Forex News

Commerzbank’s Barbara Lambrecht argues Copper faces near‑term pressure from rising exchange inventories and broader metals volatility, but maintains a constructive long‑term view. Chinese grid‑expansion capex is up sharply and industry forecasts point to slower supply growth and calls for higher state reserves, underpinning expectations of sustained demand support despite current headwinds.

Inventory pressure versus structural demand

"Base metal prices are not only facing headwinds from the precious metals markets, but the fundamentals have also been rather negative recently. This is particularly true for copper."

"But regardless of the current headwinds, we see two factors that provide sustained support: On the positive side, China's energy companies responsible for grid expansion, which are probably the largest consumers of copper, reported that they had increased their capital expenditure in January by 35% compared to the previous year."

"This indicates that grid expansion is indeed being pushed ahead significantly, as announced."

"Second, at its annual briefing, the China Nonferrous Metals Industry Association forecast production growth of only 5% in the current year, down from 10% in the previous year. It also called once again for the government to build up more copper reserves."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

Lee Hardman from MUFG highlights that the Pound has sold off sharply, with EUR/GBP breaking above its 200-day moving average as markets reprice a more dovish Bank of England path. A closer-than-expected MPC vote, softer guidance, and rising UK political risks around Prime Minister Keir Starmer and potential leadership challenges are seen adding downside pressure to Sterling.

BoE repricing and UK political stress

"The pound has weakened sharply over the last couple of trading days."

"After closing below support from the 200-day moving average at the start of this week for the first time since April of last year and hitting a low of 0.8613, EUR/GBP jumped to a high yesterday of 0.8721."

"The abrupt reversal of the pound strengthening trend that had been in place since late last year was triggered both by the dovish repricing of BoE rate cut expectations and the return of political risk in the UK."

"We are currently forecasting two more cuts this year but can’t rule out a third later this year."

"The UK rate market has moved to price back in more rate cuts from the BoE after yesterday’s MPC meeting."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

Bank of England (BoE) Governor Huw Pill said that there’s a risk that they will draw too much comfort from the dip in inflation that will come in April. He added that they should not overinterpret changes to growth outlook, speaking to businesses on Friday.

Key takeaways:

There's a risk that we draw too much comfort from the dip in inflation that will come in April.

Labor market does appear to have eased significantly, perhaps more than activity data would have predicted.

Should not overinterpret changes to growth outlook in February BOE forecasts.

Latest pay intentions data is good evidence that the disinflation process is intact but not complete.

Latest DMP data on pay and pricing plans are not at entirely comfortable levels.”

Brown Brothers Harriman (BBH) reports that the USD has pared back some gains, particularly against commodity-sensitive currencies. The report highlights a surge in AI capital expenditures, which is expected to drive commodities, especially precious and industrial metals.

AI spending boosts commodity currencies

"The commodity complex is rallying underpinned by a surge in AI capital expenditures plans. Amazon, Google, Microsoft, and Meta have forecast to spend a total of about $660bn in 2026 (2.1% of US GDP) for new data centers and equipment. That’s 60% higher than in 2025 and 165% higher than in 2024."

"Commodities, particularly precious and industrial metals, will keep benefiting from the ongoing AI spending boom. Every new server and power system requires large amounts of silver, gold, platinum, palladium, and copper, for high performance chips, wiring, and energy infrastructure."

"AUD, CLP, ZAR, BRL, MXN, and PEN all stand to outperform."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

TD Securities anticipates a landslide victory for the LDP in Japan's upcoming Lower House election, which is expected to restore a stable political environment. The report warns that investors should be cautious of potential FX intervention if USD/JPY breaks above 160.

Japanese election outlook

"We expect the LDP to win by a landslide this weekend, achieving an absolute majority in the Lower House which ushers back a stable political environment."

"Investors will be on the lookout for MoF's FX intervention if USDJPY breaks >160 as MoF may take advantage of thinner liquidity during Japan holiday on the 11th Feb."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

• EUR/USD bounces up from 1.1765 lows, but remains capped below 1.1800.
• A cautious market mood and weak German Industrial data are weighing on the Euro.
• The ECB kept rates on hold and signalled a steady monetary policy on Thursday.

