Last week saw mixed global economic performance. The U.S. economy presented varied data, with rising jobless claims and increasing oil inventories, counterbalanced by improvements in both manufacturing and services PMI indices. However, job reports and consumer confidence declined. The unemployment rate dropped to 4.0%, while average hourly earnings grew by 4.1% year-over-year. In the Eurozone, manufacturing activity improved, but the services sector slowed down, while inflationary pressures persisted with a rise in the consumer price index. In the UK, the Bank of England cut interest rates amid continued sluggish growth in both the manufacturing and services sectors. Canada experienced an economic slowdown despite improvements in employment figures. In Australia, retail sales saw a slight decline, but business sectors showed improvement. Meanwhile, Japan’s manufacturing activity contracted, but services strengthened, with wage growth and household spending increasing. Lastly, China’s PMI data indicated a slowdown in both the manufacturing and services sectors, reflecting ongoing economic pressures. The Consumer Price Index also rose to register a growth of 0.5%, the highest level in five months.
Market Analysis
USD/JPY Pair
The U.S. dollar traded at 150.92 against the Japanese yen on Friday, February 7, 2025, marking its lowest level since December 10, 2024. It is currently hovering around the 151.00 level. A bearish momentum seems to dominate the near term, driven by factors such as rising inflation and wages in Japan, which could push the Bank of Japan to continue raising interest rates. Additionally, the narrowing yield gap between Japanese and U.S. government bonds adds pressure. The Relative Strength Index (RSI) currently stands at 32 points, indicating bearish momentum for the USD/JPY pair. Meanwhile, the MACD indicator shows a bearish crossover, with the MACD line (blue) crossing below the Signal Line (orange), reinforcing the downward trend for the dollar against the yen.
McDonald’s
McDonald’s stock has risen by about 2% since the start of the year. The market awaits McDonald’s earnings report today, with expectations of earnings per share (EPS) at $2.90, slightly below the previous reading of $2.95. Revenue is projected to reach $6.51 billion, up from the previous reading of $6.41 billion. The RSI currently stands at 59 points, indicating positive momentum for McDonald’s stock.
Silver
Silver continues its upward trend, reaching $32.65 per ounce on Friday, February 7, 2025, its highest level since November 6, 2024. It is currently trading near $32.00. The key challenge is to break above the $34.87 level, last recorded on October 22, 2024. Silver prices are benefiting from several factors, including rising gold prices, which hit a new record of $2,887 per ounce, and expectations of interest rate cuts by the Federal Reserve this year. Lower interest rates typically boost silver, as it is a non-yielding asset. Additionally, industrial demand for silver remains strong, given its applications in sectors such as pharmaceuticals, medical supplies, and electronics. The RSI currently stands at 60 points, reflecting bullish momentum. The MACD indicator shows a bullish crossover, with the MACD line (blue) crossing above the Signal Line (orange), further supporting an upward trend for silver.
FTSE 100 Index
The FTSE 100 Index has gained approximately 7% since the beginning of the year. Positive momentum is expected to continue, supported by the Bank of England’s decision to cut interest rates by 25 basis points from 4.75% to 4.50%, in line with market expectations. Further rate cuts are anticipated, which could provide additional support for UK equities. The RSI currently stands at 66 points, indicating bullish momentum for the FTSE 100. The MACD indicator also shows a bullish crossover, with the MACD line (blue) crossing above the Signal Line (orange), reinforcing the positive trend for the index.
Key Events This Week
The markets are closely watching several major economic indicators and events this week:
- Today: China’s new loans data will be released.
• Tuesday: Federal Reserve Chairman Jerome Powell’s testimony is awaited.
• Wednesday: The U.S. Consumer Price Index (CPI) and crude oil inventories will be released, alongside Powell’s testimony.
• Thursday: Key reports include GDP and industrial production data from the UK, CPI data from Switzerland, industrial production data from the Eurozone, as well as U.S. producer price index (PPI) and jobless claims data.
• Friday: Eurozone GDP data, along with U.S. retail sales and industrial production reports, will be released.
Please note that this analysis is provided for informational purposes only and should not be considered as investment advice. All trading involves risk.
