Daily Forecast [February 07, 2024]

Dollar weakness on Tuesday provided temporary support for risk assets.

On Tuesday, the decline in T-note yields put pressure on the US dollar. Recent hawkish Fed comments and vital US economic news pushed back the likelihood of a Fed rate cut from the March FOMC meeting to the May meeting, which supports the dollar. The dollar weakness on Tuesday provided some support for the euro. In addition, a bullish factor for the euro was the increase in factory orders in Germany after factory orders in December unexpectedly rose to the highest level in 3 years.

The dollar's weakening on Tuesday contributed to a slight rise in metals. In addition, Tuesday's decline in global bond yields was favourable for precious metals. Keeping in mind that gold has an inverse correlation to bond yields. But gold's gains are still limited as gold is still being impacted by the ongoing liquidation of long positions by funds - on Monday, the volume of long positions in ETFs fell to a 4-year low.