Latest news with #DanielaSabinHathorn
Mid East Info
2 days ago
- Business
- Mid East Info
Market Analysis: DAX 40 Eyes Record High as Bullish Momentum Builds
By Daniela Sabin Hathorn, senior market analyst at The DAX 40 index remains within striking distance of its all-time high of 24,390, set in late May. While recent sessions have reflected a degree of consolidation, this week has seen a renewed bullish tilt, supported by softer-than-expected Eurozone inflation data. DAX 40 daily chart: Past performance is not a reliable indicator of future results. Inflation Data Fuels Optimism: Tuesday's CPI release added fuel to the market's optimism. Headline inflation in the Eurozone rose 1.9% year-over-year in May, slightly below the consensus forecast of 2.0%. Core CPI—which strips out the more volatile components such as energy and food—also undershot expectations at 2.3% versus the anticipated 2.4% and notably declined from 2.7% in April. On a monthly basis, both headline and core inflation were unchanged, indicating a stall in price growth. These subdued readings reinforce the market's expectations that the European Central Bank (ECB) will continue to ease monetary policy. While some members of the ECB's Governing Council have cautioned against moving too quickly, the latest inflation data lends support to a more dovish stance. Technical Outlook: Momentum Shifts Back to the Upside: From a technical perspective, indicators continue to favour the bulls. Both short- and long-term moving averages are pointing higher, signalling potential for further gains. Meanwhile, the Relative Strength Index (RSI) has cooled from overbought territory following last week's modest pullbacks, suggesting room for renewed upward momentum. A sustained breakout above the 24,390-resistance level would confirm the continuation of the prevailing uptrend. However, if such a move pushes the RSI back toward overbought levels, some degree of consolidation may follow before further gains are realized.
Mid East Info
4 days ago
- Business
- Mid East Info
ECB Preview: How many more cuts should we expect?
By Daniela Sabin Hathorn, senior market analyst at The European Central Bank (ECB) will hold its next monetary policy meeting on Thursday, June 5, with markets widely anticipating another interest rate cut. Interest Rate Outlook: At its most recent meeting in April, the ECB reduced its key interest rates by 25 basis points, bringing the deposit facility rate to 2.25%. Markets are now pricing in another cut in June, though expectations for further easing beyond that remain uncertain. A potential pause in July is gaining traction, as the ECB evaluates incoming economic data and inflation dynamics. Source: refinitiv Economic Considerations: The ECB's policy decisions hinge on maintaining a stable balance between inflation control and supporting economic growth. Inflation in the Eurozone is projected to ease further throughout 2025. The preliminary May CPI reading, due two days before the meeting, is forecast by Reuters to show headline inflation falling to the ECB's 2% target. A confirmation of this decline would likely reinforce the case for another rate cut. However, given the central bank has already eased rates by 175 basis points over the past year, divergence within the Governing Council has emerged. Some members advocate for caution, signalling that the timing and pace of further rate cuts are still subject to debate. On the growth front, the Eurozone faces headwinds from global trade tensions and subdued consumer demand. Rising mortgage payments are already prompting households to cut spending or dip into savings, posing a risk to overall consumption. However, recent GDP data indicates modest resilience, with quarterly growth picking up modestly over the past year. The ECB has also stressed the importance of structural financial reforms and joint EU-level investments, particularly in defence and technology, to enhance long-term economic stability. Market Implications: Investors will be closely parsing the ECB's language for signals on the future path of interest rates. A dovish stance, including a June rate cut with a signal of continued easing, would likely boost European equities, especially rate-sensitive sectors, as lower yields make stocks more attractive than bonds. In currency markets, a dovish ECB would likely weaken the euro, especially against the US dollar, given expectations that the Federal Reserve will hold rates steady for longer. This could extend recent downside pressure on EUR/USD. Conversely: If the ECB cuts rates but expresses concern about lingering inflation risks, this could unsettle equity markets while offering some support to the euro. A hawkish stance, involving either no rate cut or messaging that downplays further easing, may pressure equities but could strengthen EUR/USD, particularly if the ECB expresses greater confidence in the Eurozone's economic resilience. Conclusion: The ECB's June meeting will be a pivotal moment in determining the trajectory of monetary policy for the second half of 2025. With inflation nearing target and economic signals still mixed, the central bank must carefully navigate the trade-off between supporting growth and anchoring price stability.
