XAU/USD Current price: $2,033.05 The United States' Gross Domestic Product was downwardly revised to 3.2% in Q4. Investors await an update on US inflation before taking directional compromises. XAU/USD is technically neutral with bulls ready to jump in. Tepid United States (US) macroeconomic data helped XAU/USD bounce from an intraday low of $2,024.38. The bright metal trimmed intraday losses and turned positive for the day, currently changing hands at around $2,033 a troy ounce. The country released the second estimate of the Q4 Gross Domestic Product (GDP), which showed the economy grew at an annualized pace of 3.2% in the last three months of 2023, slightly below the 3.3% previously estimated.  Additionally,   the January Goods Trade Balance posted a deficit of $90.1 billion, worse than the $-89.1  billion posted in December. Meanwhile, stock markets spent the day on the back foot amid a retracement in the tech sector. At the time being, Wall Street trimmed most of its early losses, but the three main indexes remain in the red. The focus shifts now to the US Core Personal Consumption Expenditures (PCE) Price Index. The Federal Reserve's (Fed) favourite inflation gauge will be out on Thursday and is expected to show easing price pressures in January. That would contradict the hotter-than-anticipated January Consumer Price Index (CPI) released a couple of weeks ago and put markets in risk-on mode. XAU/USD short-term technical outlook From a technical point of view, XAU/USD maintains the neutral-to-bullish stance. In the daily chart, the pair met buyers around a flat 20 Simple Moving Average (SMA) which keeps developing well above the longer ones. As Gold trades little changed for a third consecutive day, technical indicators extend their consolidative phase around their midlines, failing to provide directional clues. The near-term picture is also neutral. Technical indicators in the 4-hour chart have lost their directional momentum within neutral levels, although XAU/USD stands just above a bullish 20 SMA. Finally, the longer moving averages remain directionless below the shorter one, reinforcing the idea of a limited downward potential. Support levels: 2,027.00 2,019.60 2,011.40 Resistance levels: 2,041.40 2,056.10 2,065.60

EUR/USD came under bearish pressure and declined toward 1.0800 early Wednesday. Cautious market mood could make it difficult for the pair to rebound. US economic calendar will feature second estimate of Q4 GDP growth. After failing to clear 1.0860 resistance on Tuesday, EUR/USD turned south and declined toward 1.0800 early Wednesday. The pair's technical outlook points to a bearish tilt in the near term. Market participants will pay close attention to the risk perception and the revision to the US growth data. The broad-based US Dollar (USD) weakness helped EUR/USD push higher in the first half of the day on Tuesday. The mixed action in Wall Street's main indexes and the resilience of the US Treasury bond yields, however, helped the currency hold its ground and didn't allow the pair to gather bullish momentum. The risk-averse market atmosphere, as reflected by retreating US stock index futures, supports the USD midweek and weighs on EUR/USD.

Markets A batch of US data turned out mixed yesterday. Strong core capital good shipments (investment proxy) compensated for negatively distorted durable goods orders (Boeing). House prices rose in line with forecasts but consumer confidence unexpectedly retreated on a deteriorating current and six month ahead assessment on the economy and jobs. Second tier business sentiment indicators were unable to settle the debate either, especially with a more important one (manufacturing ISM) scheduled later for release on Friday. US yields whipsawed with net daily changes of -2.6 bps (2-y) to +3.2 bps (30-y) eventually. The $42bn 7-y auction went smoother than Monday's 5-y but didn't leave a stamp. German Bunds underperformed. They erased intraday gains to push yields 0.4 to 3.3 bps higher to make the curve slightly less inverse. Equities along with major FX didn't choose a strong direction. The EuroStoxx50 hit new multiyear highs but Wall Street finished mixed. EUR/USD ended the day slightly weaker at 1.0844, DXY an inch higher. Above-consensus Japanese CPI helped JPY close to nothing. USD/JPY (150.51) closed well above the daily lows. Drowned Under. The central bank of New Zealand softened its previous threat to lift rates even further (see below), turning the Kiwi dollar into this morning's biggest underperformer. The Aussie dollar trades on the backfoot as well following (incomplete) monthly CPI figures (January 3.4% vs 3.6% expected). USD takes a lead during mild risk-off. US cash yields ease less than 2 bps