Upcoming Events: BOC, FOMC, and ECB Rate Statements, Core PCE Price Index, U.S. GDP

The past week saw a significant decline in the value of the US dollar against various global currencies, with the dollar index (USDX) falling by 1.79%. This drop came amidst speculation that President Trump would pressure the Federal Reserve into implementing immediate rate cuts. Market observers are eagerly awaiting the upcoming Federal Reserve policy decision, with many anticipating that interest rates will remain unchanged.

Recently, there has been a surge in optimism on Wall Street, leading to consistent gains in major US stock indices. The US 500, in particular, reached new record highs during this period. This positive outlook can be attributed to strong earnings reports and a speech by President Trump advocating for lower interest rates.

Nvidia, a key player in the artificial intelligence (AI) industry, faced a slight setback following the launch of China’s DeepSeek AI program. DeepSeek, an innovative generative AI model, boasted superior performance at a lower cost compared to its competitors. This development raised concerns about potential competition for Nvidia, which supplies chips widely used in AI development. Despite this, Nvidia’s stock managed to end the week on a positive note, indicating that investors remain confident in the company’s long-term prospects in the flourishing AI market.

Other major tech companies like Microsoft, Meta, and Alphabet are also heavily investing in AI technology. These firms are expected to report significant increases in capital expenditure during their upcoming earnings releases, underscoring their commitment to advancing their AI capabilities.

Looking ahead, key central banks such as the European Central Bank, Bank of Canada, and the Federal Reserve are set to announce their interest rate decisions in the coming week. Market movements are also anticipated upon the release of the Core PCE price index and Advanced GDP data from the US. Additionally, investors will closely monitor important economic indicators including the US Richmond Manufacturing Index, CB Consumer Confidence data, Jobless claims, pending home sales, Eurozone’s CPI, Canada’s GDP, and the Chicago PMI throughout the week.

In the currency market, the EUR/USD pair experienced modest gains, closing the week 0.76% higher. In the US, data from S&P Global indicated a slowdown in economic activity, with the Composite PMI decreasing to 52.4 in January. On the other hand, the Euro strengthened on the back of unexpectedly positive PMI data in the Eurozone, showcasing resilience and growth potential.

Meanwhile, gold prices continued their upward trajectory, supported by remarks from President Trump regarding potential restraint on further tariffs. However, market sentiment turned slightly negative despite Trump’s revised trade policy stance, as investors closely monitored US economic data releases and the President’s calls for interest rate cuts.

Oil prices fluctuated during the week, with President Trump’s announcements about boosting domestic oil production and urging OPEC to decrease crude prices affecting market dynamics. While US crude inventories reached their lowest levels in nearly a year, concerns over oversupply and weak demand persist, influencing oil price movements.

The US 500 index maintained two consecutive weeks of gains, amid mixed corporate earnings reports and economic data. Investor sentiment was influenced by President Trump’s advocacy for immediate interest rate cuts, as highlighted during his address at the World Economic Forum in Davos. Market participants also followed key economic indicators and corporate earnings reports, with notable performances from companies like Verizon Communications and American Express shaping market sentiment going forward.