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On May 6, the German Bundestag held a second round of voting to elect a new chancellor. Friedrich Merz, the chancellor candidate of the German Union Party, won the support of the majority of all members of the Bundestag and was officially elected as the new chancellor of Germany. The Union Party is composed of the Christian Democratic Union (CDU) and the Christian Social Union (CSU). The Union Party and the Social Democratic Party formally signed a coalition agreement in the capital Berlin on the 5th. The new Bundestag has a total of 630 seats, with the Union Party and the Social Democratic Party having 208 and 120 seats respectively.U.S. Treasury Secretary Bessant: We can see "significant reductions" in tariffs on U.S. goods.Market news: German Union Partys chancellor candidate Merz was elected chancellor in the second round of parliamentary voting.On May 6, ING analyst Pesole said in a report that the Norwegian central bank may hint at a rate cut soon at its meeting on Thursday, but any negative impact on the Norwegian krone should be temporary. He said that increasing economic growth risks mean that the Norwegian central bank may pave the way for a rate cut in June. This could prevent the kronas recovery and cause the euro to be in the 11.70-11.80 range against the krona for some time. However, he said that given the kronas huge exchange rate advantage and the euro looking overbought, the euro should continue to fall against the krona. INGs goal is for the euro to fall to 11.50 against the Norwegian krone by the end of the year.The New Zealand dollar/U.S. dollar exchange rate NZD/USD rose 0.50% during the day and is now trading at 0.5995.

Gold Price Prediction: XAU/USD continues to struggle above $1,840 as rates surge ahead of the release of the Fed's minutes

Daniel Rogers

Feb 21, 2023 15:15

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In the Tokyo session, the gold price (XAU/USD) is exhibiting a mediocre performance over $1,840. Prior to the release of the Federal Open Market Committee (FOMC) minutes, the precious metal is gauging a direction, but volatility is expected to remain low.

 

In anticipation of the restart of U.S. markets following a long weekend, investors' appetite for risk has diminished as uncertainty has increased. This has resulted in a further decrease in risky assets such as S&P500 futures. Prior to the FOMC minutes, the US Dollar Index (DXY) has rebounded to approximately 103.70 but is still in the woods. In the meantime, the alpha provided by 10-year US Treasury bonds has surpassed 3.86 percent.

 

The Consumer Price Index (CPI) is recalcitrant and may drive Federal Reserve (Fed) chair Jerome Powell to boost interest rates further to manage inflationary pressures, as seen by a recent improvement in US economic indicators that forecast inflation. For additional guidance, the FOMC minutes will be closely monitored.

 

Prior to that, however, the preliminary S&P Global PMI (Feb) statistics will be closely monitored. According to the consensus, the preliminary Manufacturing PMI (Feb) will fall to 46.8 from 46.9 before. Additionally, the Services PMI will be released at 46,6 as opposed to 46,8 previously.


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