and German yields are ready for a lower open as well. Belgium kicks off the CPI bonanza today, be it with a national calculation (instead of the harmonized one). Most of the EU member states (harmonized) CPI readings are due tomorrow (ahead of the euro area figure on Friday), however. In absence of other market-impacting data, it means we may be looking at a quiet trading session with moves being mainly technically inspired. Fed's Williams (New York), Collins (Boston) and Bostic (Atlanta) hit the wires today. We expect them to repeat Waller's "what's the rush" (for cutting rates) in some form or another. The power of repetition brought US money markets more or less in line with the December dot plot (three cuts this year) meanwhile. Core bond yields in any case enjoy a solid floor beneath them. The dollar's recent correction looks ready for a reversal. Spillovers from Asian equity markets to Europe could help the greenback in the process. News and views The Reserve Bank of New Zealand (RBNZ) kept its policy rate unchanged at 5.5% this morning. Interest rates need to remain at a restrictive level for a sustained period of time. Annual headline CPI is expected to return to the 1%- 3% target band by Q4 this year and to the 2%-midpoint later in 2025. Risks to the inflation outlook are more balanced than at the time of the November meeting/update. Restrictive monetary policy and lower global growth have contributed to aggregate demand slowing to better match the supply capacity of the NZ economy. High population growth (immigration) still supports aggregate spending and also helps easing capacity constraints in the labour market. Updated forecasts show policy rates (at least) level until Q1 2025 with the probability of an additional hike being slightly lower (5.6% policy rate peak compared to 5.7% in November). OCR projections otherwise barely changed (unaltered 4.9% in Q4 2025; 3.5% from 3.6% in Q4 2026). Annual inflation is expected at 3.8% for the March FY (from 4.3%), 2.6% for FY 2025 (from 2.4%) and 2% for FY 2026 (unchanged). The new growth path is 0.3%-1.2%-2.8% from 1.2%-1.4%-2.8%. NZD swap rates plunge 16 bps (30-yr) to 23 bps (2-yr) this morning as markets now rule out an additional rate hike. The kiwi dollar drops from NZD/USD 0.6170 to 0.6110. Bank of England deputy governor Ramsden, who oversees financial markets, said that the UK central bank may continue running down its QE portfolio even after hitting the "preferred minimum range of reserves" which it estimates in the range of £335bn to £495bn. The BoE's asset portfolio declined from a £895bn peak to currently £735bn with Ramsden suggesting that the BoE can wind it down completely should it be necessary. This view contrasts with for example the Fed which wants to maintain a structural bond portfolio to back an ample level of reserves. Download The Full Sunrise Market Commentary

Gold price finds buyers to once again retest two-week highs of $2,041 early Wednesday. US Dollar extends rebound but weak Treasury bond yields could cap the upside. The 4H technical setup appears constructive, as Gold price awaits US data. Gold price is duplicating the price action seen during Tuesday's Asian trading, as bulls attempt another comeback early Wednesday. The US Dollar (USD) is building on the previous recovery, despite a minor pullback in the US Treasury bond yields, as markets turn tentative ahead of a fresh batch of US GDP and PCE data due later in the day. Gold continues to find dip-demand Markets are seemingly quiet, digesting the Reserve Bank of New Zealand's (RBNZ) dovish hold decision on the interest rate. Traders take profits off the table on their recent US Dollar short positions, awaiting a fresh directional impetus on the upcoming US economic data releases. The US Gross Domestic Product (GDP) second estimate for the fourth quarter and the PCE deflator could help the markets reprice the Federal Reserve (Fed) interest rate cut bets for this year. Markets are currently pricing in about an 80% chance of a no rate cut by the Fed in the May meeting while the probability that the Fed will begin lowering rates in June stands at 60%, down from about 70% seen last week. The sentiment surrounding the expectations of a Fed policy pivot will continue to drive the value of the US Dollar, as well as, the Gold price in the sessions ahead. Gold price has been struggling to resist above the $2,033 level so far this week, having hit a two-week high of $2,041 last Friday. The uptrend in the US Treasury bond yields, in the wake of hawkish commentary from Fed officials, is keeping Gold price upside restricted. Fed Governor Michelle Bowman said on Tuesday that slower-than-expected progress on inflation has left her cautious