Daily Analysis 06/03/2025

• GBP/USD Price: The GBP/USD pair picked up momentum early Thursday, rising back above the 1.2900 mark. The move is supported by renewed US Dollar weakness amid economic slowdown concerns tied to Trump’s tariff policies.
• US Tariffs: The Greenback remains under pressure as fears grow over the impact of escalating US tariffs on economic growth. Investor sentiment favors currencies like the Pound, which has benefited from relative stability in UK monetary policy.
• BoE Governor: Bank of England (BoE) Governor Andrew Bailey called on the US to address global economic issues through diplomatic dialogue rather than import tariffs. His remarks reflect the broader concerns about trade disruptions affecting global financial markets.
• BoE Policymaker: BoE policymaker Megan Greene reiterated the importance of a gradual and measured approach to easing monetary policy. This stance suggests that the BoE is in no rush to aggressively cut interest rates, which could provide continued support for the British Pound.
• NFP in Focus: Markets are now looking ahead to Friday’s US Nonfarm Payrolls (NFP) report. Expectations point to a moderate recovery in job growth, with forecasts predicting 160K new jobs in February, up from 143K in January. A strong report could provide temporary relief for the US Dollar.

Closing statement: The GBP/USD pair remains supported by a weak US Dollar and cautious BoE policy. However, Friday’s NFP report could introduce volatility, with stronger job numbers potentially limiting the Pound’s upside.

• XAU/USD Price: Gold prices struggled for a clear direction during the European session on Thursday, extending their sideways movement for the second consecutive day. Investors remain cautious ahead of key US economic data releases.
• Tariff Exemption: On Wednesday, the White House announced a one-month exemption from newly imposed 25% tariffs on vehicles from Mexico and Canada. While this eased short-term trade concerns, broader tensions persist, supporting gold as a safe-haven asset.
• Retaliatory Tariffs: Canada responded to US tariffs with countermeasures on over $100 billion worth of American goods. Meanwhile, China imposed up to 15% tariffs on key US agricultural exports, further fueling global trade uncertainties.
• US Labor Data: The ADP Employment Change report for February showed only 77K new jobs, significantly below the 140K forecast and far weaker than January’s 186K. This reinforced concerns about a slowing US labor market, increasing gold’s attractiveness as a hedge.
• US Data: Traders are now eyeing the Weekly Initial Jobless Claims data from the US for near-term direction. However, the bigger event remains Friday’s Nonfarm Payrolls (NFP) report, which could significantly influence market sentiment and gold prices.

Closing statement: Gold’s sideways movement reflects market uncertainty ahead of key US economic data. Any further signs of labor market weakness could push XAU/USD higher, while a strong NFP report might cap gains.

• WTI Oil Price: West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $66.70 in early European hours on Thursday, marking its lowest level since December 2021.
• US Crude Inventories: The latest Energy Information Administration (EIA) report showed that US crude oil stockpiles increased by 3.614 million barrels for the week ending February 28. The buildup in inventories adds to bearish sentiment, weighing on oil prices.
• Tariff Concerns: Oil traders remain cautious as newly imposed US tariffs on imports from Canada, Mexico, and China could dampen economic growth. A potential slowdown in trade and manufacturing activity raises concerns about weaker oil demand.
• Chevron News: The US government has ordered Chevron to wind down its operations in Venezuela by April 3. The company previously had a special license to operate despite sanctions, but as production halts, an estimated 200,000 barrels per day (b/d) of supply could be lost.
• Pemex Decision: Mexico’s state-owned oil company, Pemex, announced it will not provide discounts on its crude oil exports to US buyers in response to the tariffs. This move could lead to increased costs for US refiners and further market volatility.

Closing statement: WTI remains under pressure due to rising US inventories, trade concerns, and supply disruptions from Venezuela. The market will closely watch further developments in US trade policy and global economic indicators for directional cues.

• DAX Price: The DAX surged to record highs on Thursday, benefiting from positive sentiment on Wall Street. Investor confidence improved after the postponement of proposed US car tariffs, which had previously weighed on European markets.
• Germany’s Financial Package: On Wednesday, investor sentiment was further lifted by the CDU/CSU and SPD’s agreement on a multi-billion-euro financial package aimed at bolstering defense and infrastructure. The policy shift is seen as a major step in strengthening Germany’s economic position.
• ECB Policy Decision: Thursday's market movement is expected to be influenced by the European Central Bank (ECB) meeting. Economists widely anticipate a further rate cut, which could impact market dynamics and the Euro’s valuation.
• Corporate Earnings: Several key earnings reports are set to shape the trading session. Logistics giant DHL announced 8,000 job cuts following a sharp drop in profits, while Lufthansa also reported significant losses. Additionally, Zalando and ProSiebenSat.1 (Pro7) are expected to release financial results.
• EU summit: A special EU summit is announced for today, focusing on European defense strategies and continued financial and military support for Ukraine. The meeting's outcome could influence broader geopolitical stability and investor sentiment in European markets.

Closing statement: DAX continues its bullish momentum, driven by fiscal stimulus, postponed tariffs, and expectations of ECB rate cuts. However, corporate earnings and geopolitical risks could introduce volatility in the near term.