Mid East Info
28-05-2025
- Business
- Mid East Info
Gold XAU/USD steadies as markets digest trade uncertainty - Middle East Business News and Information
By Daniela Sabin Hathorn, senior market analyst at Gold XAU/USD is showing signs of resilience on Wednesday morning, attempting to resume its broader uptrend after shedding 1.25% on Tuesday. The precious metal continues to navigate the erratic rhythm of global trade talks and the bursts of market optimism that accompany temporary resolutions. This week's swing in sentiment was driven by the latest twist in U.S.-EU trade tensions. Over the weekend, Donald Trump unexpectedly raised proposed tariffs on the EU from 20% to 50%, effective June 1—only to postpone the increase to July 9 following a call with European Commission President Ursula von der Leyen. The initial tariff announcement on Friday triggered a classic risk-off reaction: investors sold equities and flocked to traditional safe havens. Gold spiked 1.9%, reaching $3,360. But by Monday morning, markets had flipped back to risk-on mode in response to the postponement, leading gold to reverse those gains. Gold (XAU/USD) daily chart: Past performance is not a reliable indicator of future results. Technically, the 20-day simple moving average (SMA) has offered solid support this past week. A daily close below it ($3,289) would be a bearish signal, potentially exposing the metal to further downside pressure. For now, the RSI is showing signs of resilience in the bullish trend, suggesting the path of least resistance could remain higher in the short-term. That said, resistance between $3,355 and $3,365 may continue to limit the upside. Gold traders are trying to figure out how to trade the ongoing trade talks. status as a safe haven remains intact, but its appeal dims whenever risk appetite returns and equities rally—exactly what happened on Monday and Tuesday. By Wednesday, however, the tone had shifted. The thing is, it is not just one trade deal that needs to be sorted out, but several. Right now, China and the EU seem to be the most prominent, and the most likely to possibly sour. Because of this, gold traders aren't completely throwing in the towel, preferring to hold on to some safe haven assets just in case the optimism dries out. This uncertainty is unlikely to disappear anytime soon. Gold's outlook will remain tied to a fast-changing geopolitical and macroeconomic environment. In the short term, direction is hard to call. In the long run, however, demand remains underpinned by several key drivers: sustained central bank buying, expectations of lower interest rates, and a global shift away from reliance on U.S. economic leadership.
Mid East Info
22-05-2025
- Business
- Mid East Info
Rising Yields, Soaring Yen: why Japan's fiscal crisis isn't sinking its currency
By Daniela Sabin Hathorn, senior market analyst at Japan is currently grappling with significant fiscal challenges, highlighted by Prime Minister Shigeru Ishiba's recent statement to parliament that the country's fiscal situation is worse than Greece's during its 2010 crisis. This alarming comparison has intensified scrutiny of Japan's debt structure; however, the yen has been rising. Japan's debt crisis: A growing concern: Japan's public debt is among the highest globally, with a debt-to-GDP ratio exceeding 260%. As of December 2024, the central government's long-term debt stood at approximately ¥1,136 trillion, with local governments adding another ¥179 trillion, bringing the total to around ¥1,315 trillion. Historically, Japan has managed this massive debt burden through ultra-low interest rates and the Bank of Japan's (BoJ) yield curve control (YCC) policy. However, recent monetary policy shifts have driven yields higher, escalating the cost of debt servicing. Adding more fuel to the fire, on Tuesday Japan's 20-year government bond auction experienced its weakest demand since 2012. This reflects investor concerns over Japan's fiscal health and the BOJ's tapering of bond purchases. Longer-term bonds have also been affected. The 30-year yield has risen to 3.19%, and the 40-year yield reached a record high of 3.61%. These increases indicate a significant shift in investor sentiment and a re-evaluation of the risks associated with Japanese government bonds. Past performance is not a reliable indicator of future results. Impact on the yen: safe haven demand trumps fundamentals In theory, the rising yields and fiscal concerns should exert downward pressure on the Japanese yen. However, the currency has been steadily rising since last week. The chart below shows the performance of the yen against a basket of currencies, which is up 2.5% since May 14. Past performance is not a reliable indicator of future results. The move seems counterintuitive but there are several factors at play. In times of global financial uncertainty, the Japanese yen