about monetary policy stance. Earlier in the day, Kansas City Fed President Jeffrey Schmid, a new hawk, noted that there is "no need to preemptively adjust the stance of policy." "Fed should be patient, wait for convincing evidence that inflation fight has been won," Schmid added. Gold price technical analysis: Four-hour chart Following an upside breakout from the pennant on Tuesday, Gold price extended higher but ran into offers just below the two-week high of $2,041. At the moment, Gold price is struggling around the 21-Simple Moving Average (SMA) at $2,033. Acceptance above that level is needed on a four-hour candlestick closing basis to revive the uptrend. The 50-Simple Moving Average (SMA) is on the verge of cutting the 200-SMA for the upside. If that happens, a Golden Cross formation will be confirmed, opening doors for a fresh upsurge.   The Relative Strength Index (RSI) is holding well above the midline, backing the bullish potential. The immediate resistance for Gold price aligns at the two-week high of $2,041. Further up, the $2,050 psychological barrier will challenge the bearish commitments, as Gold buyers target the static resistance at around $2,065. On the other side, a failure to resist above the 21-SMA at $2,033, Gold price could see a fresh downswing toward the immediate demand area around near $2,026, which is the confluence zone of the 50- and 200-SMAs. A breach of the latter could trigger a fresh drop toward the 100-SMA at $2,022. The last line of defense for Gold buyers is Friday's low of $2,016.

AUD/USD traded in an inconclusive note on Tuesday. Further losses could refocus on the 2024 low near 0.6450. Commodities and China keep the AUD under scrutiny. The Australian dollar resumed the upward trend following a negative start to the week, prompting AUD/USD to chart humble gains around the mid-0.6500s The slight uptick in AUD/USD occurred despite the equally marginal advance in the Greenback, as well as the continuation of the intense sell-off in iron ore prices, which reached multi-month lows near the $126.00 yardstick in response to increasing inventories and heightened uncertainty surrounding the Chinese housing market. Spot price movements also mirrored the lacklustre performance of the US Dollar, as investors continued to assess the probability of the Federal Reserve (Fed) initiating monetary easing around June or later. This assessment gained traction following the release of strong US inflation data, coupled with persistently hawkish remarks from select Fed officials. Despite the recent recovery of the currency pair, investors are expected to closely monitor developments in China, fluctuations in commodity prices (particularly copper and iron ore), and movements in the Greenback. While potential additional stimulus measures in China could provide temporary support for a rebound, news indicating a more sustainable recovery in the country is essential for offering stronger support to the Australian dollar and potentially triggering a more significant upward movement in AUD/USD. An upswing in the Chinese economy is also anticipated to coincide with a rise in commodity prices, further bolstering the AUD. Regarding the Reserve Bank of Australia (RBA), the cautious approach from the central bank is likely to prevent significant downward pressure on the Australian dollar, as it is considered one of the latest G10 central banks to commence its interest rate cuts process. AUD/USD daily chart AUD/USD short-term technical outlook After clearing the weekly high of 0.6595 (February 22), AUD/USD may retest the temporary 55-day SMA around 0.6627, which coincides with the late-January peaks (January 30). A break above this range may send the pair to the December 2023 top of 0.6871 (December 28), seconded by the July 2023 peak of 0.6894 (July 14) and the June 2023 high of 0.6899 (June 16), all before the critical 0.7000 barrier. On the other side, bearish moves may cause spot to initially hit its 2024 bottom of 0.6452 (February 13). Breaking below this level might result in a return to the 2023 low of 0.6270 (October 26), followed by the round level of 0.6200 and the 2022 low of 0.6169 (October 13). It is worth noting that for the AUD/USD to experience more short-term gains, it must first leave behind the critical 200-day SMA, which is currently at 0.6560, in a sustained manner. The four-hour chart suggests that the consolidative attitude will persist for the time being. The initial resistance level is 0.6595, followed by 0.6610. Surpassing this zone suggests a potential development to 0.6728. Meanwhile, a breach of 0.6442 may result in a potential drop to 0.6347, then 0.6338. The MACD eased to the zero line, while the RSI retreated to the sub-50 area.

