Weekly Market Analysis 05/02/2024

Last week, we followed the inflation and growth data in Germany and the Euro Zone and non-agricultural employment data in the USA in global markets. Another data that would be useful for us to take note of was the interest rate decisions of the US Federal Reserve (Fed) and the Bank of England (BoE). Europe's largest economy, Germany, contracted by 0.3% in the last quarter of last year, in line with expectations. While the Euro Zone did not show growth in the last quarter of 2023 compared to the previous quarter, annual growth was 0.1%, in line with expectations. While the consumer price index in Germany increased by 0.2% monthly in January, annual inflation, which was 3.7% in December, was 2.9% in January. In the Eurozone, the consumer price index decreased by 0.4% monthly in January, while annual inflation was 2.8%. Non-farm employment in the USA increased by 353 thousand in January, well above the expectations of an increase of 185 thousand. The unemployment rate remained at 3.7%. The Bank of England (BoE) kept the policy rate unchanged at 5.25%, the highest level in 15 years, in line with expectations. Bank of England Governor Andrew Bailey stated that they are considering interest rate cuts. In its first meeting of the year held on Wednesday, the US Federal Reserve (Fed) did not change the policy rate in line with expectations and kept it constant in the range of 5.25-5.50%, which is the highest in 22 years. In the monetary policy text, officials stated that inflation is still above the bank's 2% target and gave the message that there is no interest rate cut plan yet. Fed Chairman Jerome Powell stated at the press conference after the interest rate decision that they do not expect an interest rate cut in March and that the Fed will not have enough confidence in reducing interest rates until March. Repeating the statement that inflation has slowed down but is still high, Powell stated that the policy rate is at a restrictive level and that they see the effect of monetary tightening on inflation. Sales were seen in global markets after Fed Chairman Powell's statements that they did not expect a cut in interest rates in March. Gold was priced at $2.050 per ounce, but with positive US data, it dropped to $2.020.