often benefits from its long-standing status as a safe-haven currency. Recent events such as the U.S. credit rating downgrade and renewed volatility in global bond markets have led investors to seek refuge in traditionally stable assets, including the yen. Another factor supporting the yen is capital repatriation by Japanese institutional investors. With bond yields rising in countries like the U.S. and the UK — and volatility increasing — Japanese pension funds and insurers are bringing funds back home. This flow of capital into Japan boosts demand for the yen, putting upward pressure on the currency even if domestic fundamentals are shaky. Expectations around the Bank of Japan's policy are also playing a role. While the BoJ has long maintained ultra-loose monetary policy, rising inflation and bond market disruptions have fuelled speculation that it may shift to a more hawkish stance. Even modest expectations of rate adjustments can cause traders to unwind short positions in the yen, further driving its strength. Lastly, it's important to remember that currency movements are relative. While Japan has fiscal issues, other major economies are also facing economic and monetary headwinds. In that context, the yen may appear comparatively attractive. So, while Japan's fiscal worries are real, global investors are currently weighing broader risks and finding reasons to hold the yen — at least in the short term. Conclusion: While Japan's fiscal woes are serious and escalating, the yen's recent appreciation highlights the nuanced nature of global currency markets. Safe-haven flows, repatriation of capital, and shifting policy expectations are outweighing domestic weaknesses — at least for now. USD/JPY technical analysis: The USD/JPY pair has been locked in a downtrend for eight sessions, erasing gains seen earlier in the month. The dollar's recent weakness — fuelled by growing concerns about the U.S. economic outlook — has added to this downward pressure. On Thursday, the pair attempted a modest recovery from its intraday low. While the broader bias remains bearish, a break above resistance at 144.40 could spark short-term buying interest. However, without a significant reversal in USD sentiment, gains are likely to be capped near 145.50. USD/JPY daily chart Past performance is not a reliable indicator of future results.
Mid East Info
15-05-2025
- Business
- Mid East Info
UK economy outpaces gloomy forecasts, yet caution remains - Middle East Business News and Information
By Daniela Sabin Hathorn, senior market analyst at The UK economy experienced stronger-than-anticipated growth in the first quarter of 2025, with GDP expanding by 0.7% between January and March, according to official figures released this morning by the Office for National Statistics (ONS). This performance surpasses earlier forecasts and indicates a more robust start to the year than many analysts had expected. The growth was primarily driven by a rebound in consumer spending and a notable uptick in business investment, particularly in the services and manufacturing sectors. The latest figures starkly contrast with the warnings issued by business leaders earlier this year, who cautioned that Reeves's autumn budget — particularly the planned £25bn increase in employer national insurance contributions starting in April — could push the economy into a recession. The stronger GDP growth may influence the Bank of England's approach to interest rates. While the Bank recently reduced rates by 0.25 percentage points to 4.25% to support economic growth amid global trade tensions, the robust Q1 performance could lead policymakers to adopt a more cautious stance on further rate cuts. However, this momentum may not be sustained in the coming months as rising inflation, a cooling labour market, and the recent imposition of U.S. tariffs could pose challenges to continued economic expansion. Overall, the better-than-expected GDP growth has provided a positive signal to markets, but the reaction remains cautious due to underlying economic uncertainties and external risks. The FTSE 100 saw a modest uptick as the data was released, reflecting the optimism over the UK economy, but the ongoing concerns over the global trade tensions and the impact on global growth have limited the upside. The daily chart shows a loss of bullish momentum in recent weeks as resistance takes over around 8,600. The RSI has failed to come into close contact with the overbought level (70) despite the recent appreciation, suggesting a weakened bullish drive. The moving averages show mixed signals, with the 50-day having dropped below the 100-day line, whilst the 20-day is set to move above both. They are likely to provide some support if further downside arises as they cluster around 8,490, whilst the upside is likely to continue offering resistance, with key levels between 8,684 and 8,909.