Despite a number of financial releases due out this week being quite interesting, on a monetary level, RBNZ's interest rate decision caught our attention. In contrast to other central banks, the market's expectations for RBNZ to ease its monetary policy tend to be rather low. The Macroeconomics Currently inflation in New Zealand, despite easing considerably since late 2022, remains potentially one of the main problems of New Zealand's economy. It's characteristic how the headline CPI rate slowed down from 7.2% yoy in late 2022 to 4.7% yoy in Q4 2023. Yet the rate is still above the bank's target range of 2.00±1.00% adding more pressure on the bank to maintain a tight monetary policy for longer. Particularly prices in household & utilities, rent and food inflation tend to remain stubbornly high and above the target, thus posing substantial problems in the everyday life of New Zealanders. Yet given the bank's dual mandate to watch over inflation and promote maximum employment at the same time, forces us to turn our attention also on New Zealand's employment market as another factor which will determine the bank's stance. It should be noted that the unemployment rate is currently at 4% which is considered rather low, yet is rising albeit at a slower pace than what was expected. Furthermore, the job growth rate seems to remain somewhat healthy. At the same time the labour cost index growth rate tends to remain relatively high despite slowing down somewhat over the past two quarters, implying that the labour market may continue feeding inflationary pressures in the short term. As a general comment, we could say that the employment market is still holding its tightness despite some cracks starting to appear, which may allow the bank to maintain a firm stance. As the main reason of worries for New Zealand's economy we note the growth factor. New Zealand's economy suffered a wide contraction over Q3 and if combined with RBNZ's tight monetary policy, one could reasonably expect it to fall into a recession. Despite this not being part of the bank's mandate as such, it may still add pressure on the bank to start easing its monetary policy.  The interest rate part of the decision   For the time being we note that currently, the market is pricing in the possibility of the bank remaining on hold, keeping the official cash rate (OCR), at 5.5%, by 77% according to NZD OIS, with the other 23% implying that a 25 basis points rate hike is also possible. Please note that the ICR is currently at a 15 year high level, The market also seems to be pricing in the possibility that the bank is to remain on hold for a prolonged period and actually proceed with a rate cut of 25 basis points in November. Overall we tend to concur the wit the market expectation for the bank to remain on hold in tomorrow's meeting as a base scenario that may disappoint somewhat Kiwi traders, at least those expecting a rate hike, thus weighing slightly on the Kiwi. Yet we have to note that in its projections the bank at its last meeting did not seem to expect a possible rate cut in 2024 and as a word of caution, please note that the bank did not hesitate in the past to ignore market expectations, routing for a more independent path. In regards to the OCR we expect the bank to maintain a wait-and-see position for the time being. Should the bank remain on hold as expected, we may see attention being shifted to the accompanying statement and RBNZ Governor Orrs' press conference later on.     The tone of the decision Overall, we expect the bank to maintain a strong hawkish tone, given that inflation despite slowing down is still above the bank's target. It's characteristic that in the last statement, the bank mentioned in its forward guidance that "The Committee is confident that the current level of the OCR is restricting demand. However, ongoing excess demand and inflationary pressures are of concern, given the elevated level of core inflation. If inflationary pressures were to be stronger than anticipated, the OCR would likely need to increase further". So the element of a potential rate hike is still present and if repeated as expected could provide some support for the Kiwi. Overall we expect the bank to remain hawkish in both Andrian Orrs' press conference and the accompanying statement, also as it may want to push back against the pressure being exercised on the bank for an earlier rate cut. Hence we expect the tone of the decision to be leaning more on the hawkish side and should its hawkishness exceed market expectations we may see the release supporting the Kiwi.    Technical analysis NZD/USD H4 Chart Support: 0.6120 (S1),...