The Euro (EUR) ticks up against the US Dollar (USD) on Friday, trading near 1.1800 at the time of writing after hitting fresh two-week lows of 1.1765 earlier on the day. The sell-off in Equity markets has cast an overall risk-averse sentiment that is buoying the safe-haven Greenback, while in Europe, German Industrial Production disappointed.

The US Dollar remains supported amid a global rout on Equities, with the tech sector leading losses amid growing market concerns about aggressive spending on Artificial Intelligence (AI). The risk-off mood has offset the impact of a string of downbeat US employment figures, which adds pressure on the Federal Reserve (Fed) to provide further support to employment creation.

On Thursday, the European Central Bank (ECB) stood pat on interest rates, as widely expected, and dismissed concerns about Euro strength, pointing to a steady monetary policy for the foreseeable future.

The focus on Friday preliminary Michigan Consumer Sentiment Index and the speech of Fed Governor Philip Jefferson during the US trading session. The crucial US Nonfarm Payrolls (NFP) report has been delayed for next week due to a partial government shutdown.

Daily Digest market Movers: The US Dollar remains firm in risk-off markets

• The main Wall Street indexes dropped for the third consecutive day on Thursday, dragged down by a sell-off in tech stocks as quarterly earnings boosted investors' concerns about an AI bubble.
• The US Dollar is trading higher against its main currency peers since US President Donald Trump selected former Fed Governor Kevin Warsh as the replacement of Jerome Powell as Fed Chairman. The market views Warsh as someone who will defend the central bank's independence and maintain a cautious approach to monetary easing.
• On Thursday, the ECB left its Rate on Deposit Facility on hold at 2% and stuck to its view that inflation will stabilize around the 2% level, despite the soft Consumer Price Index (CPI) figures seen recently in the Eurozone. ECB President Christine Lagarde reiterated that monetary policy is in a "good place" and downplayed the risks to inflation stemming from a strong Euro.
• On Friday, ECB committee member Martin Kocher, who had previously complained about the effects of Euro appreciation, affirmed that the central bank is not seeing "that much Euro strength", anChart Analysis
• that currency rates are not a very good anchor for ECB decision-making.
• In the US, employment data raised alarms, with weekly Initial Jobless Claims surging to 231K in the week ending January 31, from 209K the previous week, and job openings dropping to five-year lows at 6.542 million in December, from 6.928 million in November.
• The weak employment figures come after a downbeat ADP Employment report on Wednesday and have boosted market expectations of a Fed interest rate cut in the first half of the year. The odds for a March rate cut have increased to 22% from 9% earlier this week, and chances of an April cut have risen to 40% from 24% in previous days, according to the CME Group's Fedwatch tool
• Data from the Eurozone released on Friday revealed that German Industrial Production contracted 1.9% in December, well beyond market expectations of a 0.3% drop, while November's data was revised down to a 0.2% growth from the 0.8% increase previously estimated.
• In the US, the preliminary Michigan Consumer Sentiment Index is expected to have deteriorated to 55.0 in February from 56.4 in January.

Technical Analysis: EUR/USD maintains its bearish tone, with 1.1765 low at risk

The EUR/USD is in a bearish correction, with technical indicators in the 4-hour chart showing a neutral-to-bearish trend. The Moving Average Convergence Divergence (MACD) line flattens near the Signal line, while the Relative Strength Index (RSI) remains steady below the 50 line, at levels consistent with a moderate bearish momentum.

The pair has found support in the area between the 61.8% Fibonacci retracement of the late January rally, at 1.1772, and the January 20 and 22 highs above 1.1765. Below these levels, the next target is the January 21 lownear 1.1670.

On the upside, the pair should break Wednesday's high, at 1.1838, and Monday's high, at 1.1874, to confirm a trend shift.

(The technical analysis of this story was written with the help of an AI tool.)