EURUSD: the signals indicate a down trend but it looks like a range. We now have a TP at 1.0909. If this is broken, a further decline can start, otherwise we have to take into account an increase as mentioned yesterday.
EU is still clinging to a rising trend line on the 1D timeframe, but has not moved for the past five trading sessions. At the mercy of dollar news, this pair is waiting to make another move until CPI this Thursday. Higher inflation will likely cause the price to fall, and vice versa if CPI is lower. Core is a key component in USD sentiment as it is the Fed's main inflationary gauge.
Gold is still at the same trend line on the 1D timeframe, unmoved as the EURUSD pair. Price could also be waiting for CPI before making another move. In this environment, it's probably safe to say that a lower inflation number Thursday would be a good sign for the metal. However, if price breaks below this trend line, there may not be any notable levels of support until we get to the $1970-80s range.
Bond yields fell across a broad front at the end of last year. Investors expect the Federal Reserve, the US central bank, to reduce its own policy interest rate as early as March. The market is already preparing for that reduction. This leads to lower yields on bonds and also to fresh records in the market for debt securities from emerging countries.
The issuers of those bonds are borrowing cheaply. Interest rates actually rose sharply for a large part of last year. But there is also a risk to borrowing so much at once: 'The market could become oversupplied. That is why it is important for a country that wants to raise money to be there on time.'
The level of interest rates is extra important for emerging countries. Interest rates are usually much higher than in the developed part of the world. They therefore spend proportionately more money on interest costs than, for example, European countries or the United States. The average yield on dollar bonds from these countries is around 8%, according to Bloomberg. A US government bond with a ten-year term now yields a return of around 4%.
If interest rates rise again against expectations, it will become more attractive for investors to hold bonds in developed countries, which could further raise borrowing costs in the rest of the world. But there is no sign of reduced interest yet. Mexico's bond issue was significantly oversubscribed last week. Investors placed orders worth $20 billion, while 'only' $7.5 billion was borrowed.
EU is still clinging to a rising trend line on the 1D timeframe, but has not moved for the past five trading sessions. At the mercy of dollar news, this pair is waiting to make another move until CPI this Thursday. Higher inflation will likely cause the price to fall, and vice versa if CPI is lower. Core is a key component in USD sentiment as it is the Fed's main inflationary gauge.
Gold is still at the same trend line on the 1D timeframe, unmoved as the EURUSD pair. Price could also be waiting for CPI before making another move. In this environment, it's probably safe to say that a lower inflation number Thursday would be a good sign for the metal. However, if price breaks below this trend line, there may not be any notable levels of support until we get to the $1970-80s range.
Bond yields fell across a broad front at the end of last year. Investors expect the Federal Reserve, the US central bank, to reduce its own policy interest rate as early as March. The market is already preparing for that reduction. This leads to lower yields on bonds and also to fresh records in the market for debt securities from emerging countries.
The issuers of those bonds are borrowing cheaply. Interest rates actually rose sharply for a large part of last year. But there is also a risk to borrowing so much at once: 'The market could become oversupplied. That is why it is important for a country that wants to raise money to be there on time.'
The level of interest rates is extra important for emerging countries. Interest rates are usually much higher than in the developed part of the world. They therefore spend proportionately more money on interest costs than, for example, European countries or the United States. The average yield on dollar bonds from these countries is around 8%, according to Bloomberg. A US government bond with a ten-year term now yields a return of around 4%.
If interest rates rise again against expectations, it will become more attractive for investors to hold bonds in developed countries, which could further raise borrowing costs in the rest of the world. But there is no sign of reduced interest yet. Mexico's bond issue was significantly oversubscribed last week. Investors placed orders worth $20 billion, while 'only' $7.5 billion was borrowed.