CB Consumer Confidence, Richmond Manufacturing Index, FOMC Members Speak

The US dollar recovered against most major currencies on Monday, with the USDX up by 0.12%, supported by renewed U.S. tariff threats against Mexico and Canada, confirming a 25% levy on imports, which triggered increased market uncertainty and a subsequent rebound dollar safe haven demand.

In corporate news, Nvidia shares dropped by over 3%, contributing to a wider tech sector decline, ahead of its scheduled earnings release this week. The company's quarterly results, expected after market close on Wednesday, are anticipated to provide insight into the current demand for AI technologies. Despite the drop, analysts predict a strong performance from Nvidia, anticipating the company will surpass expectations and provide optimistic future guidance, reinforcing investor confidence in the AI market's growth.

In contrast to the broader tech sell-off, Apple shares saw a slight increase. This followed the company's announcement of a $500 billion investment in U.S. operations over the next four years, focusing on AI, silicon engineering, and advanced manufacturing.

Crude oil prices posted a moderate recovery on Monday, with the two main benchmarks WTI and Brent adding 0.65% and 0.61% respectively as concerns about potential oil supply disruptions arose following the U.S. government's implementation of new sanctions against Iran's oil sector.

Bitcoin and Ethereum, the two main cryptocurrencies by market capitalization, plummeted on Monday losing 4.89% and 10.85% of their values respectively and hitting six-week lows. The move was mainly attributed to heightened global trade tensions stemming from the US reaffirming tariff threats against Mexico and Canada, and investor concerns stemming from the recent security breach at the Bybit cryptocurrency exchange, where approximately $1.5 billion of Ethereum was stolen.

For Tuesday, the focus turns to CB consumer confidence data, the Richmond Fed Manufacturing index and speeches from several FOMC members. For the week ahead the focus turns to the release of U.S. Preliminary GDP data, the Core PCE Price Index, and a quarterly earnings report from NVIDIA. Some price action could also be observed upon the release of U.S. Jobless Claims, U.S. durable goods orders, pending home sales, and the Chicago PMI.

EUR/USD

The EUR/USD pair remained range-bound on Monday, briefly testing the 1.0500 level but failing to gain traction. The pair continues to hover near the upper end of its recent consolidation as traders await key economic data later this week.

Last week’s rise in US inflation figures reignited risk aversion among investors, shifting their focus to the upcoming US Personal Consumption Expenditure (PCE) inflation report. Market participants are hoping that the early-year spike in US headline inflation will ease quickly, preventing a prolonged period of elevated inflation that could delay Federal Reserve (Fed) rate cuts.

Meanwhile, Germany’s economic data will also be in focus later this week, with Consumer Price Index (CPI) inflation and Retail Sales figures set for release on Friday.

Gold

Gold prices surged on Monday as the US dollar weakened and Treasury bond yields declined.Ongoing uncertainty continues to support bullion prices as investors weigh trade policies proposed by former US President Donald Trump. While geopolitical tensions in Ukraine appear to be easing, rising instability in the Middle East has further fueled demand for gold as a safe-haven asset.

This week, investors will closely watch a series of key US economic releases, including speeches from Federal Reserve (Fed) officials, the Conference Board Consumer Confidence report, housing data, Durable Goods Orders, the second estimate of Q4 GDP, and the Core Personal Consumption Expenditures (PCE) Price Index—the Fed’s preferred inflation gauge.

WTI Oil

Oil prices edged higher on Monday as fresh U.S. sanctions on Iran and Iraq’s pledge to compensate for overproduction added to concerns over near-term supply constraints. The market partially rebounded from Friday’s sharp selloff.

The U.S. Treasury introduced new sanctions targeting Iran’s oil sector, restricting brokers, tanker operators, and shippers involved in Iranian petroleum exports.

Meanwhile, Iraq reaffirmed its commitment to the OPEC+ supply agreement, pledging to submit a revised plan to offset any recent overproduction.

Adding to market uncertainty, former U.S. President Donald Trump indicated on Monday that the U.S. is nearing a minerals deal with Ukraine, as he and French President Emmanuel Macron discussed paths to ending the conflict. Trump also reiterated that tariffs on Canada and Mexico are set to take effect next week, following the expiration of a temporary pause.

US 500

The US 500 closed lower on Monday, dragged down by a sharp decline in Nvidia and broader weakness in tech stocks ahead of key earnings reports.

Nvidia fell more than 3%, leading losses in the technology sector ahead of its highly anticipated earnings report due Wednesday after market close. The chipmaker's results are expected to serve as a crucial indicator of demand for artificial intelligence (AI) and data center spending.

On the economic front, attention will be on key data releases later this week, including the Federal Reserve’s preferred inflation gauge—the Personal Consumption Expenditures (PCE) Price Index—and the second estimate of Q4 GDP.

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