an element of uncertainty that could support gold prices.
• China’s Caixin PMI: China’s Caixin Manufacturing PMI for February came in at 50.8, up from January’s 50.1 and surpassing the market forecast of 50.3. The stronger-than-expected data indicates resilience in China’s economy, which could influence gold demand.
• Crypto Market: The US Dollar suffered additional pressure amid a strong rally in cryptocurrencies, led by Bitcoin (BTC). The surge followed Trump’s directive to the Presidential Working Group to advance a Crypto Strategic Reserve, which will include Bitcoin, Ethereum (ETH), XRP, Solana (SOL), and Cardano (ADA).

Closing statement: Gold remains supported by a weaker USD, Fed rate cut expectations, and geopolitical uncertainties. However, a strong crypto rebound and improving Chinese economic data could limit further gains.

• WTI Oil Price: West Texas Intermediate (WTI) crude oil retreated to around $69.90 per barrel during European trading hours on Monday, erasing some of its recent gains. The market remains cautious amid geopolitical and economic uncertainties.
• US-Ukraine Minerals Deal: Ukrainian President Volodymyr Zelenskyy was expected to sign an agreement granting the US greater access to Ukraine's rare earth minerals. However, the deal was abandoned following a heated exchange between US and Ukrainian leaders in front of the media. The diplomatic fallout could impact energy markets, particularly in the strategic minerals sector.
• US-China Trade Tensions: Oil's upside potential is limited by renewed concerns over weaker global demand as US-China trade tensions escalate. Over the weekend, US President Donald Trump announced an additional 10% tariff on Chinese imports, effective Tuesday, raising fears of reduced economic activity that could dampen oil demand.
• Iraq-Turkey Oil Pipeline: Turkish Energy Minister Alparslan Bayraktar stated on Sunday that Turkey wants the Iraq-Turkey oil pipeline to operate at full capacity once crude shipments resume through the Ceyhan terminal. The development could increase crude flows and ease supply concerns.
• US Oil Market Signals: In the US, oil market signals remain positive as Baker Hughes reported on Friday that the number of active oil rigs rose from 481 to 487. This marks the fourth consecutive weekly increase, suggesting a potential rise in domestic production and, possibly, stronger oil demand.

Closing statement: WTI crude faces downside pressure due to US-China trade tensions and the collapse of the US-Ukraine minerals deal. However, Turkey’s plans to restore full pipeline capacity and the rise in US oil rigs could provide some support. The market remains sensitive to geopolitical and economic developments.

• DAX Price: The DAX closed unchanged at 22,551 on Friday, February 28, following a 1.07% decline on Thursday. Persistent economic uncertainty and trade tensions weighed on investor sentiment, limiting market momentum.
• Trump’s Tariff Threats: US President Donald Trump’s proposed 25% tariffs on EU goods continued to impact German-listed equities, particularly in the auto, pharmaceutical, and semiconductor sectors. The looming tariff risk adds another challenge for EU policymakers as they navigate trade negotiations.
• German Inflation: Germany’s annual inflation rate remained steady at 2.3% in February, reinforcing concerns over persistent price pressures. If inflationary trends persist and demand remains strong, the European Central Bank (ECB) may adopt a more hawkish stance in its upcoming policy meetings.
• Eurozone Inflation: Finalized Eurozone inflation figures, set for release on Monday, March 3, will be closely watched by investors. The region’s annual inflation rate is expected to decline from 2.5% in January to 2.3% in February, which could influence the ECB’s monetary policy stance in its upcoming Thursday decision.
• ISM Manufacturing PMI: On Monday, March 3, the US ISM Manufacturing PMI will provide insights into the demand environment. Economists expect a slight decline from 50.9 in January to 50.8 in February, signaling a potential moderation in economic activity.

Closing statement: The DAX remains under pressure due to trade tensions and inflation concerns. Investors will focus on Eurozone inflation data and the ECB’s monetary policy decision for further direction. Additionally, the ISM Manufacturing PMI could provide clues about broader economic trends.